National Classification Scheme – proposed federal reforms

On 29 March 2023, the Albanese Government announced its intention to reform the National Classification Scheme (Scheme).  While computer and online games often seem harmless and fun, the proposed reforms are aimed to address concerns that computer and online games simulating gambling-like content are not effectively regulated.

What is the National Classification Scheme?

Created by the Intergovernmental Agreement on Censorship, the Scheme monitors which films, computer games, and certain publications are displayed, demonstrated, sold, hired, advertised, or publicly exhibited, ensuring they are classified accordingly.  All Australian states and territories partner with the Commonwealth in this Scheme.

Classification decisions are made by the Classification Board (Board) by assessing content and applying the provisions of the National Classification Code.  Here, the Board decides on the rating of each film, game, or publication.

The Scheme guides state and territory governments in enforcing laws and outlines potential offences and penalties for any breaches.

What are the proposed reforms to the Scheme?

In a modern digital landscape, the potential exposure of young people to gambling-like experiences is far more prevalent than that of previous generations.  Unlike today, exposure to commercial gambling required practices, such as travelling to a traditional land-based venue, compliance with dress codes for the venue and providing age-related identification for entrance into the venue.

Therefore, the proposed reforms announced by the Albanese Government are in relation to the following changes:

• a new mandatory minimum classification of R 18+ (restricted to 18 years and over) for games that simulate gambling-like content;
• a new mandatory minimum classification of M (not recommended for individuals under 15 years of age) for computer games that contain paid loot boxes or other in-game purchases linked to chance; and
• new definitions for terms contained in the proposed reforms, such as ‘in-game purchases linked to elements of chance’, ‘loot box’, ‘real-world currency’, and ‘simulated gambling’.

Is there a need for reform of the Scheme?

A media release from the Albanese Government alongside the release of the Stevens Review outline the objectives underlying classification reform.  The Stevens Review states:

“There is a need for a future classification regulatory framework that:

• Is able to adapt to new technologies, market developments and emerging issues of community concern.
• Provides clear, useful and easily accessible information to enable consumers to make informed media choices for themselves and for their children.
• Has evidence-based classification guidelines that are regularly updated taking into regard both expert knowledge and Australian community standards.
• Enables classification arrangements that are efficient and cost-effective for industry, that are consistent across content platforms and which have the confidence of the community.
• Enables timely decision-making on changes to the classification scheme”.

In addition, a review conducted by the Australian Gambling Research Centre found evidence of:

• Loot box engagement, including viewing, opening, and especially purchasing, is associated with problem gambling and internet gaming disorder.
• Simulated gambling engagement, especially in-game purchases in social casino games, is associated with problem gambling.
• Other in-game purchases (not including expenditure on loot boxes or in simulated gambling games) are associated with problem gambling.

How do computer games simulate gambling?

Interactive features within games that resemble gambling activities are referred to as ‘simulated gambling’.  These computer games can imitate various core features of commercial gambling, such as the look, sound and activities, however, do not grant players with the opportunity to lose or win real currency.

According to the Stevens Review, there are two distinct types of games that involve simulated gambling:

• “‘Social casino’ games are simple app games which simulate real-world casino games.
  Simulated gambling is the entire focus of these games.
• Other games that have a broader storyline occasionally also contain simulated gambling as a minor feature.”

Simulated gambling is considered by the Board under the category of ‘Themes’  but is not specifically addressed in the current Guidelines for the Classification of Computer Games.

What exactly is a “loot box”?

A loot box (Loot Box) is a consumable virtual item or prize that requires real currency to be paid, or alternatively be obtained for free via gameplay.  Loot Boxes award players with modifications or functional items, such as weapons or cosmetic items, that can be used to enhance a gaming experience.  The items players receive from Loot Boxes are often random or chance-based.

The proposed reforms come as a result of concerns that Loot Boxes do not currently fall within the definition of a “Gambling Services” under the Interactive Gambling Act 2001 (Cth).

For more information on Loot Boxes, see Dundas Lawyers’ article on Australian legislation proposed to address loot boxes in video games.

Links and further references

Further information on the proposed reforms to the Scheme

Media release announcing the reforms – Albanese Government

Review of Australian classification regulation (the Stevens Review)

Legislation

Guidelines for the Classification of Computer games 2012

Interactive Gambling Act 2001 (Cth)

Intergovernmental Agreement on Censorship

National Classification Code

National Classification Scheme

Further information about the National Classification Scheme

If your business needs advice on how the potential changes to the National Classification Scheme will affect you, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

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