There's a nuance here. Consider these two positions that both mean that the UK Government does not currently recognise lootboxes as a form of gambling:

A: The UK Government has decided that lootboxes are not gambling. B: The UK government has not decided whether lootboxes are gambling or not.

The current situation is a lot closer to B than A. The UK Government has decided not to extend the existing Gambling laws to cover video game loot boxes. The existing laws did not automatically cover them, so a decision has to be made whether to amend the laws or not. Instead it has asked the industry to self-regulate. In 2022 there was a review that asked for improvements, restricting some access and mandatory spending controls. There have been other reviews and studies.

It seems quite clear that the industry is not doing enough (no surprise, it's a cash cow for them) so it's likely to mean the Government will crank up the legislation to force their hand, but the wheels of Government move slowly; way too slowly for many people who have been affected by this.