Online Social Games – The Australian
Position
Date
: 16 October 2013
Author/s : Jamie Nettleton, Karina Chong
Introduction
Casual gaming
In recent years, the increasing popularity of social media
and social networks has led to the increased availability to
Australians of a “new” genre of games that have become
integrated into those networks. These games, commonly
known as online social games, add a new social experience
to gaming. In many respects, they are based on the same
easy to learn and casual play model as many traditional
games.
Online social games are designed generally to be played
purely for entertainment on a casual basis and not for
long, intense periods. Some studies have suggested that
the typical online social gamer is looking for a “pleasant
boredom through repetitive activity with low suspense,
low cognitive load and low emotional intensity.”2
The growth of the online social games industry has led to
some concern, due to their similarity with certain types of
interactive gambling services which are illegal in
Australia. However, there is a clear legal distinction
between the two.
Online social games usually involve simple step-by-step
tutorials and repetitive tasks and are easy to play even on
mobile smart-phone platforms. This ties into the casual
gaming aspect of online social games.
Easy-to-learn, easy-to-play
Free to play
What are Social Games?
Social games are still a relatively new concept and, as
such, there is not yet any universally-agreed definition.
However, there are some features that characterise an
online social game.1
The large majority of online social games, particularly
those available on social network sites, such as Facebook,
are available on a free-to-play basis. That is, players only
need to download the application and there is no cost to
play the game.
Virtual currency
Based on social platforms and communities
One of the key features is that an online social game is
offered and hosted on social networking platforms (such
as Facebook) or on online social gaming platforms (such
as Xbox Live).
Available for access readily through mobile phone
applications and mobile social networks
As mobile technology develops, more online social games
are being offered on mobile devices such as mobile
phones and tablets. Social networks such as Facebook,
are also becoming more accessible on mobile devices. As
a result, online social games are more readily available,
enabling players access to online social games wherever
and whenever they wish to play.
Prominent social aspects and heavy emphasis on
social interaction
Another key feature of online social games is that they
allow players to communicate and interact directly with
one another, creating an awareness of another player’s
presence, actions and achievements and providing the
ability for multiple players to play at the same time.
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Many of the games offer the opportunity to make in-game
purchases to enhance the game and entertainment. For
example, popular Facebook game, “Farmville”, allows
users to extend play by purchasing more land while, in
Smurfs’ Village, players can use real money to purchase
“Smurfberries”, the form of virtual currency that allows
players to purchase game items.
Concerns about Online Social Games
Online social games are legal in Australia. However,
concern has been expressed about certain online social
games that feature a casino-style or gambling-like
content.
Over the past few years, Senator Nick Xenophon has
stated that online social games constitute gambling and
are therefore prohibited by the Interactive Gambling Act
2001 (Cth) (the IGA). Senator Xenophon has stated that
these games are “identical to poker machines and they
are easily accessible by young people – habituating them
to electronic gambling, particularly poker machines.”3
Accordingly, it is necessary to consider the legal status of
these games by reference to the current legal framework.
1
Online Social Games are not gambling
The supply and promotion of an online or “interactive”
gambling service is prohibited expressly by the IGA. To
fall within the scope of an interactive gambling service,
the “game” must:
confirmed that “the distinction between these [online
social] games and gambling is that there is no cash prize
on the outcome and no cash at risk during the game.”6
This reiterates the Australian position that online social
games do not constitute gambling and are not prohibited
by the IGA.
1. Be a game of chance or of mixed chance and skill; and
2. Involve consideration; and
3. Be played for money or anything else of value.
The language of the IGA suggests that, if any one or more
of these elements is missing, then the game does not
constitute an interactive gambling service.
One major concern in relation to online social games that
exhibit casino or gambling-like elements is that real
money can be used to purchase virtual currency which can
then be used to extend play or to receive an in-game
reward. However, despite Senator Xenophon’s
suggestions that this amounts to gambling and therefore
must be banned, a number of prominent government
departments and bodies have reached the view that online
social games do not amount to gambling.
The vast majority of online social games available for
participation on social networking platforms such as
Facebook do not fall within the IGA’s definition of
“interactive gambling service” as they are played for free
and, even if there is an initial purchase, the games do not
allow players to receive a prize in the form of money, or in
a form that can be exchanged for money or anything else
of value. It is therefore arguable that online social games
fail to satisfy the second and third requirements of a
“gambling service”.
This position was confirmed by the New South Wales Law
Reform Commission (the NSWLRC) in its August 2011
report entitled Cheating at Gambling.4 It stated that the
virtual currency which could be won in such games was
akin to the free balls that are released when a certain
score is reached in a pinball machine game. The NSWLR
concluded that these free balls and virtual currency
cannot be exchanged for real money and are not things of
value and therefore, the games are not gambling.
A similar conclusion was reached by the Australian
Communication & Media Authority (the Federal agency
responsible for the initial investigation of complaints
relating to possible contraventions of the IGA) (ACMA)
in December 2011, when ACMA responded to a concern
by Senator Xenophon in relation to the legality of free
online casino-style games (such as roulette and blackjack)
offered by DoubleDown Casino.
ACMA confirmed that DoubleDown Games did not meet
the third requirement on the basis that it was not possible
to win money or anything else of value through playing
the DoubleDown Games and that there is “no facility to
convert or cash out the virtual currency accumulated
during game play into real currency.”5
Finally, in the Final Report of its Review of the IGA
released in March 2013, the Department of Broadband,
Communications and the Digital Economy (the DBCDE)
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Impact on minors
Even though online social games have not been
considered to meet the definition of a gambling service,
concern has been expressed that the increased exposure
to games that contain gambling-like content contributes
to the normalisation of gambling behaviour in children
and increases the prevalence of problem gambling
behaviour in later life.
This concern was raised in the DBCDE Final Report which
refers to “Recent research that exposure to gamblingstyle games at a young age is a predictor for the later
development of problem gambling behaviour”7 and the
suggestion that “growing evidence that the lower the age
that people are exposed to gambling, the more likely they
are to gamble as adults.”8 The issue has also been raised
as an area of community concern, in particular by a
number of Australian politicians, including Senator
Xenophon and Senator Richard di Natale.9
However, the DBCDE stated in its Final Report that
research to support the view is “at an embryonic stage.”
Accordingly, the DBCDE indicated that further research is
required to inform properly any policy decisions on issues
in the area and in particular, to inform any decisions in
relation to the regulation or the introduction of a ban on
these online social games.10 This view was also stated in
the Final Report of the Joint Select Committee on
Gambling Reform (the JSCOGR) (see below).
Ease of access by minors
A related concern relates to the impact of these online
social games on minors due to the ease with which minors
are able to access the games.
As the DBCDE indicated in its Final Report, this is
illustrated in the case of in-app purchases where
“concerns have been raised regarding children
purchasing smartphone and tablet applications,
including applications containing gambling-style
elements, and the ease and speed with which they are
able to make additional purchases within these
applications (in-app purchases),11 often without parental
knowledge and permission. However, the DBCDE
indicated that further research into the issue is required.
It is important to note that online social games are
distinct from social media and social networking websites.
Online social games are content based and produced by
game developers and publishers, while, in contrast, social
networking websites do not develop the game, but rather
provide the platform to host the game. In other words, it
has been suggested that it is the social platforms that
provide the access to the online social games, not the
game developers.
2
This raises the question of whether, to the extent it is
concluded that additional regulation to protect minors as
a result of their use of social games is required, that
regulation should be imposed on platform providers.
Government and political response
The DBCDE
Australian government departments and bodies have
confirmed that online social games are legal and are
distinguishable from online gambling on the basis that
they do not constitute an interactive gambling service and
therefore are not subject to the prohibitions in the IGA.
To address community concern about the impact on, and
accessibility of, online social games to children, the
DBCDE recommended that the best way to approach the
issue will be to consult with relevant social media sites
(such as Facebook) and other platform providers (such as
Xbox live), mobile content providers (such as Apple and
Google’s Android) and online game developers.12
Final Report that discussed the Virtual Credits Bill.15 The
JSCOGR ultimately recommended that the Virtual Credits
Bill should not be passed and was supportive of the
findings of the DBCDE in its Final Report.
In particular, the JSCOGR16 acknowledged the lack of
research and empirical evidence in the area of social
media and online social games and stated that further
independent and nationally consistent research was
required to assist with the development of effective policy
responses, before any legislation is passed.
The majority of the Committee supported the findings in
the DBCDE Final Report by concluding that there is
considerable difficulty in defining the characteristics of
the games that should be banned in a manner that does
not capture inadvertently other games. They also
commented on the difficulty in enforcing any ban, given
the global nature of the platform providers and game
developers, and the lack of a similar prohibition in other
international jurisdictions.
The Liberal-National Coalition Policies
As a result, the Minister at the time, Senator Stephen
Conroy, wrote to content providers (i.e. game developers),
social media platform providers and other industry
stakeholders to inquire how they are currently dealing
with and managing concerns that have been raised and to
encourage them to monitor closely the impact of their
user policies regarding the provision of these online social
games, in accordance with a recommendation in the
DBCDE Final Report.13
In the course of the Australian Federal election campaign,
the Liberal-National Coalition (the Coalition), now the
Australian Government, introduced two key campaign
policies.
The Interactive Gambling Amendment (Virtual
Credits) Bill 2013 (the Virtual Credits Bill)
• the introduction of internet “adult content filters” that
will allow consumers to “opt-in” and turn on these filters
on their mobile phone and tablet devices or home based
internet to filter out “inappropriate material”;
In May 2013, Senator Xenophon introduced the Virtual
Credits Bill into Parliament. The Virtual Credits Bill
sought to amend the definition of “gambling service” in
section 4(e)(i) of the IGA to state that “anything else of
value” now includes “virtual credits, virtual coins, virtual
tokens, virtual objects or any similar thing that is
purchased within, or as part of, or in relation to, the
game”.14
The Coalition’s Policy to Enhance Online Safety for
Children indicated the Coalition’s intention to strengthen
online safety measures to “protect their children from
inappropriate material”.17 These proposed measures
include:
• establishing a new Children’s e-Safety Commissioner,
with responsibility for monitoring online concerns in
respect of children; and
• the introduction of a new complaint system, backed by
legislation, aimed at removing “harmful material down
fast from “large social media sites””. The Coalition policy
Senator Xenophon suggested that the current definition of indicated that, as part of this new complaints system, the
gambling service did not cover activities where virtual
Children’s e-Safety Commissioner would have the power
items purchased with real money are then used by
to direct material to be taken down from the “large social
participants for gambling. As participants have no way to media sites”.
cash out their winnings, the games do not fall within the
Whilst the policy does not clarify the scope of “adult
definition of a ‘gambling service’ under the IGA.
content” or “inappropriate or harmful material,” these
Accordingly, Senator Xenophon indicated that the Virtual measures, particularly the new compliant system, may
Credits Bill aimed to provide protection for consumers in
apply to the online social games sector insofar as they
respect of the concerns noted above, including the impact advertise and offer social games on “large social media
that these games may have on children and the ease with
sites”.
which children access the games, as well as the potential
The Coalition also announced its Helping Problem
for these games to cause players to develop problem
Gamblers Policy (the Gambling Policy).18 This sets out
gambling behaviours.
the Coalition’s position on problem gambling. The
Coalition has indicated that current laws prohibiting
The Joint Select Committee on Gambling Reform
certain forms of online gambling (online poker and casino
Final Report
games are mentioned expressly) are not being enforced
The Virtual Credits Bill was referred to the JSCOGR for
adequately, and that the Coalition will be investigating
further review. In June 2013, the JSCOGR released its
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3
methods of strengthening the IGA. The Coalition has also
indicated it will establish an industry advisory council
comprised of representatives of clubs and gaming venues
to meet quarterly with the responsible Minister.
It will be important to monitor developments that result
from the implementation of these Policies. Care will need
to be taken to ensure that the distinction between online
social games and online gaming remains clear and that
the online social games sector is not unduly covered,
inadvertently or intentionally, by proposed amendments
to the IGA or considered to be part of the gambling
industry by the industry advisory council.
Conclusion
Ultimately, issues of definition and enforcement, as well
as the lack of research and empirical evidence, have been
identified as key concerns that require further
consideration by all stakeholders before consideration can
be given to whether any formal regulatory control should
be implemented. While there is consistent support for the
conclusion that online social games should remain legal in
Australia, it is important for organisations operating in
the online social games space to maintain the
demarcation between online social games and online
gambling.
Recent public and political concern has been directed
towards the impact of online social games on children.
Accordingly, it is necessary to ensure that children and
vulnerable people are protected and it will be important
for industry stakeholders to demonstrate that they are
proactively monitoring this issue.
For game developers, it will be important to reiterate that
they are not targeting inappropriately or misleading
children and that their games do not encourage gambling
behaviour but instead are focused on merely being a
casual form of entertainment. For the online social
platform providers, it will be essential to review their user
policies and ensure that they have appropriate
preventative mechanisms (such as age verification
procedures) in place to deal appropriately with the
accessibility of online social games by children.
Finally, the online social games industry has taken steps
to act collectively in dealing with these issues. For
example, the International Social Games Association19 has
recently been formed to act as the unified international
voice of the online social games industry, and to assist in
facilitating education and discussion between members of
the industry (such as game providers and platform
providers), policy makers and regulators and the public.
However, the concerns illustrated in the dissenting report
of the JSCOGR remain and it will be interesting to
determine whether the legal distinction that exists
currently remains clear with online social games
remaining legal in Australia and beyond the scope of the
prohibitions in the IGA.
1028373_1.doc
Jamie, Nettleton, Partner
Telephone
+61 2 8915 1o30
Email [email protected]
Karina Chong, Solicitor
Telephone
+61 2 8915 1o60
Email [email protected]
© ADDISONS. No part of this document may in any form or by any means be
reproduced, stored in a retrieval system or transmitted without prior written
consent. This document is for general information only and cannot be relied upon
as legal advice.
1
Tim Fidgeon, Social Gaming – A Usability Perspective, (26 March 2012),
Spotless Interactive, http://www.spotlessinteractive.com/articles/usabilityresearch/social-gaming-usability-perspective.php
Nick O’Neill, What Exactly are Social Games?, (31 July 2008),
SocialTimes, http://socialtimes.com/social-games_b690
2
Deterding, S., ‘Social Game Studies: A Workshop Report’ (2010), Hans
Bredow Institute for Media Research, Hamburg
3
Nick Xenophon in Bid to Close Gambling App Loophole’, The Australian
(online), 13 January 2013 <http://www.theaustralian.com.au/nationalaffairs/nick-xenophon-in-bid-to-close-gambling-app-loophole/storyfn59niix-1226552960088>
4
New South Wales Law Reform Commission, Cheating at Gambling,
Report No. 130 (2011).
5
For more information about Senator Xenophon’s complaint and ACMA’s
response, please see the Addisons Gambling Law & Regulation
December 2011 newsletter at:
<http://www.addisonslawyers.com.au/knowledge/assetdoc/a7ce87a96267f
8c0/doc-196-gambling%2012.pdf>
6
Department of Broadband, Communications and the Digital Economy,
Review of the Interactive Gambling Act 2001 – Final Report (March 2013),
139 (the DBCDE Final Report)
7
DBCDE Final Report, above n.6, 132
8
DBCDE Final Report, above n.6, 132
9 Asher Moses, ‘Online apps take bite of illegal betting’, The Sydney
Morning Herald (online), 1 April 2013, <http://www.smh.com.au/digitallife/smartphone-apps/online-apps-take-bite-of-illegal-betting-201303312h1eb.html>
10
DBCDE Final Report, above n. 6, 144
DBCDE Final Report, above n.6, 142. These concerns were echoed in a
press conference on 1 August 2013 given by Premier Jay Weatherill of
South Australia.
12
DBCDE Final Report, above n. 6, 145
13
Evidence to Joint Select Committee on Gambling Reform, Parliament of
Australia, Canberra, 19 March 2013, 11 (Abul Rizvi, Deputy Secretary of
the DBCDE)
14
Interactive Gambling Amendment (Virtual Credits) Bill 2013
15
Parliamentary Joint Select Committee on Gambling Reform, Parliament
of Australia, Final Report (2013)
16
A dissenting decision was issued by some members of the JSCOGR in
which they reached the view that the Virtual Credits Bill should be passed.
This dissenting report concluded that the virtual credits, coins, tokens or
other objects that can be purchased in the game and can be won in
playing the game have an intrinsic value and should fall within the IGA
definition of “gambling service”, and be prohibited under Australian law.
17
Please see the Coalition Policy to Enhance Online Safety for Children
at:
http://lpawebstatic.s3.amazonaws.com/Coalition%202013%20Election%20Policy%20%20Enhance%20Online%20Safety%20for%20Children.pdf
18
Please see the Coalition Helping Problem Gamblers Policy at:
http://www.liberal.org.au/helping-problem-gamblers
11
19
Please see press on the merger at:
http://www.igamingbusiness.com/news/sga-and-isgc-merge-forminternational-social-games-association (10 September 2013).
4