RMT Threat

If this doesn’t worry you, you didn’t understand it. If you really own your in-game property, all MMOs are illegal under US law.

At IMGDC, few people seemed to take very seriously Richard Bartle’s questions about legal and governmental issues facing MMOs. I would like to explain why, in a few easy steps, RMT could lead the US government to shut down all MMORPGs.

You only need one premise: in-game currency has meatspace value. You can establish this by looking at goldsellers as de facto currency exchanges, or by establishing some players’ bill of rights that grants property claims. There is no such claim with legal standing in the United States, to the best of my knowledge, but many have wished it to be so. That would immediately kill the golden goose.

Because: every goblin is now a slot machine. Any enemy you defeat has a chance of dropping coin and items that can be converted into coin, and coin has meatspace value. World of Warcraft is a casino with fancy decorations. The US bans financial transfers for online gambling, thus the US bans any bank, credit card company, etc. from transfering funds to or from Blizzard. Or any other MMO.

When a regulation applies to “online gaming,” it usually means poker. It could very easily mean you.

: Zubon

Grimwell is worried about creative control of games. I am worried about the US government arresting non-citizens for activities done in other countries.

17 thoughts on “RMT Threat”

  1. I think the obvious response to any attempt to regulate MMO’s this way in the US would be to just remove money in the game, and replace the idea of currency with something else that players can trade with. I’d love to see a lawyer try and make the argument to a judge that “karma” or “silly beans” are worth real dollars.

    In any case, I think the last country in the world to follow such a precedent would be the US with intellectual property rights as strong as they are here.

  2. “arresting non-citizens for activities done in other countries”

    That isn’t really accurate.

    They arrested the CEO of the company (who is a British citizen I guess) while he was in the United States, for crimes (Internet Gambling) his company committed in the United States.

    As always, the legal system lags behind technology. The question of ‘where’ when it comes to Internet crimes is always an interesting one.

  3. This IS a very real problem- and closer than we may expect. We’ve already dodged a few bullets when you consider stuff like “gambling” in Second Life (which DOES have a legit cash transfer system in place).

    It doesn’t necessarily matter whether the company hosting the game is facilitating the transaction- or even if they’re discouraging them. Online gambling sites have already tried to offer “free” access, then have a third-party organiztion exist to trade poker chips for cash, much like traditional MMO’s. When the legislation tries to shut these down, MMO’s may be collateral damage.

    Zubon briefly touched on a similar threat- that of avatar ownership. Even without the above being a concern, ownership (and access rights) will also kill gaming.

    Imagine you’re the server operator of an MMO and all the assets in your MMO are owned by the player. You’re the custodian of their property. You could be sued for any loss of assets… for denying access to those assets (banned account)… for shutting down the game. A nerf is an intentional devaluing of property.

    Sure, you’d hopefully prevail in 90% of the lawsuits… but that’s still a SUBSTANTIAL cut in your budget for legal fees and liability insurances. That $15/ month won’t cut it. $30 / month won’t cut it. How high can you go before the business loses viability?

    There are many ways to kill the golden goose here.

  4. Not in the U.S., I am not worried. U.S. IP law, contract law, and corporate law all favor the use of a license (click-through as it may be) and not user created assets, IMHO. I would be worried in Canada, EU, and obviously Asia where consumer “protection” is bigger in the statutes.

    I am more worried about the precedent set by the courts protecting MMO companies (MDY v. Blizzard gives me chills), where they seem to expand copyright protection.

  5. I suspect that the key governmental area of interest is the potential tax (revenue) implications that RMT could/may/does have: both state sales tax and federal income tax statutes could potentially be made to apply to existing forms of RMT. The burden could fall upon the MMO publishers to track, account, and monetize income calculations applying a fee/charge/tax on a monthly billing basis. Historically, the government runs anywhere between five to ten years behind new instantiations of revenue generation in regards to taxation policy; the curve is about halfway between that now for MMOs and the federal (US) government is becoming more aware and savvy to non-traditional digital transactions (State governments lag except in the area of online-gambling). Combine this potential for taxation with a layer of possible gambling/lottery regulation and I suspect that the future of MMOs, especially free+fee paradigms, could take some interesting twists soon.

  6. Regardless of the outcome, and the thousands of rediculous lawsuits and what not that go through the courts each year, the law still, for the most part, operates on “common sense” (although many would disagree, and there are a lot of examples proving likewise). I loved reading how a man sued, and won, against a water bottle company because his had a fly in it, and as such he couldn’t shower anymore, became sick, etc. Was worth $350,000. It was all over the news. People were outraged.

    Of course, it was appealed, and the company won, and not only got the $350,000 reversed but also received over $100,000 to cover their court costs through the whole process. Of course, this part wasn’t nearly as exciting as the first, and it recieved little news coverage (paragraph on page 20 of the paper, instead of 1/2 front page).

    I know that isn’t in line with RMT, but the point is, there is still enough of a strong common sense element in most legal jurisdictions that the sky isnt quite falling yet.

  7. I cannot get worried over legal precedent being set in China. US courts do not take judicial notice of such cases.

    The government in general and the IRS in particular seem to be trying very hard to pretend not to notice the whole RMT thing, no doubt knowing full well the can of worms that the concept of virtual value portends.

  8. Law is not an immutable thing so I find your fearmongering here unnecessary. If letting players own their avatar and it’s property makes MMOs a form of gambling then obviously gambling laws will have to be changed to accommodate this. While there may be an argument against letting players own their toons, this most certaily isn’t it.

  9. Richard Bartle commented that he gets entirely different discussions when he talks with developers, academics, and lawyers. Gamers do not think like lawyers. Legislators do.

    Legislators also think the internet is a series of tubes. No matter how many jokes we might make about that, he is a Senate committee chair and you are a gamer. Which of you will have more influence on the law?

    They arrested the CEO of the company (who is a British citizen I guess) while he was in the United States, for crimes (Internet Gambling) his company committed in the United States.
    He did has a US layover on an international flight. He company did nothing in the United States: not even his servers are in the country.

    the law still, for the most part, operates on “common sense”
    You are discussing civil law, for which I would reference Overlawyered for how well common sense is holding up there. Recovering legal fees is not the norm, either: it is a particularly egregious case when you see that.

    In this case, the law is criminal. It really is news when you recover legal costs from the government for malicious prosecution. See Radley Balko for an example of when the government decides to shut down a business that has done nothing wrong, through constant legal harassment. More directly on point, how about Steve Jackson Games? The federal government can seize all your servers as evidence. Have fun financing your defense without that income.

    The government in general and the IRS in particular seem to be trying very hard to pretend not to notice the whole RMT thing, no doubt knowing full well the can of worms that the concept of virtual value portends.
    We can hope for that trend to continue. I hope it is active trying rather than ignorance.

    If letting players own their avatar and it’s property makes MMOs a form of gambling then obviously gambling laws will have to be changed to accommodate this.
    Call a senator and explain how “obvious” that is. Seriously. Let me know how that works out for you. The US is presumably in violation of several international treaties with its current internet gambling laws; if that has not compelled change, “I want to own my night elf” has low odds.

  10. You forget that the gamer will not be the only one who wants to keep MMOs from being outlawed after the legal precedent for virtual property ownership has been set. Blizzard will be interested in continuing it’s business, as will be many other companies that talk a bit more loudly to the legislators than a lone gamer.

  11. Lawyers don’t think like the rest of us :) Relying on common sense of the legislature is like offering them the handcuffs to put on you. They are bought and paid for.

    So our best hope is the corruptive influence of Microsoft “campaign donations”? yay. And does MSFT or Blizzard have our best interests in mind? Or their own?

    Neither party, and neither major presidential candidate, seems to me they put freedom ahead of controlling us if it’s for a good enough cause. We’ve all seen cspan broadcasts of various committees when they talk about games (or even other areas we might be knowledgeable about) they have no idea what they are talking about for one, and for two special interests groups and lobbyists write the wording of the laws. Often congress just reads summaries and relies on their staff.

    Perhaps the best solutions to head off any legislation would be to change the games. Provide RMT themselves, either buying gold or buying “boe” items and maybe even kitted/specced characters for a fee. This would reduce out of game trade. Certainly they must always disallow avatar trading and any idea of “ownership” of avatars. Maybe eliminate game cards so that avatars can be traced to particular people, so that the company can make sure the avatar is not traded (such as flagging name or credit card changes, etc).

  12. Oh and regarding international law, both Justice Breyer and Ginsberg have stated that our law should be interpreted with an eye towards the law in other countries. Now the few times I’ve heard of laws being brought before our Supreme court they were European laws. But remember European law has not nearly the freedom of speech we enjoy.

    http://www.law.com/jsp/article.jsp?id=1105364112559

  13. [i][b]the law still, for the most part, operates on “common sense”[/b]
    You are discussing civil law, for which I would reference Overlawyered for how well common sense is holding up there. Recovering legal fees is not the norm, either: it is a particularly egregious case when you see that[/i]

    Overlawyered was a fun site to read. I should have clarified, I am Canadian, and our system doesn’t allow for the type of outrageous suits our American friends see daily. That site is a perfect example of why we aren’t moving that way. The loser typically pays in Canada, so it avoids a lot of frivolous lawsuits. I have been the victim of a frivolous multimillion dollar lawsuit, which we won, due to a large dose of common sense. Lawyers for the most part are still mostly human in Canada. Of course, some Lawyers are the ones trying to change the system to more American-like as they are really the only ones who profit consistenly from it, but it won’t happen.

    At least you know a safe haven if your MMO gaming turns you all into criminals- you can come stay at my place. Bring a sleeping bag.

  14. “our system doesn’t allow for the type of outrageous suits our American friends see daily.”

    Ah but you have that wonderful “Human Rights Commission” now which is nothing but a tribunal with barely any laws. So when someone loses in regular courts, they can take you to the kangaroo court and have a 100% conviction rate. Seriously that tribunal has to be the biggest threat to freedom Canadians have seen in awhile. I hope you can trash it soon.

  15. Well put Yunk, and it is something we don’t hear an awful lot about but there are very scary implications there on how that commission runs and falls under it’s “jurisdiction”.

    Just to be clear as well, I know our system is FAR from perfect and I don’t want this discussion to turn into a comparative of the two legal systems and get way off topic. I just wanted to clarify my common sense comment so it wasn’t obvious I lacked the same =)

    On a more related note to the discussion, the CDN legal system doesn’t really save us from the issue if indeed it becomes one in the USA, as we will still be playing that content which would have to be changed to protect from liability. Sure, we can safely make our own CRTC content controlled MMO’s (Don Cherry as a raid boss? the Little Mosque on the Prairie MMO?) so regardless of where the law has the impact, Gamer Nation will be effected as a whole if the companies involved are forced to change.

  16. MOre likely, the US will develope the software ( or india as the case may be ) but the servers will be hosted in canada. ( this is of course all theoretical ). Laws could be changed in canada to accomidate the cross border hosting system, and a reciprocal tax aggreement set up for these special cases ( since, lets face it, thats all the goverments the world over are really interested in first and foremost $$$ ) Then the US gov can look good “protecting the citizens from the evils of these games” (TM) while still collecting the revenue generated by taxing these games profits.

    Besides. After the shelacing the US got in the last olympic games by the chinese, I think legislators are going to be strongly inclined to thumb thier noses in that direction for a good, oh, lifetime longer ;)

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