According to the UK Gambling Commission chief executive, a prize has to be either money or have monetary value in order for it to fall under gambling legislation.
However, there are unauthorised third party sites which buy and sell in-game content or enable it to be used as virtual currency.
Gambling Commission programme director Brad Enright admitted that games publisher EA, which sells the popular football game FIFA, faced "a constant battle" against unauthorised secondary markets. "There is unquestionably a demand for a secondary market," he said.
In FIFA, players can be bought in packs but their content is only revealed after payment.
The same applies to loot boxes, which contain bonus content, often in the form of character costumes or weapons.
Dozens of parents have told the BBC that their children are spending hundreds of pounds on in-game purchases, and have criticised the process as a form of gambling as there is an element of chance in the outcome and their children are then tempted to buy again in order to try to get the result they want.
Speaking at the Department for Culture, Media and Sport select committee, Gambling Commission chief executive Neil McCarthur admitted that there were "significant concerns" around children playing video games in which there were elements of expenditure and chance.
However, he added that under current legislation it did not classify as gambling.
"There are other examples of things that look and feel like gambling that legislation tells you are not -such as some prize competitions- but because they have free play or free entry they are not gambling... but they are a lot like a lottery," he said.
Source: GMB / BBC.com
