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May 07, 2012



Why "not good"?

If you're earning "an item of value", is that somehow not income? If not classified as gambling (due to the recreational/gameplaying nature of the activity and the element of randomness in outcomes), how *should* it be classified?

(If the idea is to avoid any taxation at all, the safest way I can see is to somehow ensure that nothing that's earned has real-world value at all.)


First off, agreed. The idea that something entertainment/enjoyment related is "income" just because somebody might pay for it is ludicrous. If that's the case, I should owe taxes for every backrub my wife ever gave me, since they cost $120/hour at the gym.

It should only count as taxable income when you realize a net gain in actual money. Which is how things work for other stuff like antiques and collectibles, I believe (IANAL). If you get a valuable trinket at a garage sale that's worth way more than what you paid for it, you don't owe taxes until you sell it (I'm pretty sure).


There are a number of reasons why it's not good most of which come back around to the curtailment of the pursuit of happiness by individuals who like to play games (with consequent effects for the games industry and games academia).

If WoW is gambling then many people who currently play would stop playing, whether because they don't want to get taxed for playing it or because they may have religious or moral positions against gambling. Many children would not be able to play online games and many parents would incur liability if they did so.

You can't ensure that nothing that's earned has real-world value. In fact the sentence itself is a tautology - if it's earned then there's a value, that's what the word "earn" implies. For instance your user name Doug D has acquired value as a conqequence of your posts, people will buy user names for forums and websites. I bet Ted's would go for over $100 if he ever sold it.

Coming back to games people sell everything that drops, characters, leveling services and accounts. If it's online you can sell it because once you've earned something, anything, someone else will often prefer to "earn" the same using real world money rather than in-game time.


I've lived long enough to have come to believe in a very great many "consumer protection" laws.

Pretty much it boils down to this. If companies don't act like you'd expect your neighbor to do without feeling like punching him in the face, some sort of rule(if not a specifically written law) should be in place.

Basically the law is there to prevent reasonable people from solving grievances with violence or other retaliation. Just because large corporations are faceless and you can't just go get in the face of the owner and ask him to treat you as a neighbor, shouldn't be an out.

Some rule about requiring customers be treated with "good faith" (already there in many jurisdictions)and some mention about "deliberate design practices to induce impulse purchases of non-refundable goods". The wording isn't right of course, because there isn't anything too bad about putting candy bars and flowers and the national enquirer at the super market checkout.

But the digital world is different in that there are social limits to obvious overspending... the person behind the register and behind you in line.. the striking reminder when you look in your cart of visually seeing "im buying a lot of crap"... the scale limitations (you really aren't going to by 10 dozen roses and deliver them to each of your friends.. or even fit them in your car)

What is "reasonable" in one situation is less reasonable in others, and its not unreasonable to steer companies toward making their business profits from leaving customers satisfied on a long term basis.

I'd suggest allowing consumers the right to opt in advance for "one click" purchases and give the option that all purchases that will require additional cash outlay require a secondary login to make that purchase . Perhaps you allow the 1 click option to those who prefer that, but with some selectable thresholds.

I think a very good threshold might be allowing "prepaid" purchases out of existing balances only...like a pay pal account where if i want to make more than the 57$ i have in it I need to go through the steps of making a bank transfer.

I've been anoyed about Amazon's pushing kids into one touch environments on the kindle. I don't even want that for myself and I find it shady that they won't offer a policy that a customer wants that the customer feels will protect them.

Refusing to offer customers a way to make it harder for themselves to spend seems like bad faith business to me.. its admitting that the need the possibility of ill-considered purchases to make a profit.

Some sort of "safe harbor" for sellers to prevent open ended complaints really makes sense. Offer prepaid only options, offer out of game re-login options, set a default limit per period of purchases with a customer given the option to go and change the radio buttons to override their preferences...etc.

As for the gambling.. thats another issue but there is a broader sense of “gambling type appeal” coupled with real money that doesn’t feel 100% off.


I'll qualify the above by saying just because one person doesn't like it doesn't make it wrong but if like 80% of people looking at something from a somewhat disinterested angle see something as "shabby" and misleading they'd do something about it in any small hamlet, and just because corporations are large and faceless that shouldn’t' give them an out for the "hamlet" rules.
Like the hamlet , a legal action isn’t usually needed. Social pressure as well as fear of loss of business often adjusts the worst of behaviors and some compromise on making the past right. With corporations that have dominant positions in fields with un political customers, sometimes having something on the books an a veiled threat of eventual further regulation sets the ball in motion. Others will follow because if they’re too far out of line with the competition there will be far greater consumer resentment.

By and large the last 30 years or so, customers are given that benefit. Nordstrom’s was a early national example but home depot another. You can say all you want about the shabby quality of wood at home depot and definitely might have some high level discussion on whether using variable pricing per location in a predatory way is fair, but the consumer at home depot could always return almost anything for lack of satisfaction . Sure there are costs involved with that, but they and others like that set some new expectations so that it seems highly unusual if a store refuses a return and the idea of a "restocking fee" feels wrong.

They and many other companies around the same time had the "low price guarantee" thing going and returning something because it was cheaper elsewhere was an entirely fine, almost invited practice.

There weren't laws necessary for that to happen.. competition and the market place adjusted.

I'd think players in the virtual sales and electronic data sales can take the lead themselves and set up options for consumers that put some barriers to the scale of micro transactional purchases especially those that they can very well predict are often done in compulsive fits of loss of inhibition.


Ted>Game worlds need to be identified as such and then tightly walled off, to the extent possible, from reality.

I agree, but in today's free-to-play universe that may not be possible.

Take the case of the Chinese game ZT Online, for example. In that game, there are chests that, when you open them, sometimes have something really good in them and sometimes don't. You can buy those chests one at a time. You can buy the chest and open it in a single click. It's like pulling the handle on a slot machine. I don't know if the things you can "win" have any real-world value (ie. whether you can sell them of not); would it make a difference if you couldn't?

To me, the above looks a lot more like gambling than does WoW's system of loot tables. In WoW's end-game, you're killing bosses in the hope that they'll drop the item you want, but the time taken to do it and the fact that you may not succeed in evening getting to the boss is long enough to make sure players don't get into a gambling flow. In the levelling game, players will rarely (if ever) kill monsters repeatedly in the hope of getting a rare drop - they just want the XP so they can move to the next quest.

I'm sure there's a definition of "gambling" somewhere that could cover just about any transaction, though...



To me, the above looks a lot more like gambling than does WoW's system of loot tables.!


I wouldn't favour a blanket exclusion for video games from gambling legislation.

RB's two examples seem clear to me ZT treasure chests = gambling and should be treated as such. WoW loot tables are not gambling and need no special protection. Any reasonable definition of gambling has to involve a bet or a wager on the outcome of an uncertain event. The fee paid for a treasure chest in ZT is a wager. The monthly sub in WoW is not.

All that is required is sensible thinking on the part of legislators (but perhaps that is too much to hope for when it comes to video games).


What Richard describes is precisely what Japan's consumer protection authority is coming down on. It's pretty clear that it's gambling.

The argument that a BoE sword drop obtained after paying a monthly fee is the result of gambling is a stretch. Clearly, anything tradeable in the game economy can be assigned a real-world value so long as the currency is also tradeable. You pay a fee to access the prospect of realizations of that random drop. The analogy would be something like... Paying $15 to play a slot machine for 30 days, where you can pull the arm as many times as you want, but before you can pull it you have to solve a difficult math problem. That's no slot machine.

It's also different from games of chance that have an element of skill. Take blackjack. No matter how you play, so long as you follow the rules, you are guaranteed a realization of the random variable. Raiding comes with no such guarantee. While you could argue that killing a boss is a random variable, I think courts would call that a deterministic event that separates the actor from any real gamble.


Edit: That's no slot machine == "That's no simple game of chance"


Law and policy need to recognize the difference between a "game experience" and a "gambling experience." The problem is, will courts perceive such a difference? If there is a difference, in what does it consist? We need to come up with bright lines.

Some candidates:

Narrative: If the random valuable event is an element of a longer story, it is a game. If not, it is a gamble.

Aesthetic Scope: If the aesthetic experience extends significantly beyond the immediate thrill of revelation, it is a game. Otherwise, a gamble.

Temporal: If the event is instantiated and resolved quickly, it is a gamble. Otherwise a game.

Investment: If the event requires little prior work or labor, it is a gamble, otherwise a game. Note: Mental work, research, and information gathering are common to both games and gambling. The work notion intended here involves becoming eligible for the act itself, not learning about the act and its consequences. Grinding shards, for example.

Just some ideas.


I think these are all good ideas. I would add the aggregate economic value, as well, if only because I think courts and regulatory authorities would take that into consideration. If the value of randomly dropped items were "sufficiently large", authorities would, and probably should, be more likely to regulate.

But, as to what is sufficiently large? Gambling is such a hot-button issue that I would expect any calculation to be closely scrutinized. It would have to consider the welfare effects (addiction to random drops!), whether it is an avenue for money-laundering, tax revenue implications, etc. And then, finally, it would have to be based on the calculation of how much of the total value of the game is derived from the occurrence of random drops - not just after killing the dragon in the end game, but also after killing a spotted gnoll in the level 20-30 area.

And therein lies the rub. While most killing for random drops can be classified under one of your four candidates, there are plenty of mob deaths that result strictly because the random drop can be very rewarding in an (in-game) economic sense, can require virtually no effort on the part of the player, and be completely orthogonal to the purpose or value of the game or virtual world. How many times have you seen this behavior:

Step 1: Log into max-level character.
Step 2: Enter low-level area and quickly slaughter all potential droppers of the item you want.
Step 3: Alt-tab to facebook for a few minutes. When everything has respawned, return to step 2.

But even then... online gaming would have to be a much more popular activity in the US before these kinds of activities would garner the attention of gambling regulators.


The article that you linked pointed out the nature of the specific mechanic that is being legislated against -- it is more of a pyramid of drops through direct payment than loot drops - there seems to be quite a difference here.
For WoW to be an example, the player would have to directly pay at the chance for a drop, and then, after obtaining their whole tier set, get an additional reward.
I think the key here is direct payment for the chance at an item of a set that you then must have all of to get another item.

This is far more closely related to TF2's create system than loot drop.


"Game worlds need to be identified as such and then tightly walled off, to the extent possible, from reality."

Doesn't this go against everything Terranova is about?

Game worlds are reality.


Ted, would like to revisit all of this soon, but this is from seven years ago:



Thanks Greg. I should look these old convos up before posting.


Thoreau, I wasn't aware TN was ever about anything, other than, a place to chat about whatever. It may have been about beer at some point, but that too has faded.

As for me, though... some propositions I hold dear argue strongly against "game worlds are reality." I misused the word Reality too. So, to be clear...For me:

1. Reality is in heaven. This world is not reality, it's a fallen place that at times reflects a better and higher place. Reality only abides there, not here.

2. Game worlds represent our natural longing to be in that better place, the reality that we once knew but have lost, the happy place that is beyond us right now. Strictly speaking, Fantasy is memory.

3. Game worlds, as an element of fantasy in general, are really important for human dignity. But they must serves the needs of fantasy to have this importance.

4. Connections between game worlds and this world are inevitable. Just as dreamers always awake, game players encounter things outside the game.

5. To say that a thing is inevitable to some degree does not mean it is desirable or must be ubiquitous.

6. Therefore, games should be walled off as much as possible from this world.

I don't know what Terra Nova is about, but that's what I'm about.



Perchance do you have updated links for that terra nova post?


I agree that it sounds wrong to label mmos as a form of gambling, but I can't gather my thoughts on what the immediate harm would that mislabeling do to mmo community, industry, and healthy development? And if there is any benefit, intentional or not, can we think of any?


Ted>Reality is in heaven.
So every time you've used the word "reality" in TN for the past 8 or 9 years, you've meant some place in your imagination? What do you call what everyone else calls the "real world", then? We do need a word to refer to that, so we can contrast it with virtual worlds.

>This world is not reality, it's a fallen place
No, see, when people create virtual worlds they try to make them improve on their reality. They don't make them miserable worlds full of woes for their inhabitants.

>Game worlds represent our natural longing to be in that better place
You just made the same point I made above. People create worlds in order to reflect their idea of a better place than the world in which they currently live (their "reality"). Therefore, if our reality has been made by someone else (who lives in a reality called "Heaven"), our world is that creator's idea of an improvement on Heaven.

>Strictly speaking, Fantasy is memory.
Strictly speaking, Fantasy is imagination.

I agree with your subsequent points.



Richard said
>This world is not reality, it's a fallen place
>>No, see, when people create virtual worlds they try to make them improve on their reality. They don't make them miserable worlds full of woes for their inhabitants.

By "this world" I meant what you call the real world.

I'm not going to get into another religious debate, I can't stand the heat. If you hate what I said, just go read Tolkien's On Fairy Stories cuz it's all stolen from there.


A few points on this..

Doug/STabs: The gambling = tax argument here is rather US-centric. For Australian, British and I dare say other countries, having it classed as gambling would actually make it tax-free.

Richard (6): To me, your first example looks like a slot machine. I don't disagree that it is gambling. Your second example looks like poker -- there's some mixture of skill and luck there, but what is it more of? That's an issue that has been struggled with in texts like Caillois and more recently in British/Danish/US law.

Once we say the first is gambling, it leads us down a slippery slope -- if Virtual Worlds aren't "not gambling" because they're Virtual Worlds, then just like slot machines vs poker vs sports vs others, somebody will have to decide where we have enough luck or skill to tip the balance.

Edward (11): Some interesting arguments here.

>Narrative: If the random valuable event is an element of a longer story, it is a game. If not, it is a gamble.

I like this. I'm sure there are ways gambling operators could get around it (is playing a slot machine in Second Life a part of your characters story?), but it seems a solid foundation for some kind of distinction.

>Aesthetic Scope: If the aesthetic experience extends significantly beyond the immediate thrill of revelation, it is a game. Otherwise, a gamble.
>Temporal: If the event is instantiated and resolved quickly, it is a gamble. Otherwise a game.
Both of these have the same counter-argument -- sporting events. People bet on sports. People go to sporting events. If I go to watch Spurs/Arsenal, I'm certainly getting an experience beyond the result, but I still may place a bet on the match. Even if I'm watching at home, it's certainly more of an experience than pulling a slot machine..

Similarly, how do you define quickly? Should I be allowed to place a bet on who wins the Superbowl now, but not before it kicks off?

Now you might argue that nobody would even use this criteria for these examples -- they're obviously not 'games', but you could place both in a game context.

Rits>I can't gather my thoughts on what the immediate harm would that mislabeling do to mmo community, industry, and healthy development?

There would be an immediate issue for any world that does business with, or has customers in, the United States. Whilst other countries have legalised gambling industries with the proper regulatory mechanisms (and a number have legalised gambling without those safeties), the US actively prohibits it - with a few exceptions. They *particularly* prohibit online gambling (unless you're in Nevada and have physically visited a casino to set up an account - and then only for sports).

In practical terms, implementation has been choppy, but if you were a big public company doing it, then it wouldn't be. Look, for example, at what happened to Peter Dicks, former Chairman of the London Stock Exchange listed Sportingbet, until he was arrested in 2006 at a US Airport.

The UIGEA (Unlawful Internet Gambling Enforcement Act), Wire act, and a few other pieces of regulation implement that, and largely put the onus on payment processors to enforce it. So for a MMO mislabeled (or not) as gambling, any payment providers that people actually use would stop doing business with you -- limiting payment mechanisms to services like Western Union & Moneygram (until/unless the law catches up with those)

>And if there is any benefit, intentional or not, can we think of any?

Actually, I think we can learn a lot by saying that it's *similar* to gambling, if not gambling. There are lots of things that are similar to gambling, but quite legal. For instance fantasy sports (specifically excepted in the UIGEA), but also trading cards. The day before Bowman 2012 (a big baseball trading card product ) was released, all anybody wanted to know was the odds -- http://www.blowoutcards.com/forums/baseball/298958-2012-bowman-jumbo-odds-4-level-prospects-rookie-autos.html, because the majority of it is cardboard junk, whilst others sell for $1k (http://www.ebay.com/itm/190676412628#ht_500wt_1182; and some will end up selling for >$10k) What's that if it's not gambling? Yet, legal. Similar to a RPG drop mechanic? Maybe.

One quick thought of my own -- Facebook has a number of 'fake' casinos -- you can happily buy Facebook credits to play them, but you can never cash out. Are these 'games' because there's no reward at the end? If so, having seen some of the sums involved, there is a big argument they should be regulated somehow even if gambling legislation isn't fit-for-purpose.

We'll see this whole argument played out again very shortly with respect to the Diablo III auction house I suspect.

Apologies this was so long! I argue that looking at the models used in other gambling/gambling-like industries can actually tell us quite a bit about games, in terms of regulation, mechanics and otherwise. That topic deserves a longer-form response, given it's a fair chunk of what I've spent the last couple of years looking at, and I'll do so over or after the weekend (teaching & marking beckons!)


I'll throw a scenario in to the discussion, (similar to Richards ZT Online)


'Blink' is an EVE Online gambling site that allows users to buy, with game money, a limited number of tickets to lotteries (eg 8 or 16). The winner takes the prize. This isn't run by the game developer though.

I would find it difficult to be persuaded that this isn't gambling

Its fairly popular, 44,000 players and 188,554,513,094,079 ISK given away (http://cogdev.net/blink/?act=stats).

EVE has had for a while one way RMT, users can spend $15 (ish) on a Pilots License EXension (PLEX) which is an in game item that can be bought with 'real' money and can be traded in within the game for an additional 30 days of game play.

Players who have excess game money can extend their game time without spending their 'real' money, and vice versa. As an in game item, it can be traded, destroyed and the market sets the value of the card. Its not an exchange rate as such, players are forbidden from earning real money through the sale of ISK, but to an extent we can derive 'value' of ISK.

At the moment, one PLEX is worth 500,000,000 ISK. So players have won (and thus gambled slightly more than) roughly $5,656,635.

To make it more interesting, one of these PLEX cards can be the prize of a 'blink' lottery.

Re: the games terms of service, I do not own either my ISK or a plex item; it becomes property of the developer, CCP. It no longer has any 'value' for me, but it still has worth, and that worth makes the various types of gambling in EVE Online exciting.

With regards to the facebook casinos Darryl mentioned, I think there is some difference here because I can 'work' for ISK; grind in game to raise enough money to bet on another blink item. There might not be a monetary reward, but should I win 1,000,000,000 ISK in a blink, I know for sure that rewards me by saving me time.

Perhaps there is a distinction to be made between 'value' and 'worth'?


I might also add that Eve announced at FanFest a limited program (for now) through which you could acquire graphic cards for in-game currency. At the moment this is limited to 1/user, though a corporation/alliance could get a fair few, and of course video cards can be sold for money. You could buy a few through winning a lottery too I imagine!

Yes, they're charging more currency than the card is worth, but then Blizzard are charging a 30% withdrawal fee in Diablo III...

Slippery slope..


Ted>I'm not going to get into another religious debate, I can't stand the heat.
So you get to make statements about virtual worlds, couched in religious terminology, but no-one gets to challenge those statements? Yeah, that's religions for you...

>If you hate what I said, just go read Tolkien's On Fairy Stories cuz it's all stolen from there.
You're telling me I have to debate with a dead guy who never played a virtual world?



So what if it's labelled (libelled) or not as "gambling". If they wanna tax you, they will. Alcoohol is taxed, tobacco is taxed and there's no moral ground for that. You're actually playing the "acceptance" game. Trying to give/debate a moral justification to a economic reasoning decision. They don't care if the taxed activity is either benefitial or harming to the health or to the society or individual, or if there's any sort of profit whatsoever. When and if they decide to tax the moonwalk, or wife's back rubbing, they will. Take it or leave it (the country, the planet etc), that's the way it is.


"Perhaps there is a distinction to be made between 'value' and 'worth'?"

And what would such a distinction value toward the decision of taxation/regulation , to worth the effort ?
Aside of pseudo-intellectual moralistic masturbation , i mean.


Issac --

Sorry, no -- here's something old but perhaps even more on point:

And Ung-gi Yoon has written about how this played out in South Korea, where they ended up drawing some pretty interesting distinctions between virtual worlds and gaming worlds. (No links but you can probably find papers by following his bio link on this page.)

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