In February this year, the Australian House of Representatives Standing Committee on Social Policy and Legal Affairs called for government departments to explore ways to restrict access to loot boxes for those younger than 18 years old, including through mandatory age checks. This recommendation formed part of six broader recommendations made in a Parliamentary Committee report published on 4 March 2020 following an inquiry into age verification for online wagering and online pornography. The report is titled "Protecting the age of innocence." This Report follows other recent reviews concerning young children and gaming, including the 2018 Australian Senate Inquiry Report into gaming micro-transactions which recommended prohibiting micro-transactions for chance-based items in online games available in Australia and a further comprehensive review of loot boxes in video games, but did not form a view as to whether loot boxes constituted a form of online gambling.

1. What are loot boxes and what’s the controversy?

In the context of computer and video games, a ‘loot box’ is typically a virtual item which can be redeemed in-game by a player (for example to receive further virtual items such as clothing and equipment in the game). It is generally monetised through in-game currency or more controversially, through real-world money.

The overarching issue with a loot box is that it may contain gambling-like mechanisms, leading to increased public concern over children being exposed to in-game gambling which leaves them vulnerable to gambling-related harms. As a general rule, in Australia, loot box games may not neatly fit in the legal definitions of gambling and therefore may not at this stage be directly subject to the prescriptive gambling regulations under federal and state and territory legislation.

2. Key recommendations from the Report

The Report provided the following recommendations in respect of regulating loot boxes:

  • Recommendation 5: that the Office of the eSafety Commissioner or other relevant government department report to the Australian Government on options for restricting access to loot boxes and other simulated gambling elements in computer and video games to adults aged 18 years or over, including through the use of mandatory age verification.
  • Recommendation 4: that loot boxes should be subject to appropriate age restrictions “given their resemblance to gambling” and “the potential for loot boxes to act as a gateway to problem gambling and associated harms later in life.”
  • Other commentary on loot boxes: that the restriction of access to elements of computer and video games, including loot boxes, should be done in consultation with industry and by engaging Government departments such as the Australian media regulator (the Australian Communications and Media Authority), and with reference to the classification scheme. The Committee also noted other suggestions put to them, including the placement of warnings on video games that include loot boxes.

We note that the Terms of Reference to the Inquiry did not reference loot boxes specifically and as a result, key stakeholders were not asked to provide submissions or evidence to the Inquiry.

3. What does this mean for online games available in Australia?

This Report largely echoes previous recommendations for increased regulation of gaming providers and operators of games that provide loot boxes and other micro-transaction features, and builds on this by:

  • drawing a clear link between strong identity and age verification processes and the prevention of young people engaging in problem gambling behaviors, which are tied to simulated gambling through loot boxes and its lack of regulation in Australia; and
  • calling out specific government departments (the Office of the eSafety Commissioner, the Digital Transformation Agency and the Australian Cyber Security Centre) and essentially tasking them with the responsibility to investigate the loot box mechanism and online age verification with a view to regulate restrictions on access, and to report to the Australian Government.

These recommendations are timely considering that the Australian Government is concurrently reviewing submissions to its proposed new Online Safety Act, which proposes enhanced powers of the eSafety Commissioner with the aim of expanding online safety laws to prevent online harm. The Australian Government has also opened a consultation on Australian classification regulation, with a report to be provided to the Minister by April this year. However, these reviews are being conducted in parallel (and without overlap) with the Committee’s Report and its recommendations.

Find more information about the proposed new Online Safety Act.

Find more information about the Australian classification review.

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