NSW And Victoria Push For Loot Boxes To Be Classified

With just under a month until the Senate inquiry into “gaming microtransactions for chance-based items” – loot boxes and such – reports back, more submissions to the inquiry have been made public. Two of those submissions have come from the Victorian Minister for Gaming and Liquor Regulation, as well as the NSW Government’s deputy secretary of Liquor, Gaming and Racing, and both submissions are encouraging an update to the classification guidelines to recognise loot boxes.

The Victorian Government’s submission came from Marlene Kairouz, the state minister for Gaming and Liquor Regulation, as well as Local Government and Consumer Affairs. In the submission, Minister Kairouz argues that the Victorian Government “strongly supports action by the Australian Government” to respond to concerns raised around microtransactions “for chance-based items in online and video games, regardless of whether they are gambling or simulated gambling”.

The major concern, one echoed in both government submissions and in prior publicised submissions to the inquiry, is the potential for minors to be exposed and encouraged to gamble either directly or through other means, like third-party sites that allow users to trade in-game items.

The Major Responses So Far Into The Senate Loot Box Inquiry The Senate inquiry into loot boxes isn't due to report back until mid-September. Ahead of their deliberations, members of industry, academia and the public have made submissions to the panel. Here's what they had to say. Read more

“This has the potential to normalise gambling as part of the playing of online and video games. In addition, it is becoming increasingly difficult for consumers to appreciate where gambling activity begins and ends,” Minister Kairouz’s submission says.

“More stringent classification of video games that include loot boxes or similar items would better recognise the potential harm that can arise from the convergence of gaming and gambling and the consequent normalisation of gambling. The Australian Government should consider whether more stringent classification of such games, together with requiring manufacturers to provide information about how they operate, would better educate consumers about the risks associated with them or elements of them.”

The NSW Government’s submission comes from Liquor, Gaming & Racing deputy secretary Paul Newson. It’s a few pages longer, and notes that “loot boxes” and other chance-based items (paid or otherwise) fall under the Classification Enforcement Act, which the Classification Board oversees.

“In particular, Liquor and Gaming NSW would strongly encourage investigating opportunities by the Classification Board to use a more rigorous classifications process to provide stronger safeguards for minors and improve consumer information on the odds associated with loot boxes.”

Newson adds that loot boxes and other chance-based items don’t legally constitute gambling in NSW, but “where circumstances exist where virtual items (being quite often the contents of any loot box) can be monetised outside the game they are featured in then this is likely to offend NSW gambling laws”.

In their submission, the Australian Communications and Media Authority, which enforces and administers the Interactive Gambling Act, said the body had received more than 35 complaints and enquiries about loot boxes since August 2017. The complaints peaked in November last year “following significant media coverage about gambling-like mechanisms in popular games such as Star Wars Battlefront II“.

The NSW and Victorian Government’s submissions are included below in an abridged form.

Victorian Minister for Gaming and Liquor Regulation, Local Government, Consumer Affairs, Marlene Kairouz MP

The Victorian Government is concerned about the potential for new gambling products, or new types of video or online games that include elements that mimic gambling, to adversely impact children and other vulnerable groups. The question of whether the purchase of chance-based items, when combined with the ability to monetise the items on third party platforms, constitutes a form of gambling is complex. Gambling is defined in section 1.3AA(1) of the Gambling Regulation Act 2003 as an activity in which: (a) a prize of money or something else of value is offered or can be won (b) a person pays or stakes money or some other valuable consideration to participate; and (c) the outcome involves, or is presented as involving, an element of chance. As loot box mechanics can operate in a number of ,different ways, whether the operation of a loot box falls within this definition of gambling needs to be considered on a case by case basis.

Items obtained through micro-transactions can be used for gambling via third party sites. In these instances, these items are being used as a de-facto currency for the purposes of gambling. There is a risk that minors are using items obtained in this way to gamble on illegal gambling sites. The Victorian Government notes that the growth and popularity of loot boxes and simulated gambling games such as social casino games means that young people are being exposed, at a minimum, to experiences that mimic gambling. This has the potential to normalise gambling as part of the playing of online and video games. In addition, it is becoming increasingly difficult for consumers to appreciate where gambling activity begins and ends. Research suggests that simulated gambling games are having a “gateway effect” for some users which may lead to a long-term interest in gambling and the risk of developing problem gambling behaviour, although I note that causality has not been established. While the Victorian Government is concerned about the consumer protection issues that the convergence between gaming and gambling raises, there is no effective regulatory regime in place to address these concerns. State and territory governments are limited in their capacity to regulate products that are available exclusively online, are offered from outside their jurisdiction and do not constitute gambling. The Victorian Government strongly supports action by the Australian Government to address the issues raised by the increasing use of micro-transactions for chance-based items in online and video games, regardless of whether they are gambling or simulated gambling. More stringent classification of video games that include loot boxes or similar items would better recognise the potential harm that can arise from the convergence of gaming and gambling and the consequent normalisation of gambling. The Australian Government should consider whether more stringent classification of such games, together with requiring manufacturers to provide information about how they operate, would better educate consumers about the risks associated with them or elements of them.

Liquor Gaming & Racing NSW Deputy Secretary, Paul Newson