Tuesday, December 18, 2007

Real Money Transactions Can Lead to Gambling Problems

Worlds in Motion has an article up detailing a new surge in the efforts to legitimize real money transactions in MMO games. Generally, the idea is a good one, as RMT can provide the players what they want, as demonstrated through the vibrant black market, while the legitimization gives the developers what they want. In fact, RMT based games are widely successful in other parts of the world. However, given the current state of US gambling laws, increased RMT in MMO games where gambling exists could put the MMO providers on thin ice. Second Life has already seen attention for gambling, and other worlds may not be far behind.

The tricky issue to deal with is the conversions between the virtual goods or currency and real currency. This is something I've discussed at length in my SSRN Papers. From a broad perspective, if a game either lacks gambling or lacks RMT, then there should be no cause for concern. However, when both elements are present, it becomes more problematic. Second Life (while gabling was still permissible), for example, as a direct currency exchange, could be viewed no differently than online casinos. In fact, even if gambling were using a more barter-like system, where, for example, weapons were wagered in fights, there could be a gambling issue assuming the weapon has a real world value, for example, from the ability to buy or sell it for real currency. The even more complex situation arises where the market price can fluctuate, especially given the prospect of reporting winnings or losses for tax purposes.

Obviously, this issue could take a number of turns depending on what the developers end up implementing in future games. It will be interesting to see if more developers place outright bans on wagering to avoid the issue entirely.

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