Loophole was originally an interactive television game similar to the Hugo series where players phoned in and competed live in a Swedish children TV show. This home computer version features the same world and characters but has completely different gameplay. Unlike the arcade action gameplay of the TV game this version is more similar to a point-and-click adventure game. It is played entirely with mouse and the world of Loophole is presented through a combination of 3D models and pre-rendered backgrounds. The game takes place in the town of Broomfrost which is threatened by the ghost general Boogiboo who has cast a curse on it. This causes the citizens to become grumpy and easily irritated and if the curse is not broken they will turn into ghost nibblings which in turn will spread the irritation to more people. The only person that can stop this is Yuma, a young magician apprentice who the player has to navigate through the town, meet the inhabitants and do their errands. Upon completing an errand, which usually involves finding and bringing back a certain item, the citizen will be cured. Time is limited though since the people will get increasingly irritated until they turn into ghost nibblers. Citizens that have turned can only be saved with the use of laughter magic but this comes in limited supply and can only be recharged by collecting certain green plants. To win the game the player simply has to save a certain number of people, which depends on the difficulty level chosen. At the same time the game can be lost if too many people turn into ghost nibblings. In addition to the citizens there are also visitors arriving at the space harbour that the player has to help get to the right locations. These are also affected by the curse and are considered saved when they reach their destinations.