The Senate inquiry into "gaming micro-transactions for chance-based items" - otherwise known as the loot box inquiry - has tabled its report to Parliament, recommending that the Federal Government undertake a "comprehensive review of loot boxes in video games".
The Senate approved the inquiry in late June this year, originally setting September 17 as the due report date. The committee voted to extend the reporting deadline twice, however, to allow for more testimony. The report was tabled by Greens Senator Hanson-Young yesterday evening.
The main finding of the report was that the Department of Communications and the Arts, working with the Department of Social Services, ACMA, the ACCC and the Office of the eSafety Commissioner, launch a review into loot boxes. That review, it was suggested, should also embark on "further research into the potential for gambling-related harms to be experienced as a result of interaction with loot boxes".
The report noted that "a global consensus" on whether loot boxes are considered gambling "has not been reached, nor has a uniform approach to dealing with the issue been adopted".
5.16 The committee recommends that the Australian Government undertake a comprehensive review of loot boxes in video games. This review should be led by the Department of Communications and the Arts in conjunction with the ACMA, the ACCC, the Office of the e-Safety Commissioner, the Classification Board, and the Department of Social Services.
5.17 This review should commission further research into the potential for gambling-related harms to be experienced as a result of interaction with loot boxes; identify any regulatory or policy gaps which may exist in Australia's regulatory frameworks; examine the adequacy of the Classification Scheme as it relates to video games containing loot boxes; consider if existing consumer protection frameworks adequately address issues unique to loot boxes; and ensure that Australia's approach to the issue is consistent with international counterparts.
The committee noted that a study submitted by Dr Zendle and Cairns, which was described as "the only current empirical evidence" showing a link between loot boxes and problem gambling, was worthy of justifying further research. The report added that "analogous evidence" comparing the mechanics of loot boxes to other forms of gambling was "compelling":
Through the inquiry analogous evidence was given which compared both the mechanics of loot boxes and the potential for gambling-related harms to be experienced, to other more widely researched forms of gambling. We found this evidence compelling, particularly in light of the evidence that loot boxes utilise a number of psychological mechanisms seen in other forms of gambling such as poker machines.
The committee's report "acknowledges the community concern" around loot boxes, but argued that video games and gambling are regulated by bodies including the Department of the Communications and the Arts (which oversees the Classification Board), ACMA, the ACCC, Department of Social Services, and the Office of the eSafety Commissioner.
The strongest thread amongst the differing submissions to the commission, that loot boxes or microtransactions be acknowledged in the classification system, was not recommended by the committee.
The Australian Greens, whose Senator Jordon Steele-John chaired the upper house inquiry, disagreed with the majority findings and criticised the Labor and Coalition members of the panel for ignoring submissions to the inquiry.
"It was argued that the risk to children, young people and even vulnerable adults from developing gambling-related harms through interaction with loot boxes was of such significance that regulators should seek to either prohibit, or restrict access to games containing loot boxes," Senator Steele-John said.
In their dissenting remarks, the Greens called on the Classification Board to re-assess and rate games where their loot box mechanisms "meet the psychological definition of gambling" and can be monetised as R18. Those with loot box mechanisms that do not allow for virtual items to be monetised, but still fit the psychological criteria, should be classified as MA15.
"We do not believe that the introduction of measures such as appropriate labelling and classification are so onerous that the profitability of the video game industry would be in jeopardy," the party argued.
The Greens, however, did thank the local video game industry for the implementation of parental controls on platforms and consoles. "It is clear that there is a willingness on the part of the Australian video game industry to engage with regulators to address community concerns and to develop appropriate response," the Greens' wrote.
The inquiry drew 42 separate submissions from a range of statutory bodies, state legislators, representatives of the gaming industry, prominent individuals and academics. The strongest calls for regulation came from members of the public and academia, as well as some sectors of government, including the Queensland Attorney-General and Minister for Justice.
After being delayed twice to allow for more evidence, the federal inquiry into loot boxes will table their findings this afternoon, Kotaku Australia understands.
Representing developers and publishers, the Interactive Games & Entertainment Association argued that loot boxes were just "one form of optional" microtransactions, and that "publishers, developers and platforms typically do not allow loot boxes, virtual items or game points" to be traded on secondary markets.
"Loot boxes utilise the same “surprise and delight” mechanics that trading cards, Kinder Surprises and many other consumer products have been using for years," the industry advocates argued.
That line of argument was targeted by individuals and academics, with former Kotaku editor and contributor Jeremy "Junglist" Ray describing the Kinder Surprise or trading card comparison as disingenuous. "Often what you get back is of minuscule or zero value, and often it's a duplicate of something you've won before," Ray wrote.
"The odds of winning anything of high value are carefully calculated not only so the house always wins, but so the player feels like they've always almost won."
One common thread amongst all the industry and government submissions was a recommendation to update the classification system. The deputy secretary of Liquor Gaming & Racing NSW, Paul Newson, suggested that increasing the classification rating for games "that have gambling-like features in the game, even where the game itself does not constitute gambling, could provide stronger protections for consumers from harm".
"We recommend that games which contain paid loot boxes also carry a descriptor outlining that the game itself features gambling content," IGEA's submission said, adding that more consideration should be given to restricting games with paid loot boxes to "players of legal gambling age".
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.
This story is being updated...