Are Loot Boxes Gambling? Australian Bill Proposes Adults-Only Classification

The question surrounding whether in-game loot boxes constitute gambling has started to come up increasingly often in the gaming community, and in governments around the world. Now, an Australian Member of Parliament has proposed a bill that, if passed, could potentially restrict the sale of loot boxes only to those over legal age.

Loot boxes in video games are consumable items that need to be purchased with real money, and yield a random selection of virtual items.

“By tempting players with the potential to win game-changing items, encouraging risk-taking for possible reward, delivering random prizes on an intermittent basis, and encouraging players to keep spending money, loot boxes give rise to many of the same emotions and experiences associated with poker machines and traditional gambling activities,” reads the bill proposed by the MP Andrew Wilkie.

“This is especially concerning as many games which contain these features are popular with adolescents and young adults. Despite this, loot boxes are not currently required to be considered in classification decisions nor are games required to advertise when they contain this feature.”

Australia isn’t the first country to come up with this notion. Countries like Belgium and the Netherlands have already passed laws banning the sale of loot boxes, but this has resulted in further frustration for their gamers. In May 2022, Activision Blizzard announced that they would not release the new Diablo Immortal game in either of those two countries on account of their gambling restrictions on video games.

Wilkies’ proposal addresses this too, with the lends of a possible human rights implication. By limiting certain games to players over 18, he says, it “restricts freedom of expression as it provides for classification and restriction of access to certain content.” However, the intent of the regulation is “protection from harm”, that is, “restricting underage access to gambling-type gameplay.” The bill would not seek to impose a blanket ban on such games, but just on certain features that would be considered akin to gambling.

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© Blizzard Entertainment

A Similar Proposal Came Up In The UK Government, Was Eventually Dismissed

The chat around in-game reward systems took root in the UK government for a while as well. The House of Lords tried to shut them down, arguing that they constituted gambling. The country’s Gambling Commission disagreed and the UK’s 2005 Gambling Act remained unchanged

“While many loot boxes share some similarities with traditional gambling products, we view the ability to legitimately cash out rewards as an important distinction,” they said in their report. “In particular, the prize does not normally have real world monetary value outside of the game, and its primary utility is to enhance the in-game experience.”

Video game publishers are still answerable to the commision though, and will be expected to bring in “sufficient measures” to safeguard players from financial harm. This includes providing complete clarity on the odds of securing certain items from loot boxes.

“The Gambling Commission has shown that it can and will take action where the trading of items obtained from loot boxes does amount to unlicensed gambling, and it will continue to take robust enforcement action where needed,” read the commission’s report. “The government plans to launch a video games research framework later this year, which it hopes will work with academics and people from the industry to improve the available data. It said there were “limitations in the evidence base regarding loot boxes”.

UK Study Says Lootboxes Mimic Real-Life Gambling Systems, Potentially Harmful

A recent study conducted in the UK pointed out that loot boxes can be bad and cause financial and emotional harm to young people – essentially stating that because children don’t understand the value of money and could find it difficult to keep track of their spending habits. Failure to acquire a certain item after multiple purchases could lead to compulsive spending, and a misplaced sense of frustration. It also points out “clear parallels between the visual and auditory design of chance-based mechanisms” in virtual games as well as real-life gambling systems, and these appear “highly alluring” to children, leading them to spend more money on such things than they’d initially intended.

The study suggested that the gaming industry appoint an independent regulator to ensure that gaming is safe for players of all ages. In-game rewards involving real money must include age restrictions, and it also calls for the removal of in-game currency that can be bought with actual money – rather, items should be purchasable directly with the country’s local currency. It also suggested that games include in-game trackers and impose spending limits that help players keep track of their purchases.