Loot boxes in video games have been placed squarely under the microscope of the Federal Government, with the announcement of a senate inquiry into the matter.

The senate inquiry will investigate “whether the purchase of chance-based items, combined with the ability to monetise these items on third-party platforms, constitutes a form of gambling.”

It will also assess the current measures in place protect consumers in such “chance-based” transactions.

The inquiry will be referred to the Environment and Communications Reference Committee.

A feature in many popular online games, “loot boxes” are in-game containers with randomised rewards.

In some cases, these loot boxes can be purchased with real money.

Mainstream games such as FIFA 18, Overwatch and CS:GO are all examples of games with loot boxes.

The senate inquiry follows a motion moved by Greens Senator Jordon Steele-John.

“An incredible number of popular big name titles incorporate these kinds of monetised game mechanics, not as a way of improving in-game experience, but as a way of simply prying more money off of their players,” he said.

“We know game developers hate them, we know players hate them because they have a negative impact on the game experience, and we know that they urgently need regulation.”

In recent times there has been considerable debate around whether loot boxes constitute gambling.

Earlier this year both Belgium and the Netherlands banned them after declaring them to be gambling, while the US and UK have said they are not.

Locally, the Victorian Commission for Gambling and Liquor Regulation weighed in on the issue last year when strategic analyst Jarrod Wolfe noted on Reddit that loot boxes “constitute gambling by the definition of the Victorian Legislation.”

Star Wars Battlefront II

EA’s release of Star Wars Battlefront II last year served as a catalyst for much of the recent furore.

The game was designed in such a way that that it was difficult to unlock certain in-game characters and abilities without purchasing loot boxes.

This “pay-to-win” model received such vicious backlash that EA were soon forced to remove in-game purchases.

“We’ve heard the concerns about potentially giving players unfair advantages. And we’ve heard that this is overshadowing an otherwise great game…We hear you loud and clear, so we’re turning off all in-game purchases,” said DICE (subsidiary of EA) CEO Oskar Gabrielson following the controversy.

Loot boxes have since been added back to the game but only for cosmetic upgrades.

Putting it to the test

Australian academics Aaron Drummond and James Sauer have analysed loot boxes in 22 games against the psychological criteria for gambling, in a recent paper that was cited in the senate motion.

They found that loot boxes in 45% of the tested games could be considered gambling.

“In the way they encourage and sustain user engagement, loot box systems share important structural and psychological similarities with gambling,” the paper said.

The paper also expresses concern over the fact that these games allow and sometimes encourage underage users to engage in paid loot box purchases.