Inside the Skins Gambling Surge: DCMS Review Exposes Risks and Regulatory Gaps in Skins Gambling
On 25 September 2025, the Department for Culture, Media and Sport (“DCMS”) published a commissioned report collating evidence regarding the notable rise in skins gambling and providing enhanced policy recommendations (“Report”).
The Rise and Risks of Skins Gambling
Skins gambling involves the betting of virtual items, known as ‘skins’, that are acquired within online video games (often through loot boxes). These cosmetic items, which alter the appearance of in-game characters or weapons, have evolved into valuable digital assets that can be wagered for the chance to win more valuable items or real-world currency on third-party websites. The Report highlights that skins gambling has become increasingly popular, particularly amongst vulnerable persons such as children and younger individuals, who DMCS consider may be drawn into underage gambling behaviours through video gaming activities.
The Gambling Commission of Great Britain (“Commission”) legally recognises skins gambling as a form of gambling. The Commission considers that skins can be used similarly to money in a gambling context, and notes that skins can often be converted and withdrawn as currency (more typically, cryptocurrency) and therefore hold a real-world monetary value. Despite the legal framework, many skins gambling platforms operate without licences and outside the jurisdictional reach of the Commission; the Commission does not consider such skins gambling websites to be legal in Great Britain and works actively to have skins gambling sites removed and blocked. However, the sector is dominated by third-party platforms which are not originally intended for gambling. The platforms lack regulatory oversight and player protection measures due to their international nature, making effective regulation challenging and leaving consumers exposed to significant risks of gambling harm.
Whilst distinct from one another, the design of skins gambling is closely linked to loot boxes. The Report references research showing that those who participate in skins gambling are more likely to engage in free loot box use, play video games with gambling content and buy loot boxes for money first, suggesting a potential gateway effect into broader gambling behaviours. The randomised nature of loot boxes has long prompted questions as to whether they should be regulated under the Gambling Act 2005 (“Act”), but the position remains for now that they fall outside of the scope of the Act. This position is based on the fact that, whilst loot boxes may offer in-game items acquired by a ‘game of chance’, they are not considered by the Commission as ‘money or money’s worth’. The Commission has previously made clear that where in-game items obtained via loot boxes are confined for use within the game and cannot be cashed out, they are unlikely to be caught as a licensable activity. The Government has further stated that although an association has been found between loot boxes and gambling harms, research has not yet established a causative link between loot box spending and problem gambling behaviours. Other jurisdictions including (but not limited to) Austria, Belgium, France, Netherlands and Spain have either classed loot boxes as a gambling product or enforced regulations around certain aspects of their offering; in our LawNow article here we looked into the fragmented global regulation and the European Parliament’s recommendations in their January 2023 report.
The Report’s key objectives are to: (1) assess the prevalence and impact of skins gambling, particularly on vulnerable groups; (2) compare skins gambling with traditional gambling products in terms of game design, demographics, and user participation; and (3) review international regulatory responses, providing recommendations for Great Britain.
1. Prevalence and Impact of Skins Gambling on Vulnerable Groups
The Report finds that skins gambling is highly prevalent, with millions of unique visits to skins gambling websites globally each month. In February 2025, 6.9 million unique visits to skins gambling websites were recorded globally, with 3.93% of that traffic comprising UK consumers.
The Report highlights that underage participation is likely underestimated due to weak age verification on the platforms used, where users may falsely self-declare their ages. Furthermore, research has shown that skins gambling is especially common among those aged 11-14, who are more than twice as likely to engage as those aged 22-24.
The Report suggest that skins gambling is associated with a higher risk of developing problem gambling behaviours. The Report’s audit of skins gambling sites reveals a lack of adequate Responsible Gambling (“RG”) practices across the websites, and sometimes RG tools even being obscured by promotion content.
2. Comparison of Skins Gambling with Traditional Gambling Products
The Report highlights that skins gambling and traditional gambling products share similar core features: risk, the ability to place bets, a potential for addiction and the possibility of financial loss. One of the key differences, however, lies in the currency used, with skins gambling using virtual items with a fluctuating real-world value, and traditional gambling relying on recognised currencies. In terms of design, the games on skins gambling sites frequently resemble those on gambling platforms, compromising a combination of traditional games with new era games such as loot boxes, mines and electronic dice.
The Report found that numerous skins gambling sites had more global traffic than established betting platforms. The user base is predominantly young and male, with the 18–24 age group making up nearly 45% of users (which is substantially higher than on traditional gambling sites). User participation patterns also differ, with skins gamblers often accessing multiple sites, having a shorter user session duration, and a preference to use desktop platforms. Traditional gamblers are more likely to use mobile devices and spend slightly longer on the sites.
3. Review of International Regulatory Responses
International regulatory responses to skins gambling are fragmented and limited. The Report highlights that most jurisdictions lack specific legislation and therefore leave skins gambling in a legal grey area. The Report draws on responses from academic experts across over 50 jurisdictions. By way of example, some countries, such as Sweden, take regulatory enforcement against unlicensed skins betting operators. Denmark applies gambling definitions based on value, chance, and the opportunity to win. Australia has recommended classifying skins betting as gambling and called for public awareness campaigns. In the United States, regulation varies by state level. China considers skins gambling illegal. Spain attempted passing new legislation regulating loot boxes and skins gambling, but this was later withdrawn.
Great Britain is one of a few countries which has taken proactive steps towards skins betting regulation, where operators must hold a licence to offer skins betting. The Commission recognises the significant risks posed by skins betting, especially its strong appeal to children and young people, however its remit is limited where the virtual items are not formally exchangeable for money or prizes. The Report acknowledges the Commission’s view that the video games industry is not encouraging consumers to gamble, however, the use of gambling skins for betting is taking place on third party platforms and video games companies should not be passive to this.
The DCMS has previously welcomed industry-led guidance by trade body UK Interactive Entertainment (“Ukie”) on how to navigate loot box offerings; see our LawNow article here where we reviewed the proposed Ukie loot box principles. The principles demonstrate that games companies are taking responsibility for emerging risks in the sector and are encouraged to commit to tackling the sale of items acquired from paid loot boxes for real money. The government was scheduled to review the implementation of this guidance, but we are not aware of any further action to date.
Policy Recommendations
The Report recommends that game developers and publishers be held accountable for gambling-like systems in their games, including loot boxes, tradable items and third-party marketplaces enabled by application programming interfaces (“APIs”). In the context of the fragmented legal landscape, the Report calls for more cohesive and future-proof regulatory frameworks. It suggests greater harmonisation of skins betting laws within states and across countries will benefit all stakeholders. The Report notes that any legislation developed should be flexible and frameworks future proof, with multi-sector collaboration between regulators, industry, consumer advocacy groups and researchers.
The Report makes 8 policy recommendations:
For the UK government and DCMS:
- Launch national awareness and harm-prevention campaigns around skins gambling to educate the public, especially parents and young people, about associated risks. The campaign should include advice on recognising the signs of problem gambling and provide resources for support.
For the Commission:
- Require skins gambling operators to obtain licences and comply with strict age verification, fairness, and harm reduction standards. Stricter regulatory measures should be implemented for skins gambling operators, recognising skins gambling as a distinct form of gambling and ensure it falls under appropriate regulatory oversight, including to adhere to age verification processes, RG practices and fairness protocols.
For game developers:
- Build age-based safeguards into loot boxes and skin trading systems. Game developers ought to be mandated to implement age verification safeguards into their loot boxes and skin trading systems to prevent minors’ access to gambling-like features.
- Monitor third-party misuse of game items and take action against enabling external gambling. If external websites enable players to gamble skins, game developers should take swift action to prevent further misuse of the in-game items, possibly with the assistance of law enforcement authorities or regulators.
- Avoid creating APIs that enable illegal gambling. Discourage developers from creating skins that can be traded or gambled via APIs which allow the exchange of virtual items between external platforms. This could be done by ensuring skins are contained within a controlled in-game economy.
- Encourage collaboration between game developers, regulators and researchers to establish best practices for digital item design and in-game economies. This collaboration should focus on promoting fair and responsible play whilst creating systems that reduce exploitation of gambling mechanics.
For educators and youth services:
- Integrate skins gambling risks into digital resilience and financial literacy education for young people. This would include teaching younger people about the dangers of gambling to help them to make informed choices.
- Provide resources for parents and young people to recognise and manage risks related to gaming-related gambling. Both parents and young people should have resources available to identify and manage gaming-related gambling risks.
Comment
The Report provides a timely analysis of the growing convergence between video gaming and gambling. It highlights the ongoing need for comprehensive, flexible, and enforceable regulation that keeps pace with technological developments and the evolving nature of digital economies. The report recognises how the boundaries between gaming and gambling are increasingly blurred and provides evidence of children as young as 11 engaging in skins betting, often as their first gambling experience. The risks to vulnerable groups, especially children and young people, are well-documented - of particular concern is the lack of robust RG processes among skins gambling operators, with age verification often superficial or absent, potentially exposing minors to gambling-related harms.
The policy recommendations are widespread, targeting government, regulators, developers, and educators. In the short term, the recommendations emphasise the need for thoughtful game design changes, robust age-verification, licensing, and harm prevention campaigns, to tackle the prevalence of underage skins gambling. Looking forwards, the Report highlights a potential need for greater regulation: the recommendations rely heavily on industry self-regulation by game developers and cross-sector collaboration, whilst also suggesting greater legislative clarity, robust enforcement, and international cooperation to close regulatory loopholes. Enhanced regulation is ideal in theory, but the practical reality of the patchwork of (often outdated) gambling regulation we see locally and globally leaves it uncertain whether more legislative control of skins gambling will be implemented in practice.
As at the report’s publication, it is not yet clear which specific actions the government will prioritise or the timeline for possible implementation for the recommendations. The report however provides a significant call to action for policy reform for in-game items.
Co-Authored by Helena Thornby, Trainee Solicitor at CMS
