Social Games, Loot Boxes Under the Microscope in Australia

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Social Games, Loot Boxes Under the Microscope in Australia

Social games and loot boxes have received mixed reactions globally, with some countries calling them forms of gambling and others unsure what to make of them. Now they’re becoming targets for Australian lawmakers.

Australian members of parliament
Australian members of parliament
Australian members of parliament participate in a recent session. The government is launching an inquiry to determine whether social games and loot boxes should be considered gambling. (Image: Yahoo News)

The Guardian reports that Australia’s Parliament is establishing an inquiry to take a closer look at how to define both social games and loot boxes. The former are similar to slot machines but have no cash rewards, while the latter are add-ons such as avatars, in-game weapons and characteristics for use in video games.

The debate over whether the two are a type of gambling has been going on for years, and there is still no consensus. This is most likely because those making the decisions often don’t understand the way they work.

The Gaming Conundrum

With social gaming and loot boxes, there is a monetary component and an uncertain result. Social games could hit jackpots like slot machines and loot boxes could deliver items that can greatly benefit the player.

However, the prize in both is never known beforehand (with the exception of some newer loot boxes and their equivalents, such as player cards in some sports video games). Because consumers can pay to play social games, including Playtika’s Slotomania or SpinX’s Cash Frenzy, or to purchase loot boxes, some rule-makers have decided that they’re a form of gambling because the outcome is unknown.

However, making a purchase is not a requirement. It is possible to acquire virtual tokens for social games slots and loot boxes by playing the games. Therefore, as other jurisdictions have determined and because there’s no tangible cash value, these are not forms of gambling.

Under current Australian gambling laws, the absence of a cash value means these are not gambling. As such, they are in the clear and can be part of the gaming landscape without complying with regulations.

That could change, though, as the parliamentary inquiry runs its course. In light of the dedicated focus on gambling and gambling harm in the country, anything that hints at being part of the ecosystem is under fire.

Given the state of problem gambling discussion in the country, it’s surprising that lawmakers haven’t acted already. A study the government commissioned four years ago concluded that there was a link between loot boxes and problem gambling.

No Clear Solution

It’s obvious that loot boxes and social games are causing a lot of grief for countries everywhere, but at the political level. The lack of a consensus on what they are makes it difficult to formulate adequate legal frameworks.

There have been lawsuits against social games companies across the US, including in Washington, California, New Mexico and more. Some have found success for the plaintiffs; others have found success for the developers.

Across Europe, there’s no consensus, either. Belgium says loot boxes equate to gambling, the Netherlands and the UK say they don’t and Spain still isn’t sure.

What’s clear, though, is that the markets mean big business. Social gaming was worth over $2.5 billion to Playtika last year, according to The Guardian, and some estimates put the global value at as much as $60 billion. That makes facing a $3.5-million lawsuit for potentially breaking the law a gamble worth taking.

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