Let’s Talk About Machinima – Part 2 of 3

Let’s Talk About Machinima is a 3 part series. The first was Machinima from the perspective of the Machinimist. The second tackles Machinima from the point of view of the game developer. Finally, the third will be a bit of a forward thinking proposal on Machinima.

Part 2

“So What Should I Do About Machinima?”

If I could boil down this article into one statement, it would simply be:

Machinima can be a developer/publisher’s best friend or worst enemy.

Simple and peculiar as that statement may be, it addresses the entire issue. Machinima can bring more fans and players to a particular game or even create an entire community around a game. On the other hand, allowing people to freely generate derivative works from your intellectual property can hinder your ability to enforce your rights in the future. It is the essence of the double edged sword analogy.

Machinima as a Friend: Publicity

I think it has become readily apparent that machinima can do a lot for game publicity. Take F.E.A.R. and the machinima P.A.N.I.C.S., for example. I know I downloaded the F.E.A.R. demo because of P.A.N.I.C.S., and ultimately bought the game. Another example, the ever growing cult of Halo has definitely had some boost in membership from Red vs. Blue (and vice versa). And those are just two examples. Simply put: A well-crafted machinima can draw people to any game. (The caveat being well-crafted.)

Machinima as an Enemy: Intellectual Property Rights

On the other hand, letting the general public do what they will with your game engine can be seen as an unwillingness to enforce your rights to your intellectual property. If you are seen in this light, then you may be unable to enforce rights in the future. What does this mean specifically? Well, let me use an example. Let’s say I write a story that becomes very popular. All of a sudden, hundreds of people start writing side stories about my characters. I choose not to enforce my rights. Later, yet another one of those side stories becomes hugely popular and starts making a lot of money. If I were to sue to enforce my rights, the court would likely ask why I hadn’t bothered to enforce these rights on anyone else. Profit alone is not enough of a reason to pursue or ignore derivative works. A game is no different than a story, and the level of derivativeness is largely based on how much of the game is incorporated into the machinima. For example, Red vs. Blue would be less derivative than a machinima about the Master Chief.

So what is a Developer to do?

Is there a way to have both the publicity and the rights? Of course, and the answer is licensing. So long as you enforce the use of licenses for your work, and pursue those who won’t make the effort to secure a license, then you should be seen as enforcing your rights. Of course, you should have your attorney draft the license.

This just leaves the issue of royalties. For a contract like a license to be valid, both sides have to tender “consideration” for the deal. You are tendering the license to use the game for machinima. The recipient of the license needs to tender something of value. In the case of a machinima license, asking for something as simple as $5 or $10 dollars for non-commercial use should be thoroughly sufficient. Of course, if there is a commercial use involved, a developer or publisher is likely going to want more than token consideration. On the other hand, a developer who wishes to have no machinima made can simply refuse all license requests.

The secondary part, though, it to actively protect your rights by monitoring sites like YouTube for unlicensed video works. As part of this, the license will likely need to detail the name of the person who receives the license as well as a screen name they plan to post it under. The developer needs to send removal requests to the site for all unlicensed works. Even if they are not removed, keeping a record of actions to get them removed may satisfy some courts in terms of the base level of action required to maintain protective rights to the work. As a general rule, requests that result in no action are worth more than not sending requests at all.

Check back soon for Part 3: “So, Where is Machinima Going?” Part 3 will detail my thoughts on making this process easier for both the Machinimist and the Developer while keeping everyone’s rights intact.

A Short Post on Jack Thompson

Like most of the other legal gaming blogs, I occasionally find it necessary to comment on the activities of attorney Jack Thompson (as of this posting, he is still licensed in Florida). As a courtesy to another member of my profession, I will not delve into his long history with the gaming industry or the gaming community, or the series of statutes he has sponsored which have been struck down. On a basic level, I agree with him that titles with adult content should not be placed in the hands of children (I, however, disagree on the implementation and place a greater responsibility on the parents, but that is a separate matter for discussion at a later date).

However, today Jack issues this complaint, which was reposted by Kotaku. I have now forced myself to read it in its entirety, and it falls well beyond the norm of complaint drafting and more into the realm of a self-promoting tirade (not to mention the occasional typographical error, the first of which I found on page 5). While I could probably write an entire post critiquing his form and use of language, or all of the complaints he lists, I will rather focus on the specific complaint against Kotaku.

A short comment before I begin: I am not licensed in Florida, but as this is a federal claim, I feel competent to comment on it. Moreover, this is merely commentary, nothing more, and I do not claim it to be definitive, exhaustive, nor to have any actual legal effect. These are simply my observations on the matter.

Why this claim? Well, first, it's not a claim at all. Let's look at the specific statutes he references.

18 USC 241 and 242

This statute, most notably, is a criminal statute. The basic premise of criminal law is that it is not a private action. When someone violates a criminal statute, it is the job of the government to bring charges and try the suit. If you were to assault me, I could only bring a civil suit. The District Attorney (or a similar official) would have to bring criminal charges. His reference to the statute is misguided at best.

42 U.S.C. § 1983

This is a civil claim, but once again, Mr. Thompson has missed an important element of the statute: The entity must be operating under color of law or authority. Here is a lengthy article on the statute. I can see no stretch of the imagination under which Kotaku or Gawker could be viewed as operating under the color of state authority or law.

42 USC § 1985 (3)

Under Griffin v. Breckenridge, 403 U.S. 88, the bias of the conspirators must be "some racial, or perhaps otherwise class-based, invidiously discriminatory animus." Jack does not have any of these, unless he wants to claim that somehow Kotaku is discriminating against the class of people he claims to represent. Rather, I believe most reasonable jurists would see their actions as non-conspiratory (as conspiracy is an essential element) and non-discriminatory on a class level.

Section 1988 is not worth discussing, as it only allows for attorney's fees in the event of a victory. There is no substantive issue to discuss.

Conclusion

While I can't say how this case will turn out, I am at least glad that Mr. Thompson had the common sense to avoid a libel/slander claim against Kotaku, which would have likely failed as Mr. Thompson is undoubtedly a public figure. While many of these claims are relatively novel, they also seem to be relatively poorly constructed as a way to include a blog he particularly dislikes.

As a side note to anyone who wishes to pick up a cause as Mr. Thompson has:

Sensationalism will typically not yield the best results. Being reasonable and agreeable to compromise generally works much better.

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Second Life Professionals: Just Fun or Real Fraud?

Anyone who has explored much of Second Life has noted that there are many “professionals” offering services in the world. From psychiatrists to lawyers, they are all present in Second Life. However, with the proliferation of Second Life residents and resident professionals, an interesting issue arises: Does real life accreditation, training and experience matter in Second Life? More importantly, should it?

Anyone can go into the virtual realm and claim to be just about anything. If someone is using their real name, it’s generally easy enough to see if they’re really a member of a state bar or graduate of the university they claim. With a pseudonym, it becomes much less likely to track them down. So, if I or anyone else decides to begin their Second Life as a professional, should their credentials be subject to some sort of actual verification?

Much of the outcome will depend on any future outcry from the residents. If there is some scandal, that outcry is likely to follow. However, in the meantime, I think it is important to examine the issue and perhaps get residents to voice their opinion on the matter to avoid an actual scandal. Just as an example, I am going to explore two very different professions, psychologists and attorneys, and how their lack of education may impact Second Life and its residents.

Psychologists

A psychologist’s key role in Second Life would be someone to talk to, much like a real life psychologist. From this basic level, there seems to be little harm in allowing anyone to open up a psychologist’s office in Second Life. However, if the psychologist goes beyond mere talking, to actually claiming to diagnose disorders, the ramifications could be much greater, especially if the diagnosis is incorrect, given by an unlicensed pseudo-professional, and taken at face value. While it may seem far fetched that anyone would take a diagnosis given in Second Life seriously, if someone has a serious mental issue, it could easily happen.

Attorneys

Attorneys in Second Life could serve two functions: dealing with in-game issues and dealing with real life issues. Both of these could be a potential nightmare if an unlicensed pseudo-professional is involved. As with all professions, there are a large number of untrained, armchair lawyers, many of whom spend hours a day attempting to argue legal points on message boards across the internet. Some are better at these arguments than others, and like so many topics, many are completely out of touch with the reality of the legal situation.

Dealing with in-game issues is one real where an unlicensed person may have enough knowledge to operate without detriment, for example in resolving in-game disputes. After all, real life mediators and arbiters do not need to be attorneys in many states. However, in the in-game realm, there are issues that could spill over into the real world realm that do need competent legal advice, for example license or customer agreements. Since Second Life residents retain the rights to the things they create, many of them have license agreements, and firms in Second Life do offer agreement reviews (see here). Reviews of or drafts of binding legal documents done by armchair lawyers could have detrimental effects should there ever be a client.

More problematic would be the offering of legal advice applicable to the real world entirely. Every state has some sort of criminal penalty for the unauthorized practice of law, and for good reason. The practice of law is a difficult profession that requires training to properly research and analyze legal issues thoroughly. Finding a quick answer on Google or Wikipedia is generally not sufficient, and legal advice at that level, when represented as complete and accurate, can lead people to make the wrong decision. Moreover, as laws vary by jurisdiction, advice from a lawyer in Texas about Texas law likely won’t apply to someone in Iowa under Iowa law, for example. Thus, even a credentialed person could communicate incorrect advice if there is an ambiguity as to something like jurisdiction.

Conclusion

Psychologists and Attorneys are just two groups of professionals who could and do appear in Second Life. Accountants, Doctors, and countless other groups could appear, each with their own respective dilemmas involving the practice of their profession in their Second Life. Moreover, for each group, the potential for fraud varies and the risk of the results of the fraud varies. I would hope that anyone seeking professional services in Second Life takes anything they receive with a grain of salt. However, should there be an increase in the number of actual and supposed professionals offering services in Second Life, some sort of credential verification should likely be implemented.

Taxing Azeroth: Why WoW Players Shouldn't Fear Uncle Sam

1UP recently posted this article, which originally ran in Games for Windows magazine this month. Taxing virtual economies has been something I've looked into since 2005, and based on the current state of the World (of Warcraft), residents of Azeroth do not need to worry about the IRS auditing them because of the two Darkstone Claymores you found, or the Plated Abomination Ribcage you're wearing.

The article's basic premise is largely correct: Taxable income, as defined by the IRS, includes pretty much everything. This can include income from the sale of intangible property. However, even ignoring the ownership issues presented in the article, the present reality poses a more significant sticking point for the IRS. Specifically, the goods in Azeroth have no actual value. As most players remember, the eBay market for World of Warcraft goods ground to an absolute halt in the wake of a major crackdown. As a result, there is no longer an approximate exchange rate of World of Warcraft gold to US dollars, which further means that items have no value in US dollars, at least not one that is easily determined. Moreover, the market is essentially gone. The occasional friend gives friend $20 for a Spiteblade is not a frequent enough occurrence for the IRS to take notice or care about what is, all in all, now a negligible amount of income.

The closest allegory is a company dealing in its own intellectual property. For this example, let us say a company owns a trademark. Ordinarily, income from the sale of that trademark would be taxable, and changes in the value are reported in taxes (not as income, but the finer points of intellectual property valuation and taxation are a lengthy discussion). However, the company has a freely alienable piece of intellectual property. A player does not. The player is limited to trade their item in the constraints of the game for other property in the game.

This stands in stark contrast to the state of affairs in Second Life, which I will be addressing in an upcoming article. This also stands in contrast to the former state of affairs in the World, when eBay fueled a real world economy for virtual goods. There was a significant argument for taxing virtual goods when they were transferable for real money, and undoubtedly the volume of those transactions raised the eyebrows of at least a few agents of the IRS.

In any event, the likelihood of the IRS opening an Azeroth office seems remote at best, as there is no real world value for them to be taxing because of the basic lack of transferability for actual, taxable income. This will likely remain the case so long as Azeroth remains an economy independent of the US dollar. Should the situation begin to return to the eBay marketplace that dominated until just recently, or should a Second Life approach be taken in, say, World of Warcraft II or World of Starcraft, then the IRS may begin to pay new attention to the resale value of your Nerubian Slavemaker.

Making Indie MMORPGs Work: Server Franchising

Can an independent developer create an MMORPG? That question has been poised, and was addressed at least in part by the recently held Indie MMO Game Developer Conference. One key issue, however, with rolling out any MMO game is server usage. MMOs are highly demanding, obviously, and typically require multiple servers as the user base expands. Depending on the connections available, these servers may need to be strategically distributed ad various points across the US and in other nations worldwide to avoid issues with lag that take away from the gaming experience. To date, this has either required a significant investment by the developer/publisher or volunteers with varied servers. A concept that has not yet been rolled out, accordingly, would be a franchise-type system for servers.

Franchising is what has brought a McDonalds to every nation of the world, among other things. The basic concept is this: A franchisor develops a business model, a “system,” which they license to franchisees. In return, the franchisee runs the business according to the model and pays a license fee back to the franchisor. Through this system, the franchisee bears an individual risk of loss smaller than the company would bear for rolling out the system to so many locations at once. Conversely, the individual franchisee stands to make substantial profit but does not have to generate an original business model or develop the brand.

This concept could be applied to MMORPG servers. Before I begin the outline of the system, I must emphasize that before anyone considers actually proceeding with a model such as this that they absolutely must consult an attorney because the Federal Trade Commission regulations on franchises are very specific, and no one wants to be caught in violation of those regulations or the corresponding state level regulations.

To simply state the model, an indie developer created an MMORPG. They then license the server end to various server providers at strategic locations in the US and/or other countries to minimize player lag. The server would collect the billing for its players, and in turn pay a percentage back to the developer. The developer has then earned the license fee and the royalty (the percentage of the sales) while the server owner is earning the remainder of the monthly fee.

Under this model, the developer could be free of the burden of maintaining servers on a day to day basis and could focus on additional development of the game. Conversely, someone with available server space could get an income stream for the future without having to develop the software. Moreover, a well crafted agreement could include options on future software, allowing those who enter in early the potential to secure a spot on sequels and new series by this developer.

There are many finer points to the exact agreement that would have to be worked out, but this structure, properly created, could be hugely beneficial. Rolled out on a larger scale, a publisher of indie MMORPGs could use a server franchise network to roll out multiple games at once. In any case, it is a possible way to rapidly deploy an MMORPG that is not backed by a mega-corporation with an existing server network.

For the MMORPG Fans

I've noticed the comments about the upcoming MMORPG content. While I don't have any of the new content ready yet, other than my second post, I thought I would take the time to re-link an old paper I wrote about MMORPG gambling. You can read the paper here.

I re-posted the paper on GoogleDocs since my TTU posting will expire in the not too distant future. That paper has been referenced many times, according to my most recent searches, including Wikipedia, Kotaku, Answers.com, and other scholarly papers posted online. A quick google search will generate quite a few results.

One note on the content of the paper: it is officially out of date. Because of changes to eBay policy on the sale of virtual goods and the passage of the Unlawful Internet Gambling Enforcement Act of 2006, a some of the current analysis no longer applies, other than in the theoretical sense. I've written an update, but due to some potential publication restrictions, I cannot post the update at this time. Perhaps it will make an appearance here in the future.

Let’s Talk About Machinima – Part 1 of 3

Let’s Talk About Machinima will be a 3 part series. The first will be Machinima from the perspective of the Machinimist. The second will tackle Machinima from the point of view of the game developer. Finally, the third will be a bit of a forward thinking proposal on Machinima.

Before I begin part one, I do feel it would be useful to give a few Machinima links for the uninformed.

Wikipedia article on Machinima – A good quick reference for those not familiar with the art form.

Machinima.com – A huge library of Machinima and related articles

Machinima.org – The Academy of Machinima Arts and Sciences (the Machinima awards)

Rooster Teeth Productions – Probably the most successful and well known group of Machinimists to date, as well as makers of what is probably the most popular Machinima series, Red vs. Blue.

Part 1

“So You Want to Make Machinima”

Ever since Red vs. Blue stormed across the internet in 2003, people worldwide have been interested in machinima. While others may quibble on the exact catalyst for the machinima explosion, I firmly believe Burnie Burns and company are at least mostly responsible for it. However, machinima is one of the more complex mediums from a legal standpoint. Not only are there the traditional film maker’s intellectual property concerns, there are also a whole host of concerns from the game engine used for the machinima. Hopefully this article will help explain some of these issues. However, I must caution anyone who wants to create a business in machinima: SEEK COMPETENT LEGAL ADVICE FROM AN ATTORNEY. This article alone is not sufficient to guide anyone, and as every situation varies based on the facts, competent counsel is an absolute must.

Script

A script is like any other text, be it a book or a paper or an essay. To protect the content of the document, it needs to be copyrighted. Copyrights are relatively inexpensive (the filing fee is currently $45 for most items), and the process is pretty simple. Copies of the work are submitted with the form and fee, and a copyright certificate is mailed back in a few weeks.

The biggest misunderstanding with the copyright system is that a copyright only protects the expression itself, NOT the idea. The term originates from having the right to produce copies of text. With a copyright, the dialog is protected, not the plot (more or less).

There is one potential pitfall with the script. If a large portion of the script employs elements from the game (characters, dialog, etc.), then it might be considered a derivative work rather than an original work. If that is the case, then you will need to have the original author’s permission to copyright the work. A good example of a script that would not be a derivative work is the script to The Strangerhood. While Sims 2 elements are clear in the video, the script itself could be applied to anything and does not take anything from the game.

Voice Talent

Voice Talent is something that needs to be carefully contracted. I know that many machinimists start out using their buddies and that most people feel awkward about presenting a friend with a contract. If you want to be forward thinking, abandon this mindset. It is far better to set down the ground rules in a contract up front than have the whole thing blow up down the road. The contract does not have to be overly formal, but should outline things such as who owns the rights to the actual vocal performance, what (if any) compensation there will be, and under what conditions the agreement can be modified or terminated, and if terminated what happens to the rights set forth in the contract.

Obviously, if your machinima takes off and reaches the Rooster Teeth level of accomplishment, hiring an attorney to revisit and draft more thorough contracts would be a smart move, but for the aspiring machinimist, a simple agreement signed by both parties should be more than enough to get you started.

Music

Music is the first item in this discussion that you have to get licensed, unless it’s your original work or it exists in the public domain. Before getting into licensing commercial songs, let’s address these two issues. First, if you write your own music, you have full rights to it. Once again, however, it would be worthwhile to copyright your music. Songs in the public domain, on the other hand, are ones that not subject to copyright. They are free to use, and sites like PDInfo.com can help you locate such songs.

If you want to use commercial music, you will need a license, and licenses are not cheap. Short of getting permission from the individual artist, groups like ASCAP provide licenses to a large list of songs, provided you continue to pay the bill. They even have a “new media” license (see here).

Game Engine

The game engine is the copyright issue that is the trickiest part to deal with, but also the most integral part of the machinima. There are a whole host of issues, more than I can fully discuss, but I will try to focus on some of the main points. In Part 3, I will discuss some changes that could be made in the future to simplify this process. Before I begin, there are engines that exist in the public domain or with a public license of some sort (such as the GPL). These are free to use, and the issues discussed here should not apply.

First, there is the issue of derivative works. When you use a game engine, especially the character models and maps, you are in essence creating a derivative work based on the game, almost like a fan fiction is a story based on an existing copyrighted work. While it is copyright infringement on its face, uploading a short video on YouTube or Machinima.com may never attract enough attention to actually commence a copyright action against you. In fact, Machinima.com has agreements with some developers to use their engines in conjunction with their website (please see Machinima.com for details). However, if your project becomes widely popular, expands into a series, or becomes a full time business venture, then the developer will likely notice. This is especially true if profit enters the picture.

Similarly, the End User License Agreement on most engines forbids their use for profit or for commercial use. This is another potential lawsuit if your machinima takes off. Again, this is something that you, as a machinimist, want to avoid.

The easiest route is to simply ask the publisher or developer for permission. Depending on whom that is, permission may be free, inexpensive, very expensive, or just not available at all. To find out, you will simply have to ask, but keep in mind that smaller developers or publishers are often much more understanding on issues such as these than the bigger or more popular studios. If you reach an agreement for the use of an engine, the first rule is to get it in writing, and make sure it’s an official writing (signed by someone in the company with authority to do so, preferably on company letterhead). Second, if you are paying for the license, pay by personal check and put some information on the memo line, such as “License to Use XXXXX Engine in Machinima.” While it may sound like overkill or Judge Judy advice, little elements like that can be useful should a dispute ever arise. The final rule is: Don’t push your luck. If you get a license for one project, don’t start five more and expect the company to go along with it. If you have a license, don’t give it to your friend. Ultimately, if a large number of machinimists garner ill will with the developers, then no machinimists will get licenses. Put simple, if you want to be respected, treat others with respect.

Final Video Product

Assuming you have the rights to all elements of the video (the engine, the music, the voices, the script), then you can copyright your entire video, individually or in batches (such as a season of videos). This protects you from others distributing your video without your permission. After all, if you are finally making money selling your machinima DVDs, you don’t want little Timmy down the block burning copies and selling them for half price on eBay. While getting more people to see your work is always great, the artist should be the only one profiting from the work.

Check back in the near future for Part 2: “So What Should I Do About Machinima?” (Machinima for Game Developers)

A Taste of What's To Come

I am honestly quite impressed with the number of responses on the previous post. It's amazing what a link from Joystiq can do.

As I stated in the first post, I promise there should be one substantive legal post per week at a minimum, depending upon what my work schedule allows and what issues may also arise in the gaming media.

I don't have this week's main post quite ready yet, but I thought I would put up a list of the few of the topics I plan to cover in the not too distant future. If you have a request for a topic, please leave a comment or send me an e-mail at mmethenitis@vernongoodrich.com.

Upcoming Topics:
-Machinima
-MMORPG Intellectual Property
-Professional Gaming Leagues
-New Server Business Models
-MMORPG Income and Taxation
-Mergers and Acquisitions for Game Developers

This is just a sampling of the topics I have in mind, and some may span multiple articles. I look forward to your continuing commentary and discussion as the articles are posted.

Deceptive Advertising? Not Quite

In response to this editorial posted at GameStooge, I laughed. I truly hope that jonahfalcon was writing it more for comic content than for actual legal content.

Is the Guitar Hero II box deceptive advertising? No. I don't have my copy in front of me for the exact wording, but indicating that certain songs are included would not be deceptive, even though you cannot play them from minute one. In fact, if it were considered deceptive, then any game which says "## Levels Included!" would be guilty of a similar deceptive practice. I am sure someone, reading an article such as this, will expend the resources just to test such on box advertising in court, and I can only assume the judge hearing said action will quickly dispose of it.

It is the Federal Trade Commission that deals with deceptive advertising. They define a deceptive ad as one that "contains a statement - or omits information - that:

• is likely to mislead consumers acting reasonably under the circumstances; and
• is "material" - that is, important to a consumer's decision to buy or use the product."

In making that determination, the FTC follows these steps:

• The FTC looks at the ad from the point of view of the "reasonable consumer" - the typical person looking at the ad. Rather than focusing on certain words, the FTC looks at the ad in context - words, phrases, and pictures -to determine what it conveys to consumers.

• The FTC looks at both "express" and "implied" claims. An express claim is literally made in the ad. For example, "ABC Mouthwash prevents colds" is an express claim that the product will prevent colds. An implied claim is one made indirectly or by inference. "ABC Mouthwash kills the germs that cause colds" contains an implied claim that the product will prevent colds. Although the ad doesn't literally say that the product prevents colds, it would be reasonable for a consumer to conclude from the statement "kills the germs that cause colds" that the product will prevent colds. Under the law, advertisers must have proof to back up express and implied claims that consumers take from an ad.

• The FTC looks at what the ad does not say - that is, if the failure to include information leaves consumers with a misimpression about the product. For example, if a company advertised a collection of books, the ad would be deceptive if it did not disclose that consumers actually would receive abridged versions of the books.

• The FTC looks at whether the claim would be "material" - that is, important to a consumer's decision to buy or use the product. Examples of material claims are representations about a product's performance, features, safety, price, or effectiveness.

• The FTC looks at whether the advertiser has sufficient evidence to support the claims in the ad. The law requires that advertisers have proof before the ad runs.

Source

Applying these guidelines, it seems that a reasonable consumer of video games will know that more content becomes available as the game is played. In fact, the vast majority of games follow this model, be it through levels, items that expand the playable area (i.e. Metroid or Zelda), or an accomplishment-unlocking system (i.e. Guitar Hero). In fact, the accomplishment-unlocking system has been a staple of the racing game for quite some time, usually additional tracks and cars, as well as many iterations of extreme sports games like Tony Hawk or SSX.

Even if an ordinary consumer might be misled, the statement itself is still not material. Most consumers who buy a game are willing to play it, so most consumers will make the content available. It took me less than 6 hours of actual play time to have every song available in Guitar Hero II. Even if you could only play an hour a day, the content would be available in less than a week. And the unlocking scheme doesn't mean the content is not there, just not accessible.

Video games do not easily compare to other products or forms of entertainment. Analyzing them typically takes some new thinking and needs to avoid the kind of analogies used in the GameStooge article. I continue to assume, though, that the article was written for humor rather than content, and in that regard the author was quite successful.

Second Life Casinos and the new Unlawful Internet Gambling Enforcement Act

CNN: Virtual Feds Visit Second Life Casino


It was inevitable. The MMORPG crowd and the Internet Gambling Regulators have been on a collision course for quite some time, as I noted in my 2005 paper. However, since I wrote that paper, the landscape has changed. The Unlawful Internet Gambling Enforcement Act passed congress, dramatically changing what is "illegal" internet gambling. Meanwhile, Blizzard and eBay have pretty much eliminated the gold trade from World of Warcraft.

What does this investigation mean for Second Life? More than likely, Second Life Casinos will have to be shut down. The statute is worded in such a way that any betting with Linden Dollars will exactly fall in the realm of the statute. Failing that, Second Life could be forced to shut its doors because transactions for Linden Dollars would be "restricted transactions" under the act. Under an alternate interpretation, transactions of Linden Dollars to Second Life casinos would be restricted, if the Federal Reserve classified Linden Dollars as a "designated payment system." In either case, the Second Life casinos should be on notice.

Does this have any implication for World of Warcraft? For now, nothing. World of Warcraft seems insulated enough from the real economy to fall under an exception for risking nothing of value other than the result of personal efforts in the game. Not that this really matters, since Blizzard banned World of Warcraft gambling quite some time ago.

It will be interesting to see how the regulators actually deal with Second Life. Until then, it seems likely that their casinos won't last much longer.

Welcome to The Law of the Game

Greetings and welcome! You have made your way to my new blog site, "The Law of the Game." This site will have typically at least one new weekly post. The articles will cover topics including the law, the law as it relates to video games, the law as it relates to gambling, and the gray area between video gaming and gambling as it has evolved online.

I will always be open to questions, and may even publish responses with permission from you.

I look forward to providing you with some information, and hope to make you think.