| they cant. puting a modchip in a console has NEVER been ILLIGIAL IN AUSTRALIA. let me make that clear. infact its probly help bost XBOX's sales thanks to the function of emulators.
whats illigial is burning copies of the games. IE rent a game, burn it, play the burnt copy you are only alowed to burn the game or "back up" if you own the original, so this way if you break the copy it dosent mattey, you just burn another and dont lose a $120 game.
though soney has tryed to sue dealers of modchips in the past, though the guy got away with the modchiping because its not breaching any laws, but he got done on the selling "unauterised" copys of games
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