Senate Inquiry Calls For 'Comprehensive Review' Of Loot Boxes

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".

Recommendation 1

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.

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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".

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This story is being updated...


Comments

    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.
    WHAT!!!! No they are not regulated by those bodies, cause if you asked any of them (as a member of the community) they said it wasn't their concern or they are looking at it... and part of the confusion was who's jurisdiction is it if gambling is in the video games industry, is it the gambling regulator, the games regulator, or the consumer regulator.

    ... at the end of the day, it should of defaulted to the ACCC and they should of been given authority under all the consumer protection laws (including gambling) to go after them.

    Its the jurisdictional mess that is one of the core issues here, and the lack of legal power to clearly define and penalise those activities.

    Gambling Laws are just a specific industry type of consumer law, the protects the gambling industry but also protects gamblers (the consumer) from predatory and criminal activity in the industry. As a consumer protection / industry law its pretty robust and strong. But it can't be applied to loot boxes, cause they hide behind the fact they are computer games... but the computer and consumer regulators just don't have the same power (as the gambling regulator does) to point at a particular behaviour (like unfair competition, odd fixing, rigging, underage, predatory marketing, unlicensed, hidden accounting) and charge them for violations.

    Adjusting or telling the current regulators "DO YOUR JOB" is not enough, cause they don't know its their job. I asked the ACCC, Gambling Queensland, ACMA, The Queensland Premier and the Prime Ministers office... who's jurisdiction does this belong too??? They all deflected it, each one of them denied they needed to do more cause it was outside their own legal charters/regulations, but there "looking at it".

    They need new tools and powers to handle this. A New Microtrasaction Law that is on par with gambling laws they serve both to protect retail and consumers alike from malicious practices. Covering not only lootboxes, but all microtransactions in retail that requires business to be licensed, auditable, and comply with rules like not selling to minors, comply with advertising/marketing rules (no more ingame advertising for one), no match fixing or unfair competition, and no items can be exclusive to lootboxes and must also be purchasable as a seperate item.

    Good. While it won’t kill loot boxes, it’s about time they got a shake up.

      Don't shake them man, might brake the loot...

    I guess this is another reminder that the IGEA is not on the side of consumers.

    While we might have had common ground during the computer game R18+ classification changes, if the interests of consumers and game developers diverge they won't be on our side.

      Yup. True colors shown, right there. Lost all respect for those dodgy fuckers.

      It becomes very clear from their complete dismissal of this problem that they were only ever on our side where it meant more ways to get their hands into our pockets.

      Just disgusting.

      ... how was that ever a question?

      From their website:
      "IGEA (Interactive Games & Entertainment Association) is an independent industry association representing the business and public policy interests of Australian and New Zealand companies in the computer and video game industry."

        It shouldn't be a surprise. But I see a lot of people on these forums categorising companies as "good" or "bad", rather than "having interests that temporarily align with ours" or not. That kind of emotional investment can blind you when interests diverge.

    Slow clap to EA...

    Just like Kinder Surprise... you know, if they had flashing lights, dramatic sounds, and it took 6 hours to open an egg unless you paid even more.

    But apart from that, just like Kinder Surprise.

      and had to pay 80 AUD for a kinder surprise license before you could actually buy a kinder surprise.

      Or if half the toys were actually lumps of coal. Or if when you got a duplicate toy, it would automatically transform into a token worth about 100th of a new egg.

      Just like Kinder Surprise... you know, if they had flashing lights, dramatic sounds, and it took 6 hours to open

      Stop right there. I'll take five. That sounds like a fun and occupying afternoon for the kids.

        Sorry, you need in-egg currency to buy Kinder Krates. Please buy 500 Kindineros for $29. *Kinder Krates require 550 Kinderos each.

        (If it's not a direct purchase, we can obfuscate that we don't directly sell gamble packs.)

      Be fair. You can eat a Kinder Surprise. They're so synonymous with the surprise toy inside that people tend to forget they're made of delicious chocolate.

        Which is funny, since in the US they're banned because people will eat the toy.

      Took 6 hours to buy, not open.

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