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An increasing number of volatile financial trading products and video games available to children closely resemble gambling, a panel of experts that includes UK Gambling Commission officials has warned.
“Simply changing the definition of what is gambling won't solve the problem. We must focus on the information we can give consumers and the risks attached to different products. It must be clear what products and services are regulated and which ones are not,” Gambling Commission executive director Tim Miller said.
Miller warned that children already can spend “huge amounts of money” on in-game items such as loot boxes without triggering any warnings with financial services.
Matt Burgiss, who works for the charity GamCare, said even he, someone who works with the industry and who is an expert-by-experience, recently unknowingly downloaded an app on his phone available for children that allowed peer-to-peer transactions.
To address this growing problem, increased collaboration among financial services, gaming companies, gambling operators and regulators is needed, they said, speaking as part of Money and Mental Health’s panel on tackling gambling-related harms on Tuesday.
Financial services have already “stepped up to the challenge”, said Miller.
However, he fears the rising popularity of day trading, the recent collapse of Football Index and the increasing use of cryptocurrencies and non-fungible tokens (NFT) highlight a need for a multi-faceted approach to regulating potentially harmful products that recreate the “same emotional experience as gambling”.
Asked by VIXIO GamblingCompliance about the seemingly high volume of “simulated gambling” apps available to children on both the Apple and Android platforms, a spokesperson for the commission said it only “regulates products which meet the statutory definitions of betting”, but acknowledged the technology blurred the lines between gambling and other forms of entertainment.
“This is concerning, especially where it risks encouraging gambling-type behaviours in children,” the commission told VIXIO.
Dr James Close, who has been commissioned in the past by GambleAware to investigate the interface of gaming and gambling, said on the panel this could be a big issue in the future, as there is already a clear link between loot box engagement and problem gambling.
“Policy action on loot boxes has potential for the utility of harm minimisation. It starts with education, as it's such a fast-evolving environment. Psychological nudges make people use these products. Awareness-raising of these techniques from a young age at school would be helpful,” Close said.
Close believes gaming companies as well as a host of technology platforms, such as Apple’s App Store, or video game distribution service Steam, are best suited to act as “gatekeepers” in cooperation with financial services, to prevent potentially harmful products.
“These platforms have had their heads in the sand in terms of loot boxes and other potentially harmful products. Particularly when it comes to labelling the risk of apps and loot boxes. The responsibility should be on those who provide these products, not consumers,” Close said.
Sharon Collard, professor of personal finance and research director at University of Bristol's Personal Finance Research Centre, said: “There are clear links between problem gambling and high-frequency trading.”
Several studies have already shown that people using these products often end up chasing losses and their mechanics and architecture is very similar to gambling apps, Collard explained.
The professor highlighted the heavy uses of charts and tips on investment apps, influencers giving unregulated financial advice and people being defrauded and scammed as key reasons why more online regulation of these products, similar to loot boxes, is needed.
Collard backed the implementation of products and services that would allow consumers to opt out of being able to use certain potentially risky financial products, similar to the gambling blocks offered by most banks.
Conor D'Arcy, Money and Mental Health’s head of research and policy, agreed that non-gambling products can cause common symptoms of mental health problems, leading to people losing large sums of money.
“People think they can get rich quick from cryptos and also a lot of people are scammed due to their lack of understanding of the product,” D'Arcy said.
