[MUD-Dev] Re: Black Snow Revisited

[Leverett]

From: Dave Rickey [mailto:daver at mythicentertainment.com] 
 
> I am not allowed to comment on this case in any particular, but
> will someone *please* think through the implications for potential
> future changes to the game and possible legal recourse for those
> financially impacted, if the courts recognize ownership rights for
> in-game value converted to real-world currency, and share those
> implications with the list?

I've thought about this scenario for some time now and have come up
with some really bizarre scenarios and results. Some of these sound
absolutely crazy but you have to remember, this is creating an
entirely new financial market.

  1) Servers no longer hold just game data. They become warehouses
  for financial data of customers. In other words, they are now
  banks, and they are now liable for thousands (millions?) of
  dollars of digital data.

  2) Companies would need to provide information to customers of
  their accounts. Keying item info - and remember there are often
  thousands and thousands of items per character - is technically
  not feasible in most games. Retrofitting a game into a financial
  database is not something that the design team had in mind.

  3) Items that now have attributable value would suddenly overnight
  create an unregulated virtual commodities market, which won't sit
  well long with the Securities Exchange Commission, the
  U.S. Treasury Department and the Secret Service. It sounds crazy
  but think about it - if you can trade for UO ingots, DAoC leather,
  or EQ jewels in the same method you would trade for stocks, bonds,
  or actual gold, you can bet someone is going to want to know about
  the transactions. This would result in another government
  bureaucracy - some sort of virtual economics watchdog to regulate
  things.

    a.) So this one is related to the one above and is sort of a
    reach, but I can see this requiring legislation or amendment of
    current U.S. code. U.S.  code only holds information about how
    to deal with foreign currency, and nothing about virtual
    currency.

  4) The act of creating items with value now a produced item. If it
  is a produced item with value, then it is taxable and you must
  report it as an asset on your federal and state (if applicable)
  income taxes.

  5) All online contacts risk becoming invalid. Contracts usually
  are designed specifically to protect the service, but if a judge
  for some reason invalidates it, the entire product is at
  risk. After all the company is in that business of running a
  service so they can make money, and if they cannot do so in a way
  that is profitable, they will pull the plug.

In other words if this passed, one would evaluate virtual items the
same way we currently evaluate stocks, bonds, commodities, futures,
etc. And because of the issues involved, I could see a situation
where MMORPGs cease to exist as they are.

That is, at least until the lawyers clear from the smoke with the
tax code in one hand and their virtual property code in the
other. And that image should be frightening enough to scare us all
away.

Will
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