Won’t Someone Please Think of the Children? Oklahoma Lawmakers Offer Sane Response to Silly Law

Video games have come a long way. Within decades, they have gone from a fringe hobby to a major industry. But as sales increased and the market expanded, small and significant debates took place. As a child, your parents are gatekeepers between you and the world at large. If you had your preference, you might wear a motorcycle helmet and a clown suit to school, eat candy for lunch, and train the dog to do your chores.

But, you do not have your preference. The adults in your life make decisions on the clothes you wear, the food you eat, and your behavior. For as long as video games have been around, those same adults have decided, either actively or passively, whether video games are right for their kids. If they are, they then determine what types of games are acceptable. This might have resulted in some slammed doors and harsh words over your copy of Mortal Kombat, but it was a matter to be worked out within your family, and not something left to the government.

The latest instance of legislators attempting to change that balance of power was a proposed Oklahoma tax on “violent" video games. It is “proposed," because, at present, it has been defeated in committee. The law, the ideas behind it, and the recent decisions are an opportunity to consider the status of video games as protected free speech. Brown v EMA was a huge step forward for gaming, and will be powerful precedent demanding consideration when regulation is proposed. But this debate is far from over.

For background, we should first look at what happened in Brown v EMA. (Mark did a great recap of the case on Joystiq.) California Assembly Bill 1179, passed in 2005, banned the sale of violent videogames to minors, ordering application of labels to offending titles, and fining retail employees up to $1,000 per violation. The law was struck down, first in the District Court for the Northern District of California, and then in the Ninth Circuit Court of Appeals. The Supreme Court agreed to take the case, heard arguments in November of 2010, and released their decision in June of 2011.

In upholding the lower courts, the majority (7-2) refused to consider video games the protections of the First Amendment merely because of their unique appeal to minors. It was a sweeping acknowledgement of games as expression worth protection. Decisions about what to say and how to say it “are for the individual to make, not for the Government to decree, even with the mandate or approval of a majority." This type of legislation receives strict scrutiny, and could not survive. The State has a legitimate purpose in protecting children, but “that does not include a free-floating power to restrict the speech to which children may be exposed." The interactive nature of games did not change that. Fees and penalties added up to $2 million for California.

Oklahoma House Bill 2649 proposed a 1% surtax on any video game rated Teen or higher. Proposed by Representative Will Fourkiller, the money was to support outdoor and counseling programs. On one hand, 1% would end up being about sixty cents for your average $60 game. That is not an amount of money likely to influence any buying decisions. This law was not as broad as California’s in Brown. But as people pointed out, for a law that claimed to target obesity, it would tax Get Up and Dance and Zumba Fitness 2. Both involve moving around, not sitting. Very few children buy their own video games, and for most that do they buy them with money given by their parents. The tax falls on adults, not children.

The common sense response to the proposal in the notes from the subcommittee showed skepticism on whether games deserved singling out. “Why not French fries or rap music or movies?" (At the same time especially!) It narrowly failed, 5 to 6. It may be the dissenters knew that if they ended up defending the legislation in court, it could get very expensive. But the reopening of the issue of whether there is correlation between playing video games and health problems is one worth considering.

Many things, in excess, are bad. Too much junk food is bad. So is television, and video games. But legislation designed to influence the decisions people make about these issues of child rearing have historically failed. The question of when it is appropriate for a child to consume “violent" entertainment is an important one. But ample entertainment already accessible to children is violent, as the majority noted in Brown. Involved parents make those decisions. Lawmakers have since backed out of similar proposals. It remains to be seen how other states will react.



Zack Bastian is an official contributor to Law of the Game. A third year student at George Washington University Law, Zack works at the Woodrow Wilson Center's Science and Technology Innovation Program and is a member of the American Intellectual Property Law Association. The opinions expressed in his columns are his own. Reach him at: zack[dawt]bastian[aat]gmail[dawt]com.

The Department of Justice’s New Interpretation of the Wire Act: A Green Light for Video Game Betting?

Last year was tough for online poker. A lot of people were swept away in poker’s surge in popularity in the early 2000s. A big part of the spike in was a new generation of players who cut their teeth playing online. You might remember Chris Moneymaker, the first World Series of Poker Champion to qualify from online tournaments. Some used the skills they picked up on the web to transition to the tables of Atlantic City, Vegas, and Reno. Others chose to focus on online play and made a healthy income doing so. The New York Times Magazine profiled one such prodigy, Daniel Cates in late March of last year. But the legality of online poker was suspect since the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006.

The Department of Justice put a stop to the boom when shut down the biggest and most lucrative poker sites just weeks after the article on Cates was released, including the UIGEA in the indictment. Full Tilt Poker, Poker Stars, and Absolute Poker, played a “game of cat and mouse” with the US Government, and did business here while operating offshore. They argued online poker was not gambling, but a “game of skill”. The Department of Justice was not persuaded: they quickly shut down domains, filed a civil lawsuit for money laundering, and froze company assets. With such a dramatic blow to the biggest outlets in the market, it was easy to assume online poker in the United States might not recover at all.

Maybe not. In a decision reached in September but made public in late December, the Department of Justice has made a dramatic reinterpretation of the Wire Act. According to the ruling, the law’s ban on betting crossing state or international borders now only applies to a “sporting event or contest,” not to online lottery tickets. Professor I. Nelson Rose made a great post summarizing why this matters for online poker. The Wire Act can be used against people who attempt to make cross-border bets on events. But a lottery is not a bet on a separate event: when you buy a ticket, you are wagering whatever you pay on winning the pot based on the numbers drawn, not something external. Instead, it’s a bet in the event. As Professor Rose points out, a bet placed during a poker game follows the same logic. When you wager money on your hand, you’re not betting on anything other than that round itself.

This likely will not mean that the lawsuit against the big poker sites is over with. The Federal Government has made clear they are concerned about technology facilitating illegality, like money laundering. It would be hard to believe that the Department of Justice would make such a sweeping show of force against those poker sites, then abandon the effort. It could mean that online poker could see a rebirth, provided players are in states where that sort of gaming is legal. Due to its checkered past, anybody considering getting into the business would “wait and see”, making sure they are on solid legal footing before putting down any serious investment.

What is particularly interesting to us at Law of the Game is that this could open the door for gamers to make legal bets on their own performance in online gaming tournaments. Players of games like Call of Duty: Black Ops can already wager points used to purchase new items and skills based on their performance in a given round. If it is legal, a player could place cash bets on how they might perform on a given round, or the entire tournament. Remember, it would be a bet in the event, not on. There are some important caveats to consider. It will be up to game companies whether or not this kind of infrastructure is set up. Some might not find it appropriate for a title, either because of the intended audience or the mechanics of the game. Companies would also need to consider whether they want to assume the burden of regulating betting on their game. The Department of Justice would want to make sure that online games were not being used to launder money, so they would expect gaming companies to take appropriate precautions: tracking bettors, making sure games are not fixed, and so on. Game companies have a vested interest in making sure that their product promotes fair competition, and no one wants to get caught up in illegality. That regulatory burden could provide a benefit.

Game companies would want a fee for their troubles. It could take the form of a temporally charged amount above and beyond the amount it costs for a subscription service like Xbox Live, or a per-bet percentage on every wager, win or lose. If the gambling systems on games became popular, this income stream could convince a company wary to dive in the market. A wagering system could extend the shelf-life of a game for quite some time. World of Warcraft just turned seven years old, but it is still generating income for Blizzard today. This is due in no small part to the subscriptions every player must buy. Subscription or transactional fees could be a powerful enticement to bring companies into the business.

This could also signal the return of integrated gambling models like we saw with Kwari, and an increase in 3rd party tournament sites, as we have previously discussed. It will be interesting to see if a proliferation of tournament sites puts their operators in conflict with the game developers/publishers, and what creative lawsuits may result. Online poker’s future is still an open question, and any type of betting on video games would probably be preceded by a more concrete development clarifying poker’s legality. But, as Professor Rose points out, there are not many federal regulations left prohibiting the interstate transactions involved in gambling. In fact, there have already been proposals, including one from Representative Barney Frank, to overturn the UIGEA, and move the industry to regulation and taxation on a nationwide level.

As budgets get tighter, there is always the lingering question of whether the previous moral objections to online gambling might give way to the very present opportunity to increase government revenue and create jobs. If companies can put in the time and effort to keep the competition fair and above board, we might be able to put cash down on our performance on Mario Kart. Which, reminds me: do not bet on a game of Mario Kart with Mark, it is a bad idea.

Zack Bastian is an official contributor to Law of the Game. A third year student at George Washington University Law, Zack works at the Woodrow Wilson Center's Science and Technology Innovation Program and is a member of the American Intellectual Property Law Association. The opinions expressed in his columns are his own. Reach him at: zack[dawt]bastian[aat]gmail[dawt]com.

The Thompson - Methenitis Debate Video is Forthcoming

I know many folks on the internet are waiting for the video of the debate I had with Jack Thompson last weekend on the 4th of July at the ScrewAttack Gaming Convention in Dallas. I've been told by some of the folks at ScrewAttack that both an edited and an unedited version of the video will be up on their site next week.

In the mean time, I did find this seven minute clip from the latter half of the debate. I also did some post-debate commentary on this week's Late Nite JengaJam. Hopefully those two will tide everyone over until the full video is available online.

For those who didn't make it out to SGC, the event was outstanding, and the entire ScrewAttack crew deserves any and all praises you may have seen on their forums about the event. I also really appreciate Jack for making the trip out to the convention and participating in the debate.

As soon as the debate footage is available, I will make sure to post the appropriate links here on Law of the Game.

LGJ: Jack Thompson's Utah 'game bill'

The latest LGJ is a more in-depth look at the bill Jack Thompson was behind in Utah and some of its major flaws.

Read on!


In the period of time between my writing that piece and its publication, GamePolitics has published another commentary on the issue. While I don't necessarily disagree with the intent theory posed there, I believe the state would argue (and I'm certain Jack would argue) that by showing a pattern of 'mistakes' based on a series of stings, that the retailer has no intent to follow through on their advertised policy. In the alternative, I could see the argument being made that while most false advertising is a specific intent offense, this type of goodwill based advertising is not given that it's not targeted to a specific event or sale but rather to artificially boost the store's reputation at large. I do think the noted 'fallacy' of tying the advertising to subsequent conduct isn't a fallacy insomuch as it is valid if the court wanted to accept this offense as one of strict liability, which is what it appears the goal of the provision is. This also completely invalidates the concept of intent, as strict liability requires no intent only that the conduct occurred. It would be an interesting new realm, as this would be a sort of self imposed strict liability in that it only applies to the extent the seller represents that they act in this manner.


Regardless of the outcomes of the attempts to invalidate the statute legally, my main objective in my column was to demonstrate the fact that from a practical standpoint, the statute can be completely avoided without much difficulty.

LGJ: More game laws?

This week's LGJ is a survey of a number of proposed game laws, including a new proposal from Jack Thompson.

Read on!

How to Regulate Games: A Guide for Legislators - A Followup

I've noticed that a lot of people have commented on the various reproductions of my How to Regulate Games: A Guide for Legislators since its posting a few weeks ago. There are, however, a number of points I'd like to clarify about that post and with regard to some of the comments I've seen on the stories about that article.

1. I am not pro-video game legislation. In fact, I think it's largely unnecessary and that most of the proposed bills have been a wast of the taxpayer's money in terms of legislative and judicial effort.

2. The main point of the piece was to point out the flaws that bill after bill have had. I generally expect people to learn from the mistakes of others rather than continue to repeat them.

3. Based on the FTC statistics on game sales, the ESRB and retailers are basically accomplishing the end goal of any sort of reasonable legislation pretty well. Is it perfect? No, but even items which are regulated (alcohol, tobacco, p0rnography) still end up in the hands of minors.

4. The 'AO' rating, unless stores begin to sell the games, is akin to classifying a game as pornography. Hence, that is why I said it had to reach the level of sexual simulation.

5. There was significant concern over 'delegation of authority' by Congress to a non-governmental body. The system I proposed is a quasi-hybrid of the FCC TV content system and the regulations on, for example, franchising. While an independent body is rating the game, the government is merely limiting the sale of a designated product ('M' rated games). Right now, all content on TV (other than sports and news) must be rated, broadcast or cable. Of course, the hybridization comes in from that being regulated on the basis of spectrum and this being regulated on the basis of commerce. Given that an actual sales transaction is involved, I think this has a much better tie to commerce than, say, Lopez. It's my personal opinion that it would pass judicial muster, but only an actual test would tell. I have not run across a case that follows this closely enough to be able to tell. The only alternatives would be government game rating, which seems like an additional waste of taxpayer money, or a government absorption of the ESRB and MPAA, which seems unlikely. What hasn't been proposed, but may also pass muster, would be a statutory definition that is then applied to the rating, which could then be applied to each title, but this is fairly complex and convoluted and lacks a resolution if the statute and the game rating don't agree.

6. Some question was brought up as to appeals. The only place I would see an appeal is when a consumer feels the rating to be too low, thereby seeking a judicial remedy to have the game rated higher. Any squabbles between the ESRB and the game maker would be handled as they are now.

7. To those who cite the First Amendment, I think the argument can be made that restricting access to children is, at best, similar to other content restrictions with respect to children or, at worst, a time-place-manner restriction. Remember, no games are banned under those 9 points.

8. Some of the citations to the First Amendment and delegation of authority points cited Engdahl v. City of Kenosha, 317 F.Supp. 1133 (E.D. Wis. 1970), which didn't allow the city to use MPAA ratings to bar kids from movies, but this case and statute were based on obscenity. There is no basis in obscenity in my 9 points.

I hope this clarifies some of my previous ambiguities.

How to Regulate Games: A Guide for Legislators

After reading about the latest Congressional attempt to go after the game industry, and given my legal background, I've decided to put together a list of the elements necessary to create a video game law that works. I'm sure you might be thinking, "Why, Mark, Why? Why would you do such a thing to your fellow gamers? You're just helping them." It's fairly simple: I'm not opposed to keeping things out of the hands of kids that their parents don't want them to have. On the other hand, I'm also not opposed to letting the parents make the choices. About the only thing I am opposed to is letting the government decide what I or my eventual kids can play. I am an adult, and I can make those decisions for myself and for my children when I become a parent.

The Nine Points for a Successful Video Game Regulation:

1. Forget the idea that you're only regulating games.
If you want a regulation to stick, targeting one media without credible proof of the difference between that media and all of the other things kids are exposed to isn't going to fly. So, if you want to regulate games, the bill needs to also regulate movies, maybe music, and potentially even books. It needs to be a universal approach to put parents in control. Don't forget the TV shows, which should probably also have their ratings appear on the DVD box sets. Whether the TV-MA is equal to an R rating would likely be the subject of some discussion. Based on the latest statistics from the Federal Trade Commission, M rated games are actually sold to minors less often than R rated movies, both as DVDs and movie tickets, and 'Parental Advisory' music. If anything, video games should be the least of your concerns if you are trying to protect the children.

2. Use the industry's rating systems.
The respective industries each have their own rating system, and each system is pretty well adapted for that industry. Not to say these systems are perfect, but they do the job they are intended for. The only real catch is 'Unrated' movies, which may have to default to an 'R' rating. The only industry without a rating system is the print industry (books, graphic novels, etc.), and I'm not sure any legislator is as worried about them as games, movies, or TV. Requiring in-store information about each rating system is probably reasonable as the systems do differ between products.

3. Forget 'banning' anything.
There are plenty of people out there who seem to favor the ability for games to be banned, as they are in other countries. This is the United States of America, the land of the free and the home of the brave. We have a Constitutional right to free speech. You will never succeed in imposing a ban on the kind of content we see in M rated games, so it would be in your best interest to move on to something that is a realistic goal.

4. Forget basing this on obscenity or harm to children. Use commerce.
If this regulation is going to pass, the idea of 'obscenity' won't do it. In fact, trying to base this on anything other than regulating the instrumentalities and channels of commerce pursuant to the commerce clause will likely fail. In fact, I'm not entirely sure even this bill would succeed based on commerce, but a broad based attempt to just prevent the sale of something rated by the industry as for 'adults' to people under 17 seems more realistic than trying to base it on inconclusive studies or other such justifications.

5. Forget the 'AO' rating for games.
The argument is often made that some games should be rated 'AO.' Forget it. An 'AO' rating is basically banning the game from sale, or classifying it with the most hardcore pornography. Unless the game is some sort of sexual simulation, it shouldn't garner an 'AO' rating. In general, the sexual content in an 'M' game falls short of what is in many R rated movies or even what is on television. Arguing that a game like GTAIV should be AO is just an effort in futility.

6. Enforce it only on products that have to be sold to those over 17.
There's a simple reason that this can only be applied to games rated M or movies rated R: most people under 15 or 16 do not have any sort of ID. If you had to get ID from a 13 year old to buy a T game or PG-13 movie, nothing would ever sell because they don't have ID. What we're mostly concerned about is adults buying content that is suitable for adults, correct? Then that's the limitation that should be in place.

7. Enforce it only on sales to those who can't present ID or present fake ID.
This is pretty simple: The goal is to put parents in control. If a parent decides their 16 year old can have an M rated game and buys it for the teenager, it is not the government's place to tell them otherwise. This is a point of sale or retail resale control only. The government has no place invading the living rooms of every family in America in order to override the judgment of parents on what media their child is allowed to consume.

8. This should be a fine only offense, and only a fine against the store.
It is the requirement of the store to perform their due diligence on each sale. Keeping that in mind, this isn't injecting heroin into the veins of children. The idea that it should be a criminal offense is just silly, and the idea that individual cashiers should be punished is equally inane. If a store has a problematic cashier, then the store should be held accountable and be allowed to deal with the cashier as they see fit.

9. Once it's done, leave it alone.
This isn't a "get one foot in the door so we can ban things later" idea. This is the end all, be all solution. As a legislator, you're passing your 'protect the children' bill that will give you some good publicity. It's the Constitution that won't let you go farther based on an objective look at the facts.


In a nutshell, that is a blueprint for a video game regulation that could actually work. Why hasn't anyone tried this yet? Most of the anti-game zealots are too interested in draconian punishments, outright bans, or overly complex and involved systems to actually explore what could practically work and withstand a legal challenge. Granted, it is a compromise between those who are on either extreme, but it is likely a solution that would allow game retailers and developers to stay in business, allow gamers to keep gaming, and allow many in the anti-game crowd to feel like they've protected the children.

I would rather leave the system be, given that in a gaming context it's actually working pretty well. But as it seems that the issue will never go away, I see having to show ID a pretty small price to pay for leaving the bulk of the rest of the system in place.

[Edit: Corrected the point count, Typos.]

An Open Letter to Glenn Beck re: 'Grand Theft Morality' Segment

The following letter has been e-mailed to Mr. Beck directly, and is being re-posted on Law of the Game for my readers to enjoy.

Glenn,

First, let me say I am a fan, and listen to your radio show every day during my commute. However, over the weekend I caught your show from Thursday with the magic of TiVo, and I have to say the ‘Grand Theft Morality’ segment was a real disservice to the public at large. First, your panel was exceedingly one sided and biased. It was the equivalent of discussing global warming with Al Gore and Ted Turner. Given that you have had the authors of ‘Grand Theft Childhood’ on the show, I would have expected a more balanced guest list. Second, it is irresponsible for anyone to bring Jack Thompson on the air anymore. He has been sanctioned in Alabama and Florida and is facing disbarment in Florida for his courtroom shenanigans against the video game industry, which includes attaching homosexual pornography to court filings (which are available to anyone at any age in the general public). Most importantly, with no one there to even speak to the other side of the issue, it was a complete disservice to your viewers. Mr. Thompson makes many allegations which have been disproven, and he presents them as though they are still fact. Most notably, the complete myth that the Virginia Tech shooter was an avid gamer was not only invented by Mr. Thompson, but repeatedly disproven.

Here are some undisputed facts:

1. There is NO LINK between factual statistics on ‘cop killing’ and the release of Grand Theft Auto games. (http://gamepolitics.com/2008/04/29/fbi-stats-dont-support-claims-of-gta-series-as-cop-killing-simulation/)

2. There is no link between the violent crime rate and video game violence. (http://gamepolitics.com/2008/04/12/comparing-violent-crime-to-violent-game-releases/)

3. There are many studies showing that games don’t have the impact on behavior that people like Mr. Thompson espouse as fact. (http://gamepolitics.com/2008/04/02/new-study-game-violence-makes-players-less-angry/ and http://content.apa.org/journals/emo/8/1/114, among others)

4. In fact, studies show that it is a dysfunctional family that generally creates violence. (http://gamepolitics.com/2008/03/25/study-games-dont-spark-violence-but-dysfunctional-families-do/)

I have actually played Grand Theft Auto IV, which I assume neither you nor your guests have. For the first nearly full hour of the game, you quite literally drive people around, go on a date to a bowling alley (no sex in the entire sequence), and then get into a schoolyard fist fight with some thugs who are beating up your cousin. In terms of the actual storyline, it’s no more violent or sexual than a Martin Scorsese movie. All of the worst things you cite as part of the ‘experience’ are completely optional. Those films garner an ‘R’ rating, and this game has similarly garnered an ‘M’ rating, the game equivalent to ‘R.’

I find it troubling that someone like you would be perfectly fine with Jack Thompson’s government-imposed controls on content while decrying government interference and the ‘nanny-state’ on so many other fronts. No other packaged media (books, DVDs, CDs, etc.) in America has any government-controlled content restriction for the level of content that exists in these games. They are not pornography, and stating otherwise is a gross misrepresentation of fact. The ‘AO’ rating referenced in the segment is generally reserved for games whose content falls into what would be a film rating of ‘XXX.’ Most importantly, a number of states have passed laws similar to the one written by Mr. Thompson, imposing government regulation on games, and all of those laws have been struck down by the courts, many on First Amendment grounds. As someone who has repeatedly denounced the ‘fairness doctrine’ based on its chilling effect on free speech, I would hope your view would extend to other media in addition to your own.

Glenn, we’re not talking about placing this game deliberately in the hands of kids. Many stores do actually require ID to purchase games and movies that are rated M and R respectively. Ultimately, though, it should be the responsibility of the parents to monitor their child’s media consumption. The rating systems on TV, movies, and games make it much easier for a parent to do so, and if the point of your piece was simply to make parents aware, then your method of doing so was exceptionally overbroad. Telling your viewers to be careful if their husbands are playing this game was just absurdity. I have been playing video games for decades. I haven’t murdered anyone yet, and I have no plans to murder anyone in the immediate future. When any new form of media has been released, the public has always been quick to blame all of society’s ills on it until, eventually, people realize that it is not the media causing the problem, rather some other aspect of society. Putting on segments that only serve to increase the fear and unfounded hate of not only the games but those who play them has no benefit to the public at large. I hope that future segments dealing with the issue of video games would at a minimum include more credible anti-gaming guests, if not guests on both sides of the issue.

Thanks,
Mark Methenitis

Law of the Game on Joystiq: Video Game Laws (abort/retry/fail)

This week's Law of the Game on Joystiq is all about video game laws.

Read more here.

Virtual Worlds Become Virtual Nations?

An interesting piece was recently posted on Virtually Blind by Israeli attorney Jonathan J. Klinger. The crux of his argument was:

For example, earlier this year, Michael Carlton, CEO of online sportsbook Victor Chandler, was arrested in Israel. An Israeli court asserted jurisdiction over Carlton, a foreign citizen, and stated that as long as a portion of the illegal activity (here, gambling) occurred in Israel, there is no need for universal jurisdiction, and the website operator is subjected to the Israeli law (State v. Carlton, Hebrew decision). The court stated that it was in Victor Chandler’s responsibility to bar all communication from Israel since the activity they offer is illegal for Israeli citizens to participate in.

Using the same rationale, any employee of Blizzard or Linden Lab could be subjected to the Israeli penal code, as they are allowing illegal conduct (under Israeli law) to take place on their servers. Blizzard could face harsher liability as it distributes World of Warcraft actively in Israel, while Second Life is only available for download.

The only solution to these legal problems is to separate players according to countries, or even states (as some state laws in the US differ regarding pornography and violence). Any other solution may cause a conflict of laws, and subject the industry to liability twice: the first is the constitutional tort, where legal expression is barred though there is no local legal reason to bar it (e.g. ageplay in the U.S.) and the second is potential criminal prosecution by another state which may prosecute company leaders for user actions that are actually legal in the home country of the company.

I, however, do not agree. Moreover, I believe the precedent set by Isreal should be looked at with disdain by the legal community. Take note here that I'm departing from an actual analysis, which the above quote limits itself to, and moving into theoretical alternatives that would generally be beneficial to all those involved.

I want to begin with a meta-theoretical statement. The purpose of virtual worlds is to bring people together. As such, the solution that either people must be divided on geographical lines or game providers must be subjected to liability is a pure frustration of purpose. Of course, the concept of making a "virtual world" an actual nation is equally blasphemous. In fact, it seems at though negative consequences could easily result from creating "independent nations" within nations that exist on servers. So, what solutions are available to the problem? Clearly the social conscience of a person in Texas cannot be made to match a person in Isreal or Japan or France. That idea is equally impracticable, and in the same vein, the pipedream of creating "universal rules" to govern the internet is impracticable. Moreover, the idea that we allow complete free speech to govern our online worlds only gives rise to the most deplorable of content, as child predators would take refuge under the "free speech" of the digital world. There is also the final consideration that, ultimately, the server space is private property. The Grid belongs to Linden. Azeroth (all of the various iterations on the various servers) belongs to Blizzard.

So where does this leave possible solutions? Governing in-world conduct being left to the worlds owners, how should jurisdiction be handled? I think it is time for a paradigm shift an analyzing jurisdictional elements with virtual worlds. Put simply: Server location dictates jurisdiction. While this idea won't bode will with the "minimum contacts" proponents out there, the theory does have a logical base. Ultimately, the activity occurs on the server, not at the user end. I can click buttons all day long on my personal computer, but without the server end, there is no net effect. As such, the server is the critical component. This is the basis for a client-server model, and this is, in my opinion, how it should be treated under the law. This provides the maximum certainty for the developer.

This, of course, leaves the issue of performing an activity illegal in one country on a server located in another. Ultimately, issues like these will have to be resolved by the governments, rather than putting the developer in the line of fire or forcing the defeat of the purpose of virtual worlds. So, for example, if a 3rd world nation hosts "Child Porn: The Game," it will be up to the international community to pressure that country to abolish the game. (Moreover, with something as pernicious as child pornography, local governments could likely track subscriptions and users in order to find offenses in the local countries. I can't say I favor invasion of privacy, but I also can't say I oppose using any means necessary to remove dangerous predators from the streets.) On the other hand, with something as hotly debated as online gambling, rather than leaving the user and developer in difficult and awkward positions, it would have to be resolved between nations. Ultimately, either the moralists would win, or the simple positive economics would. In either case, the burden is on the government, or indirectly on society as a whole, rather than punishing the developer or the user based on what are largely ambiguous lines.

Will this paradigm shift happen? It seems doubtful given the overwhelming analysis of jurisdiction to the contrary. However, I think that we have reached a time in which the old analysis need to be seriously re-examined based on the dramatically different world and virtual worlds that technology has created.

[Via Virtually Blind]

Oklahoma Video Game Law Defeated

The Video Game Industry can now add Oklahoma to their list of victories against game laws, as an opinion was released today in Entertainment Merchants Association v. Henry, Case No. 5:06-cv-00675 (W.D. Okla.). The opinion grants the plaintiff's request to have the enforcement of the act permanently enjoined.

The opinion makes it quite clear that there is no grounds to support this law. For those unfamiliar, the Oklahoma version of the law placed a $1,000 fine on any dissemination of video games with "inappropriate violence" to minors. This language even included a parent giving a game to a minor. The opinion made a few distinct points on the issues at hand:

1. Video games are protected speech. No particular peculiarities of the medium nor amount of user control can change this legal fact.

2. Regulating violence is a content based restriction on free speech, and therefore presumptively invalid and subject to strict scrutiny. Violence, unlike sexual content, is not regulating obscenity.

3. Video game violence does not compel youth to commit violent acts, nor is there "substantial evidence" of a link between video game violence and youth violence. To quote the opinion on the latter, "Beyond Defendants’ generalized statements, there is a complete dearth of legislative findings, scientific studies, or other rationale in the record to support the passage of the Act. Defendants’ argument that “common sense” dictates that playing violent video games “is not good for children,” and that the onus is on Plaintiffs to prove otherwise, completely fails. (See Defs.’ Resp. at 9.) The First Amendment does not allow prohibitions based on “common sense.” See Kendrick, 244 F.3d at 578; Granholm, 426 F. Supp. 2d at 663-64."

4. The standard on violence in this act was so very vague that it was fatal to the act itself, in addition to the numerous other flaws pointed out. "The Act “does not satisfy the rigorous constitutional standards that apply when government attempts to regulate expression. Where First Amendment freedoms are at stake . . . precision of drafting and clarity of purpose are essential. These prerequisites are absent
here.” Erznoznik, 422 U.S. at 217-18."

The question from here is whether the government officials in Oklahoma see fit to continue to waste taxpayer money and the court's time in addressing this issue, as California seems determined to do. I have long supported the proposition that parents should be controlling their children's media consumption, not the government, and this seems to be another step in the right direction.

Skill, Chance, and the Unlawful Internet Gambling Enforcement Act

Prior posts on this site about Tournament.com and Kwari have both raised some eyebrows about my particular interpretation of the UIGEA as it relates to games of skill and games of chance. As such, I thought this would be an appropriate time to discuss both types of games, and the reasoning behind my conservative approach to the UIGEA.

Put simply, there are three types of games in the world: games of pure chance, games of pure skill, and games somewhere in between that employ both elements of chance and skill. There are readily available examples of all of them. Lotteries, roulette, and bingo are games of pure chance. All in all, no matter what system you think you're using to select your winning numbers, it's pure luck. You cannot affect the odds of which number will be picked. To be a true "pure" skill game, there must be no chance involved whatsoever, and to that end there are very few, prime examples being chess, checkers, and othello. In any of these games there is no chance element as every move and rule is pre-defined and determined by the rules. After all, rolling a dice, drawing a card, or spinning a spinner are all "chance" elements, even if they are not always treated that way under the law. Between the two extremes lay a spectrum of other games with varying degrees of chance and skill weighing upon the outcome, be they board games or casino games or video games. As such, some games which can be played in either way to be classified as one or the other. Blackjack is typically lumped into the games of chance, even though a card counter would argue otherwise. Poker has been classified both ways. Competitive board gaming, such as Scrabble or Monopoly, would likely be classified as skill since the chance element is so minimal. Of course, these interpretations also vary by county, and the major difficulty with the internet is addressing these games on a multi-national level.

This brings us to the difficult proposition of classifying video games, the vast majority of which I believe fall into the "in between" category. Granted, arcade games are likely games of pure skill, Galaga or Donkey Kong or House of the Dead for example. However most anything else has some chance element to it in a multiplayer context, even if it is minor. The most relevant example would be spawning. In a FPS that has respawning, spawns are the luck of the draw. While many people claim FPS games to be pure skill, there is no amount of skill that can alter the result of spawning in someone's crosshairs. Similarly, in any RTS map, say Starcraft, that has unequal resources at the starting point, there is an element of chance. In a similar fashion, the terrain from a given spawn point may give some players an advantage. The most often cited counter argument is Counter-Strike, where there is no real "spawning." However, even Counter-Strike can have a random element to it if either team is filled out with random players. Even the most skilled players will be severely disadvantaged round after round if their team is arbitrarily filled up with an inept hodgepodge of other gamers. It would be the equivalent of filling out an NFL team with random fans who happen to be in attendance at the game and making them play. Thus, only in the event where both teams are controlled can Counter-Strike be a true "skill" game.

Skill games are not defacto illegal under the UIGEA. In fact, it's rather ambiguous on that matter. When laws are ambiguous, the courts are free to look at elements like legislative history, and one of the key issues the UIGEA hoped to address was online poker. As such, I have been erring on the side of caution in my analysis. Why? Poker has fairly equal elements of chance and skill (skill which includes reading your opponents, an element absent from Blackjack). If poker is covered, then arguably, anything short of a pure skill game could be lumped into the UIGEA if the courts so decide (absent the Skill Games Protection Act). Moreover, the overwhelming sentiment in the US congress seems to be anti-gambling, and thus I would be inclined to surmise that future legislation or interpretation would follow this same thought process. Accordingly, most of my articles have erred on the side of caution in pointing out chance elements that could push certain games into the UIGEA domain. As such, the articles reflect the direction I think the law can go rather than how I would personally interpret it or how I hope it would go. I hope that serves to clarify the two above referenced analyses.

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]

Revised Microsoft Machimima Rules Coming "Soon"

It would seem that more and more people in the blog-o-sphere are joining the Microsoft Content Usage Rules coverage, most recently the EFF and the blog for the book Machinima for Dummies. Both of these parties were privvy to a conference call sometime yesterday in which it was revealed that Microsoft is updating the Content Usage Rules (the "Machinima Rules"), and revised rules should be made public "soon." I personally hope that these rules address some, if not all, of the major issues I have pointed out in my coverage of the Machinima Rules. Once the new rules are posted, I will post a revised analysis.

For more information see my previous coverage of the "Machinima Rules":
Microsoft's New Content Usage Rules: A Small Step for Machinima
New Microsoft Machinima Rules Revisited
Microsoft Machinima Rule Podcast
More Details on the Microsoft Machinima Rule

Chinese Editorial Calls for Increased Regulation of Virtual Goods

An editorial on China View has some rather harsh words for the online gaming industry in China, specifically for those in the "black market" of virtual goods. The sibling to the gold farming issue in China is the theft and resale of virtual goods.

The article brings up a number of interesting points, but also seems to confuse the "virtual theft" concept with the "gold farming" one, although both issues have been met with cries for regulation, along with the already regulated "underage gaming" issue in China.

The editorial, however, leaves me with mixed feelings. On the one hand, it is always positive to see people outside the gaming establishment finally realize and accept that these virtual goods, be they land in Second Life or an Infinity Blade in World of Warcraft, do have a "value." Moreover, the idea of protecting players from theft is definitely a positive one. On the other hand, the idea of additional government regulations never seems to be the most appropriate approach. While this could be in China rather than the US, I still can't help but feel the regulations are inappropriate.

The major difficulty would be the near impossibility of government alone policing those systems, but on the flip side, the game providers lack any real enforcement tools if and when they can track virtual wrongdoings. The logical outcome would be a necessity for cooperation between government and game providers, but I think the mandates should come from the game providers, not the government. After all, the government does not seem to, on a basic level, understand these games. This would only lead to ineffective legislation that would breed resentment in the gaming community or lead to a downward trend in the games overall.

Regardless of your stance on game regulation, the wisdom of self regulation is evident in many industries, from law to medicine. In this case, where a real crime is involved, similar cooperation has worked for other industries. Of course, only time will tell if any actual regulation is attempted, but given the trend to monetize virtual worlds, some sort of "law enforcement" is almost inevitable.

[Via GamePolitics]

More Details on the Microsoft Machinima Rule

A Microsoft attorney who goes by DonkeyXote has posted a discussion of the Microsoft Content Usage Rules in his blog. Before reading my continued commentary on the issue, you should probably read his five clarification points.

The clarification process, I can only imagine, will continue for quite some time as new issues continue to pop up from the Machinima community. There are a couple issues that specifically need some attention in the near future.

1. The Universe Expansion Rule
I suppose the real question is how remote is remote enough to be allowed? While I can understand the point DonkeyXote makes in his post, it doesn't speak to the machinimist trying to develop his story. It was a point Laird and I specifically discussed in the recent podcast. For example, I'm certain making use of any of the game's characters is not allowed. But what about a story going on in the same timeframe in another part of the universe? What about a parallel universe? Do you need to re-name all of the character models? Speaking to a more practical level, is the Red vs. Blue storyline remote enough? Sponsors vs. Freeloaders? Halo Unyielding? It would be much easier on the community if a clear framework were applied to this rule.

2. Reverse Engineering/Modifying the Engine Rule
The rule itself is vague enough that "reverse engineering" could involve modifications made using, for example, the tools in Halo CE, Halo 2 Vista, or what appears to be in the Halo 3 Forge. While I would anticipate that this isn't "modifying" the engine, I think the community would feel more comfortable if Microsoft said that these things were allowed.

3. The Contest Rule
Are all contests disallowed? And if so, what is a "contest?" Is entering a video in the YouTube Debates a contest? You do have the basic elements of a "contest," but the prize has no monetary value. A clarification as to the term contest (for example, that it has to have a prize worth $XXX) would likely be quite helpful.


All in all, it is nice to see one of the drafters of the rule address the issue in his blog, and hopefully he will continue to field questions like these as they arise.

A Tale of Two Worlds: New U.S. Gambling Laws and the MMORPG

Back in late April I finished an article titled A Tale of Two Worlds: New U.S. Gambling Laws and the MMORPG. That article has been published in the now available August edition of the Gaming Law Review. I must admit that some of the substantive MMORPG analysis is a bit simplistic (mostly in defining the volume of real money transactions as they relate to World of Warcraft), in part due to to audience considerations, but the legal analysis is quite thorough. While my SSRN revisions are still under review, the paper is available to those who may have access to the journal through academia or other means.

For those interested, here is the reference information:

A Tale of Two Worlds: New U.S. Gambling Laws and the MMORPG

Mark Methenitis

Gaming Law Review. Aug 2007, Vol. 11, No. 4: 436-439

Abstract

Full Citation:
Mark Methenitis. Gaming Law Review. 2007, 11(4): 436-439. doi:10.1089/glr.2007.11404.

Gaming Law Review, Volume 11, Number 4


[UPDATE: Just to clarify, the simplification was in the following regard: I assumed, for the purpose of the paper, that Blizzard's ban on real money transactions was completely effective, rather than just mostly effective. The concept of the "black market" complicated the comparison to a high degree and would have easily doubled the length of the paper. It also plays to a greater assumption that Blizzard will, in all likelyhood, continue to crack down and may eventually wholly eliminate real money transactions, even those on the "black market" type level.]

Epic v. Silicon Knights: The Countersuit

It was likely inevitable that Epic would launch a stout countersuit of Silicon Knights with regard to the Unreal 3 Engine issue. GameDaily.biz is reporting that such a suit has been filed, and makes a number of references to the text of the suit and the motion to dismiss Silicon Knight's suit without posting the entire text publicly.

This is, however, also pretty common in the legal world, just as Silicon Knight's original claim is relatively common in the realm outside the game industry. From what I have read, Epic is counter-claiming that Silicon Knights has has everything to gain from seeing the Unreal 3 code, and moving to dismiss based on their assertion that they wanted Silicon Knights to succeed as that would lead to greater income for Epic. This first issue touches on one of the most complex issues in the industry, whereas the second seems mildly flawed.

The first issue is about code, and it exceptionally complex. Code can be copyrighted, and it can also be patented (sometimes), and it can be protected by trade secret provisions. Much of this will come down to comparing the Unreal 3 and Silicon Knights engines, and the analysis will certainly be complex. In fact, it's so complex I'm not sure I can adequately explain it in the blog. To far over-simplify the matter, depending on how it is protected, different aspects of the engine are protected (the code itself, the idea of the code, the specific method, etc.), and the comparison will determine if Silicon Knights gained an unfair advantage by seeing the Unreal 3 code.

The motion to dismiss claims that Epic would profit from Silicon Knight's success, which is true. However, there is a fault with the argument. Epic would probably always profit more from selling their own game (Gears of War) than the small royalty/license fee they would get from any Silicon Knights project. Moreover, if you imagine that the game buying public can only expend X dollars per season, having titles that all profit Epic compete is bad for business. This is a little complicated as an example, so bear with me.

Say in Universe A, Gears of War and Too Human were both out last holiday season.
Say the average 360 owner can afford 2 titles for the holidays, and that both Gears and TH scored a respectable review of 9.5.
Many people will buy one, or the other, but not both. Why? There are many, many other games available.

Say in Universe B, Gears came out last year and TH was pushed to, say, June.
Say the average 360 owner can afford 2 titles at the holidays, and one more by June.
Many people will get both (especially given the summer drought), and Epic will likely see more total income as they are not having two Unreal 3 products in the market launching at the same time.

It's not an all-encompassing example, but it shows the basic element of the flaw. Competing against yourself isn't good for business.

Also remember that this case could end up with rulings for both parties, which typically offset each other to some extent. They may both owe each other money when the judge hits the gavel the last time. It will certainly be interesting to see who walks away with what as a result of the suit. There's also a distinct possibility of a settlement, as most cases never actually make it to trial. We will have to wait and see what Silicon Knight's next move is in this legal battle.

Second Life Bans Gambling...Sort Of

As I continue to play catch up from my hiatus, I have been hit by a bit of an irony. During my time away, I did submit the finalized version of "A Tale of Two Worlds: New US Gambling Laws and the MMORPG," which will be appearing in this month's Gaming Law Review. Of course, a mere few days later, Virtually Blind reports that Second Life has issued a clear "ban" on in game gambling, making some of the examples I used in the paper moot.

While I do agree with Virtually Blind's Benjamin Duranske that the revised policy statement is far clearer than the previous, I can't go as far as to call this a true "ban." The revised statement leaves many loopholes that I'm certain will be exploited in the days, weeks, and months to come. The policy states that games cannot "(1)(a) rely on chance or random number generation to determine a winner, OR (b) rely on the outcome of real-life organized sporting events, AND (2) provide a payout in (a) Linden Dollars, OR (b) any real-world currency or thing of value."

First, the statement really makes no claims at all with respect to games of skill. In fact, Second Life poker wouldn't violate this policy under many interpretations of "relying on chance." Whether it would be interpreted this way under the UIGEA is an entirely different debate (without an answer at this point), but more than likely poker would not violate the Second Life policy. The same could be said for any other game of skill that could be integrated into the grid. I suspect it will only be a matter of time before someone builds a Quake Zero betting system that plays through Second Life.

The second loophole is actually one that was mentioned in the article, being that only betting on the outcome of "real-life organized sporting events" is banned. Thus, if your event is either not real life, not organized, or not a sporting event, it is excluded. Virtually Blind mentioned the Oscars or Survivor (although Big Brother would be more timely at the moment). But there are a large number of other excluded events. MMO-based sporting events (in Second Life, World of Warcraft or elsewhere) would not be "real-life" events, so they would be excluded. This means that theoretically you could bet on PvP matches. The definition of "organized" will likely be pushed, probably in drawing a line between "professional" or "league" play. However, the most critical designation may be "sporting." What is defined as a sport? Is Major League Gaming a sport? I know of people who would argue on both sides of that debate. This restriction is by no means as comprehensive as it appears.

Perhaps the biggest loophole is in the "payout in (a) Linden Dollars, OR (b) any real-world currency or thing of value" clause. First, as Virtually Blind points out, the phrasing doesn't seem to restrict gambling in virtual items "of value." This, taken broadly, means that a simple casino chip system implemented in Second Life could circumvent the restriction. The only restrictions are on betting with Linden Dollars or real world currency or items of value. Thus, any virtual good that can be bought, gambled with, and resold for value would not be included. While actual chips might be argued to be the equivalent of currency, a system that operates in a similar manner without using chips may skirt the rules. Moreover, as Play No Evil's Steven Davis points out in comment 1, the use of a pachinko style system would skirt the restriction. For those unfamiliar with Japanese gambling, pachinko is a game in which you play with, earn or lose metal ball bearings. Having played the game while in Japan, it's much like a cross between a slot machine, a pinball machine, and a video game. These ball bearings can be redeemed for prizes. Among the prizes are a tokens that are, in the parlor, worthless, but if you take them to a booth nearby, they can be exchanged for cash. A similar model could be employed in Second Life as a means to bypass this policy.

While this new policy does help in some respects, it is still probably inadequate to deflect the pressures the UIGEA is placing on the system. Whether these loopholes were intentional or the result of an oversight will not impact the government's investigation, which seems to be an inevitability at this point.

We are drowning in an ocean of shallow politics and fear mongering.

I do occasionally step beyond the bounds of the typical Law of the Game topics to editorialize, and politics has long been an interest of mine, as evidenced by my degree in Government (Political Science) from the University of Texas.

A new campaign ad by Presidential hopeful Mitt Romney declares that our children are drowning in a an ocean of filth, citing violent games among other media, and states that it is time to clean up the waters. I have nothing against Mr. Romney personally, he is just the latest in a standing trend against the game industry.

We are drowning, all of us, in a sea of shallow politics and fear mongering. Both Presidential and Congressional approval are at historic lows, and yet, rather than deal with issues that matter, the politicos of the United States have opted to gravitate to video game violence. Why? It's always easy to amass votes under the guise of "protecting the children" from the evils of society, whereas it seems like an impossibility to win support on a platform of parental responsibility. And yet, it has become apparent that many parents are, simply put, failing their children. But should the battle cry of those wishing to defend those who cannot defend themselves really be "The government should do it for us!" Do we, as a people, really want to leave the decision on how to raise our children in the hands of a body that is barely approved of by a fourth of the population?

There are ample other issues that this country should resolve in a timely fashion, and I think it is high time that the people demand more from their representatives than an appeal to the lowest common denominator of potential issues. No matter where you may stand on other issues, or whom you may support, wouldn't you prefer a response to an issue of substance rather than repeated attacks on the gaming industry? Is there really a value to expend legislative time on a bill that will place a 16 year old GameStop clerk in jail for selling a game rated "M" to another 16 year old? Moreover, in the wake of such legislation, will we have to restrict the hiring practices of game retailers, when no such restriction exists for retailers of movies or books?

I can only imagine the possibilities of the path on which we tread. For now, it may be sales restrictions, but in the future, it could be an act of "child endangerment" to let your own children play games that you determine are appropriate for them. It is not beyond the realm of possibility that we end up in a world where a parent can let a 15 year old watch an R rated movie without repercussion, but can face a CPS investigation or criminal charges for letting the same child play an M rated game. This could be the result of letting fear mongering dictate media policy.

I believe we should expect more from our elected officials. They are supposed to represent us, not dictate our opinions to us. Accordingly, the time may be upon us to let our voices be heard and write to our representatives to let them know with the utmost respect that we are tired of their time being wasted on this non-issue.

I don't want Washington dictating what video games can and can't be played in the privacy of my living room. Do you?