The Department for Digital, Culture, Media & Sport (DCMS) recently published a research report on ‘skins gambling’. It sets out policy recommendations for combatting this phenomenon, which has grown out of the world of video games.
The report stresses that skins gambling sites must be licensed by the Gambling Commission to operate legally and that children are particularly at risk of unregulated sites. The report calls for the video games industry to take a more active role in undermining skins gambling, and its policy recommendations indicate the government’s aspirations for the regulation of skins gambling and loot boxes.
- Basic background
Skins are virtual items in video games, such as weapons, character outfits or accessories. Players can use them to personalise their in-game avatars. They can be acquired through gameplay or loot boxes.
Loot boxes are a ‘lucky dip’ feature in video games. Players open them, by paying or for free, in the hope of acquiring rare skins.
What is skins gambling?
Skins gambling is when skins are wagered in games of chance for in-game items or real-world currency.
Players transfer their skins from video games to skins gambling websites. They can wager them on games that resemble traditional casino games, such as electronic dice, mines, crash or double. Players can then cash in their skins for real-world currencies (usually cryptocurrency).
What is the regulatory position in the UK?
Skins gambling is gambling. Sites that offer it require a licence from the Gambling Commission to operate legally.
For now, loot boxes are not a form of gambling provided that the items acquired from them cannot be ‘cashed out’ of a game. In 2022, DCMS called for the games industry to regulate itself on loot boxes. The games industry trade body, Ukie, responded by publishing 11 principles that set out best practice on protecting children from loot boxes.
Despite these developments, loot box mechanisms remain controversial. In May 2025, a Royal Society report identified widespread non-compliance with the Ukie principles in the video games industry. The ASA has taken regulatory action against ‘free to play’ games that fail to flag that they contain loot box mechanisms.
What constitutes ‘cashing out’ an item acquired from a loot box also remains open-ended. So far, the Gambling Commission has focused on platforms that pose the greatest threat, such as those that target children and allow direct exchanges of loot box items for cash, although other types of platforms and games are likely to be subject to future loot box regulation.
- The DCMS report
The report was commissioned by DCMS and written by academics at Nottingham Trent University. It contains high-level recommendations rather than a worked-out regulatory roadmap. At this stage, the degree to which the recommendations will be implemented by the government is unclear. However, the commission and publication of the report by DCMS indicates that the government wishes to take a firmer stance on skins gambling.
What are the report’s findings?
The report makes the following observations:
- Skins gambling is popular in the UK. UK players make up 3.93% of global skins gambling traffic.
- Skins gambling sites are more popular than some traditional gambling sites. The most popular skins websites had more monthly global traffic than traditional betting platforms, such as Betfred, BetVictor, Betway, 32Red, and Bally Casino.
- Children are at risk of skins gambling. DCMS cite a 2019 survey of 1,025 11- to 24-year-olds conducted by the Royal Society for Public Health to establish this point. This survey found that almost twice as many 11- to 14-year-olds (14%) had taken part in skins gambling in the previous week than 22- to 24-year-olds (7%).
- Skins gambling could contribute to gambling harm. The report’s position is that skins gambling seems to be both a marker of more extensive gambling activity and a potential contributor to gambling harm.
- Skins gambling sites often lack responsible gambling tools. Many skins gambling sites do not have dedicated responsible gambling pages, self-exclusion options, limit setting options, links to gambling filtering software, or links to problem gambling support organisations.
- Gaming streamers are often sponsored by skins gambling sites. A 2024 report noted that 120 out of the top 300 Counter-Strike live-streamers on Twitch had sponsorships with at least one skins gambling platform. The report is particularly concerned with the association between gaming culture and skins gambling.
- Skins gambling sites often lack proper age verification measures.
What are the recommendations?
The report makes eight policy recommendations for game developers, the government, the Gambling Commission, and educational services.
For game developers:
- Build age-based safeguards into loot boxes and skins trading systems such as robust age verification measures, trading limits, and parental controls.
- Monitor and take action against third-party misuse of virtual items. This could involve blocking third-party platforms that facilitate skins gambling and working with regulators or law enforcement.
- Avoid open APIs that allow skins trading, and contain skins within games’ regulated environments.
- Collaborate with regulators and researchers on digital design, in-game economies, transparency, and responsible spending.
For the Gambling Commission:
- Require skins gambling operators to obtain licences and comply with strict age verification, fairness, and harm-reduction standards.
For the government and DCMS:
- Launch national awareness and harm-prevention campaigns around skins gambling.
For educational services and youth services:
- Incorporate skins gambling into broader digital resilience, and peer pressure and financial literacy education.
- Provide resources for parents and young people on recognising and managing risks associated with gaming-related gambling.
What impact will the report have?
The report represents a significant change in tone from DCMS, especially in relation to game developers and the Gambling Commission. It represents an attempt to understand the skins gambling sector and indicates the future direction of regulation.
For game developers
The report stresses the need for game developers to take action against skins gambling. It suggests that developers have made it too easy for skins gambling sites to spring up around popular video games. The report notes that video game developers can indirectly benefit from skins gambling: those who lose skins on skins gambling platforms are likely to repurchase those skins from in-game stores.
DCMS has taken aim at APIs that allow skins to be transferred out of video games and failures to protect children from loot boxes. The report has only made recommendations and has not placed explicit requirements on game developers. However, its recommendations suggest a push to move away from the self-regulation approach adopted in relation to loot boxes.
For skins gambling sites
The report encourages the Gambling Commission to take more proactive enforcement action against skins gambling sites. It makes clear that these sites require Gambling Commission licences to operate legally and should implement age-verification measures, provide a suite of safer-gambling policies, and implement processes that ensure fairness and transparency.
The report also encourages collaboration between the Gambling Commission and international regulators. It notes that skins gambling sites often evade regulation by relocating or rebranding. The full scope of this collaboration is unclear but the Gambling Commission may seek international recognition of skins gambling as a distinct form of gambling.
The report represents a change of approach from DCMS on skins gambling, rather than a clear regulatory programme. Its focus is on understanding and gathering information on skins gambling, and its suggestions for future regulation remain high-level. Despite this, the report is crucial in understanding DCMS’s aspirations in relation to skins gambling and marks the first step towards future regulation.
If you have questions or concerns about skins gambling or the regulation of games, please contact Oscar Kent-Egan.