Friday, August 31, 2007

Kwari: The First True "Gambling" FPS

Your "buy in" is the purchase of ammo. Your health bar is your wager. You lose money for damage taken, and gain money for damage inflicted. This is the basic concept behind the first true "gambling" First Person Shooter, Kwari, and it seems like a mild adaptation of the basic concept in poker to a completely new game and genre. This is truly a game of skill that you wager upon.

However, while the concept is a step beyond the model employed by sites such as Tournament.com, the legality is still questionable in the United States. As I've pointed out before, the Unlawful Internet Gambling Enforcement Act ("UIGEA") was created, at least in part, with online poker particularly in mind. Hence, the Skill Game Protection Act ("SGPA") is proposed to specifically exempt games for skill, which includes poker, from the UIGEA. However, the SGPA hasn't passed, and so therefore it is reasonable to assume that the UIGEA still encompasses games of skill until the courts say otherwise, even though the UIGEA is quite ambiguous on the matter.. As such, even though Kwari is purely a skill game, it may be covered. But, the overwhelming ambiguities in the UIGEA may provide Kwari with a loophole, or the SGPA would almost certainly exempt Kwari from the UIGEA.

There's also a bigger tax implication for players. If you are a master of Kwari and can walk away with thousands of dollars a month, is it ordinary income or gambling winnings? I think the argument can certainly be made that winning in Kwari is no different than what, say, Tiger Woods wins in golf or what any other professional athlete is paid. On the other hand, poker winnings are gabling winnings in the eyes of the IRS. The classification of Kwari winnings could easily go either way, and mean a significant difference in taxable income depending on the result.

[Via Joystiq]

7 comments:

erandall10 said...

For years now, laws concerning for cash online gaming online have been somewhat ambiguous, yet established gaming sites such as Worldwinner.com, Pogo.com, and others have been able to maintain operations because they adhere to strict rigid guidelines that allow players to take part in for cash gaming tournaments. Sites like Tournament.com and most recently Kwari, are essentially no different than these predecessors: they each have a system of rankings to ensure fair play, and elaborate security systems to prevent these games from being manipulated by hackers.

US law makes it illegal for anyone under the age of 18 to win in a skill-based game for cash, and as long as these sites take proper measures to identify that a player in a given state is an adult, there should be no foreseeable question of legality. It also seems a bit of a stretch too assume that Poker and Kwari would follow under the same regulations because each has a tournament style system in place where any money paid in by players is paid out in similar fashion. To be clear on this matter, Kwari is a pure skill-based game, whereas Poker can be determined by the “luck of the draw” where no skill is involved.

Benjamin Duranske said...

Mark - Interesting piece. I often find myself in agreement with Law of the Game, but we're on different pages this time. I think you put too much stock in the title of the Skill Games Protection Act and are thus lumping Kwari (and everything from darts at the bar to PGA Golf Tournaments) in with poker. That leads you to the reasonable conclusion that the UIGEA potentially hits Kwari, since it obviously hits online poker, but I think that the SGPA is a little bit of a misnomer, and that's throwing off the analysis.

The premise is the problem. There's a big legal difference between games that are 100% skill based and games that involve some skill, but ultimately depend on the turn of a card. I could argue blackjack is a skill game the way I used to play it (I counted cards) but at its core, it's a game of chance because no matter how skillfully I play, there's no way for me to win more than a statistically advantageous number of hands. There is, no matter how well played, a significant element of luck. Same with poker -- you can improve your chances by understanding the odds and reading players, but at the end of the day, there's still only an X% chance that you'll win any given hand.

Games like Kwari, like pool tournaments at the bar, and like what is offered at Worldwinner.com and similar sites, are very explicitly 100% skill based, and as such, they've not been generally considered under the control of the UIGEA. Instead, state law has controlled, and about 40 states have decided that they're legal.

I've got an article on this up at Virtually Blind where I go into this in a bit more detail.

Patrick said...

To further Ben's points, if this game could be played for cash, it would fall under the poker set of a luck/skill-hybrid, but a symmetrical game of imperfect information, which games like counter-strike, most board games, and puzzle games where scores are compared, fall outside of this bound, and are "pure".

Steve said...

a first person shooter where the outcome can win or lose money sounds like a fantastic concept for avid video gamers. It does raise concerns over the age at which people are attracted to winning money through gambling because video gamers would tend to fall in younger age groups than poker players.

online poker itself lowers the barriers to underage gambling and i feel video games where the outcome involves winning / losing cash is priming a new breed of younger, potentially under-age gamblers. It is therefore the responsibility of sites offering such a service that details of participants can be verified.

MrYook said...

The UIGEA will never go into affect. The banking industry has already said that they cannot police the gambling industry.

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