The bill would be centred around video games that feature ‘loot boxes‘ that players gamble to win virtual assets, with or without the use of real money.

If this bill is to be passed by parliament, it would regulate game classifications and require all games that feature loot boxes be clearly labelled and carry R18+ classification.

“The R18+ classification would align with the fact that you must be 18 to legally gamble,” Wilkie said, in his address to parliament on Monday.

“One mother then told me about her then 17-year-old son spending three and a half thousand dollars in just eight weeks on loot boxes.

“Now almost 24, her son still spends money on the in-game platform, Steam — at times haemorrhaging hundreds of dollars a day.

“The family, she says, has been through hell.”

Wilkie then went onto quote the lady further by adding that she believes “the brain of a gamer is similar to that of a heroin addict, it’s no different, it’s a dopamine hit”.

Once Wilkie started to address the speaker and the rest of parliament, he added that he does not want to see our children groomed into gambling by these loot boxes.

“Speaker, clearly we cannot continue to let our children to be groomed to future gambling in this way,” he said.

“No wonder governments around the world are beginning to wise up and take action, with loot boxes already banned in several countries around the world as pressure rises for regulation in many others.”

The other countries that Wilkie refers to include Belgium and the Netherlands, which now have blanket bans on any video game that contains loot boxes.

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It also illustrated a link between high usage of in-game rewards and behaviours commonly associated with problem gambling.

The Centre for Gambling Research at the University of British Columbia surveyed 257 people about their online gaming activities and their awareness of loot boxes.

SEE ALSO: TRIBAL CASINO AT WAR WITH VALVE OVER LOOT BOXES

Two distinct groups were surveyed: one featuring 144 adult gamers from across North America, the other made up of 113 undergraduate students at UBC.

Some 86.2 per cent of the undergrads equated loot boxes with gambling, while 68.1 per cent of the grown-up gamers agreed.

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Researchers also discovered that 94.8 per cent of the students had opened a loot box in a game and 88.9 per cent of the other group had done the same.

Participants were also asked whether they had spent real money on loot boxes, with 60.3 per cent of the UBC group and 49.3 per cent of the others answering in the affirmative.

The study was published in the Addictive Behaviors peer-reviewed journal last month.

Gabriel Brooks, the paper’s chief author, said the study also unearthed a correlation between a person’s gaming expenditure and their likelihood of associating that activity with gambling.

“Typically we did have an association where the more one spent monthly, the more likely they were to endorse questions that associated with problematic gambling behaviour and/or problematic or risky loot box use,” he told reporters in Vancouver.

Brooks admitted the findings are far from conclusive and more research is needed before any serious campaign for legislative changes can be made.

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The Native American Quinault nation filed a lawsuit in the state of Washington against the gaming company, stating they do not have the licence to operate gambling in the state of Washington, which they allegedly still operate in a disguise with their in-game skins.

The Quinault Indian Nation owns and operates the Quinault Beach Resort & Casino, which has generated revenues which the tribe uses to improve the lifestyle of the tribe members.

In order to protect the integrity of its gaming license, the Quinault Nation has launched proceedings against Valve, the latest in a growing line of legal battles, this time specifically targeting Valve’s well-known CS: GO loot boxes.

The Quinault Nation’s lawsuit claims that the mechanic behind CS: GO loot boxes too closely mimics the feel of a slot machine. Additionally, the skins obtained through loot boxes hold a monetary value, which under Washington state law means Valve would need a gambling licence, which they do not have.

This is not the first rodeo for Valve when it comes to appearing in court because of their CS: GO loot boxes i.e. skins.

In 2016, Valve had to halt their so-called “gambling” of skins through Steam after an order from the Washington State Gambling Commission. Back then, their spokesperson made it clear that their API nor their user agreements allow them to run any gambling business. The same year Valve faced another lawsuit, which just like the first one, failed to “hold any water”.

But, as they say, third time’s a charm.

While superstition is not something Valve should be afraid of, it’s the recent events in the world of video games and gambling that should grab their attention.

Valve is not alone when it comes to being accused of gambling ties to their loot boxes. Most recently, we saw Epic games forced to remove blind loot boxes from Fortnite after a lawsuit which took place earlier this year.

The lawsuit against Valve is 24 pages long, and urges Valve to stop offering the “crate opening online slot machine” until the examination from Washington Gaming Commission, who will then determine if a gambling licence is needed. For those who want to go through the lawsuit themselves, it can be found at the following link.

Being that it’s a fresh blow delivered to Valve, there has not yet been an official statement from the company on the topic. They have managed to fight off the lawsuits regarding their CS: GO skins “gambling” before, but the question remains; can they do it for the third time?

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The Australian Environment and Communications Committee’s report into video game loot boxes was delivered to the Australian senate last week, noting that a consensus around the world had not been reached on whether the practice should be considered gambling.

The Committee essentially recommended that no action be taken and that loot boxes not come under harsher regulatory framework moving forward.

The senator who chaired the inquiry, Greens Senator Jordon Steele-John, said he disagrees with the committee’s finding.

“Many loot boxes utilise a number of psychological mechanisms commonly seen in other forms of gambling, including variable ratio reinforcement schedules, entrapment and ready and constant availability,” Senator Steele-John said.

What exactly are loot boxes?

“Furthermore, 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.

“As chair, I sought to follow this evidence and recommended the Parliament take action to ensure that no young person who plays video games is exploited by gambling-like mechanisms. Labor and the Coalition combined to outvote me in this effort and replace the committee’s considered and appropriate recommendations with a single watered-down recommendation for a government review.”

The news comes as the USA begins to investigate the practice, that has already gone through significant debate in Belgium, UK, Ireland and most of Europe.

We will continue to bring you news as it comes to hand.

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The United States Federal Trade Commission has announced it will investigate video game loot boxes — the source of much controversy over the last few years in online gaming.

A ‘loot box’ is a digital package that players can buy, containing mystery in-game items. There is an argument in some countries that they encourage gambling in young, sometimes underage, susceptible customers.

FTC chairman Joseph Simon address the the United States Congressional Oversight Committee this week, confirming that his agency would look into the controversy, following an attack from Democratic Senator Maggie Hassan, who went public in recent weeks, calling loot boxes an ‘endemic’ that is providing a direct link to gambling for children.

Hassan referenced a report from the UK Gambling Commission that highlighted 31 per cent of its children had opened a loot box in a video game.

Despite the UK’s Gambling Commission report, it does not constitute loot boxes as gambling, but in other countries, like Belgium, they are deemed unlawful.

Giant video game company Electronic Arts has denied loot boxes are gambling and refused to remove the random player packs from its most popular title, FIFA 19, triggering a potential show down in the Belgian court.

Loot boxes are worth a reported $30 billion globally and are set to exceed $50 billion by 2022 according to a report by Juniper Research.

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He noted that his declaration has no “legal effect”, but is based on solid law.

Loot boxes have become a subject of controversy around the globe, with several governments trying to determine whether it is a form of gambling or not.

Loot boxes in essence are in-game purchases which allow players to buy or win surprise upgrades which can often lead to players spending big dollars on trying to secure the item they want. Trading and on-selling loot box items has also become commonplace.

Countries like Belgium and Australia classify loot boxes as gambling while France and New Zealand say they are not gambling.

“Where a game offers the possibility of placing a bet or the taking of risk for financial reward within the game, then, in my view it must be licensed as a gambling product,” Stanton said.

“To offer gambling products in Ireland, a license is required under the Betting Acts 1931-2015 or the Gaming and Lotteries Act 1956.

“The Revenue Commissioners are the primary responsible licensing authority under both Acts, with some involvement of the Minister for Justice and Equality.

“However, it should be understood, that if a game offers in-game purchases – be they loot boxes, skins, etc. – which are promoted to gamers as increasing their chances of success, such purchases are essentially a commercial or e-commerce activity. This activity would fall within normal consumer law.”

The loot boxes contain virtual items that allow game characters to have the edge over other characters. However, it is being classified as gambling by some countries because they are purchased without the buyer knowing what it contains.

The gaming giant Electronic Arts in resistance to rulings countries have made which classified loot boxes as gambling have refused to comply with the law changes in those countries. These countries, have asked video game manufacturers to remover loot boxes but Electronic Arts have not complied.

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Since ruling EA’s controversial practice illegal months ago, developers like Blizzard, Valve and Take-Two had removed loot boxes from their games, but Electronic Arts has not budged.

Big titles including; Star Wars Battlefront 2, FIFA 18, Overwatch and Counter-Strike: Global Offensive were all found to be in violation of the country’s gambling legislation.

Perks collected in loot boxes are almost always random and players don’t know what they’re buying. The Belgian government considers them a game of chance and therefore subject to gambling laws.

Following the company’s refusal to heed to the commission’s ruling, Belgium’s public prosecution office has begun its own investigation.

Given the controversy with loot boxes around the globe and arguments that they are creating a gambling pathway for underage customers, this could be a landmark case — one in which Electronic Arts may in fact welcome for final clarification.

During a conference call with share holders in May of this year, Electronic Arts Chief Financial Officer, Andrew Wilson, stood firm on the company’s position — that loot boxes in FIFA are not a form of gambling.

“Firstly, because players always receive a specified number of items in each pack, and secondly we don’t provide or authorize any way to cash out or sell items or virtual currency for real money,” Wilson said.

“We’re working with all the industry associations globally and with regulators in various jurisdictions and territories, [and] have established that programs like FIFA Ultimate Team are not gambling,” Wilson said at the time.

Loot boxes continue to make headlines throughout the gaming world.

The biggest market in the world, the United States, has a number of state legislators and even the US Senate investigating the issue, while the UK and New Zealand have given the practice the tick of approval.

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The report put the business models and industry sales of video games with loot boxes under the microscope, and showed a small number of players are contributing the most to the game’s revenue solely through the purchase of loot boxes.

In gambling terms, these players are called ‘whales’ and essentially keep the loot box ecosystem afloat with their high-spending, while the majority of players don’t engage with the system.

The Youth Protection Commission of the State Media Authorities believes loot boxes are preying on young children and are promoting gambling to gamers who don’t know any better, turning them into whales without parents realizing.

“It think it is conceivable that loot boxes violate existing regulation in place to protect against promoting gambling to children and adolescents,” said Wolfgang Krei?ig, chairman of the Youth Protection Commission.

If the plan for reform goes ahead, the Youth Commission could hand out fines and prohibit manufacturers from offering games with loot boxes elements unless they modify the game for the German market.

Germany’s lawmakers will decide whether a blanket ban is on the cards for games with lootboxes in March, and their decision could influence other countries grappling with the issue.

Why are lootboxes a problem for esports?

Given many of the world’s most popular esports titles feature loot boxes, potential restrictions could drastically affect local and international esports circuits.

For those who don’t know what they are, lootboxes are virtual boxes which contain randomized digital rewards which players can use in-game.

Counter-Strike: Global Offensive, League of Legends, Overwatch and PlayerUnknown’s Battlegrounds are just some of the big name esports games with loot boxes or optional microtransactions incorporated into their general gameplay, using these systems to award players with cosmetic items such as character skins and weapon skins.

What is irking regulators in Germany and around the world is that these virtual items are obtained by chance and you cannot buy what you want individually, leading to arguments about whether these games should be classified as gambling.

While none of these rewards are essential, the rarity of these advertised digital items heavily encourage players to make additional purchases of loot boxes for a chance at obtaining the items they want, without guarantee of getting them.

Some esports organizations also regularly team up with the game developers behind each esport to release exclusive team weapon skins, encouraging fans to purchase loot boxes for a chance to wear their favourite team’s colours in-game.

For those who don’t believe loot boxes are significant enough for such intense scrutiny, just know Overwatch recorded over $1 billion in revenue last year, 80 per cent of it from digital channels and in-game content sales which jumped 25 per cent year-over-year.

Why? Because of the massive 30 million strong fanbase spending money on lootboxes and cosmetic items.

At present, the Belgian Gaming Commission has classified loot boxes in video games such as Star Wars Battlefront II as gambling.

However, the United Kingdom Gambling Commission has dismissed loot boxes as a form of gambling, which is a big blow to those pushing for change given the UKGC’s immense influence on the international regulated gambling industry.

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But the products they are gambling on aren’t blackjack or poker. Instead, they are betting on skins.

Skin betting has been on the UKGC’s radar for some time now, which the regulator believes is more problematic than loot boxes in video games.

Skins betting sites allow players to gamble with virtual items, such as guns or knives, you can win in video games for real money.

A few weeks ago loot boxes in video games, which are randomised items you can purchase in games, made headlines as the Belgian Gaming Commission said they count as a form of gambling.

While other regulators around the world agreed, the UKGC said loot boxes do not meet the definition of gambling since you cannot exchange them for real money.

The UK gambling regulator did note that skin betting counts as gambling, identifying several sites where players can trade and sell skins, as well as gamble them for the chance to win better ones.

Critics argue skins betting is a form of unlicensed gambling since players can exchange them for real money.

“Because of these unlicensed skin betting sites, the safeguards that exist are not being applied and we’re seeing examples of really young people, 11 and 12-year-olds, who are getting involved in skin betting, not realising that it’s gambling,” UKGC CEO, Sarah Harrison, said.

“At one level they are running up bills perhaps on their parents’ PayPal account or credit card, but the wider effect is the introduction and normalisation of this kind of gambling among children and young people.”

In an unprecedented move, the UKGC prosecuted owners of an unlicensed gambling website connected to a video game earlier this year.

The two owners were fined ￡91,000 and ￡164,000 under the UK’s Gambling Act for the FUT Galaxy website which allowed players to gamble virtual currency connected to the FIFA video game.

Harrison said the UKGC looked into taking criminal action, but limitations prevented it from proceeding. She added that many sites are out of the regulator’s jurisdiction, too.

The BBC spoke to one young man who began skin betting when he was 15, resulting in a loss of around ￡2000 in the four years that have followed.

“I’d get my student loan, some people spend it on expensive clothes, I spend it on gambling virtual items,” Ryan Archer told the BBC.

“There have been points where I could struggle to buy food because this takes priority.”

Archer said he would gamble on unlicensed websites to try and raise money to buy skins that he could not afford.

“It’s hard to ask your parents for ￡1,000 to buy a knife on CSGO (Counter Strike: Global Offensive), it’s a lot easier to ask for a tenner and then try and turn that into ￡1,000,” he said.

Players can exchange real money for skins (modified weapons) in CS:GO, and there are several gambling sites connected to the game.

“You wouldn’t see an 11-year-old go into a betting shop, but you can with this, there’s nothing to stop you,” Archer added.

The report will be published by the Office for National Statistics on Tuesday.

Skin betting sites vs licensed gambling sites

Online betting sites accept wagers on esports. The difference is these sites offer properly regulated markets where you bet on the outcome of esports tournaments, not gamble for upgraded digital weapons. They’re also licensed by gambling regulators which ensure the bookmakers have the appropriate responsible gambling measures in place, including preventing minors from gambling. We recommend checking out William Hill for a great selection of esports betting markets if you’re over 18.

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The decision contradicts that of the Belgian Gaming Commission (BCG), which found that the video game feature recently included in the new Star Wars Battlefront II does count as gambling.

The UKGC Executive Director, Tim Miller, released a statement explaining that the regulator does not see loot boxes as gambling as you can’t exchange the items for real money, as per British law.

“A key factor in deciding if that line has been crossed is whether in-game items acquired ‘via a game of chance’ can be considered money or money’s worth,” Miller said in the statement.

“In practical terms, this means that where in-game items obtained via loot boxes are confined for use within the game and cannot be cashed out it is unlikely to be caught as a licensable gambling activity.

“In those cases, our legal powers would not allow us to step in.”

The UKGC released a position paper in 2016 identifying the potential risks associated with loot boxes. However, it refuses to classify loot boxes as gambling, even after a petition with 10,000 signatures, called “Adapt gambling laws to include gambling in video games which target children”, forced the UKGC to review its position last month.

The UKGC has stepped in when it comes to third parties specialising in skins gambling and prosecuted operators that allowed gamers to bet on virtual currencies using real-world value.

However, the statement suggests it may look into video game regulation in the future.

“Many parents are not interested in whether an activity meets a legal definition of ‘gambling’,” Miller said in the statement.

“Their main concern is whether there is a product out there that could present a risk to their children.

“We are concerned with the growth in examples where the line between video gaming and gambling is becoming increasingly blurred.

“Where it does meet the definition of gambling it is our job to ensure that children are protected and we have lots of rules in place, like age verification requirements, to do that.”

Miller goes on to explain that parents still expect the regulator to put protections in place for products that do not meet the meaning of gambling.

“We have a long track record in keeping children safe and we are keen to share our experiences and expertise with others that have a similar responsibility,” Miller said.

“Whether gambling or not, we all have a responsibility to keep children and young people safe.”

Loot boxes aren’t exclusive to Battlefront II, with players eligible to earn loot boxes in Overwatch too. However, the Electronic Arts’ game has caused controversy since you can purchase the loot boxes with real money.

The BCG recently investigated and declared all in-game purchases in video games as harmful, and is seeking to ban loot boxes.

US lawmakers have taken the same stance, while Australian regulators have clashed, with Victoria siding with the BCG and Queensland siding with the UKGC.

EA released a statement explaining that loot boxes “are not gambling” as “the gamer makes the decision.”

Our opinion: How does the UKGC draw the line?

The UKGC’s stance is an interesting one. In recent weeks the regulator has been cracking down on online casino operators featuring cartoon graphics that could appeal to children.

These graphics reportedly attract children to the gambling sites. However, these sites have age verification tools preventing children from playing the games for real money. If they do happen upon the site, they can only play these games for play money.

Since the UKGC seems to define gambling as an activity which only takes place if players can cash out, it is somewhat confusing why it targeted licensed casino operators in that respect.

The UKGC needs to make a clear stance on what gambling means, especially when it has to do with children.

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