Gambling with the future
For some reason, Tide’s Horizon seems to be the only MMO blog talking about the possible impact of the US ban on online gambling. But he’s right, the implications are possibly far-reaching on virtual worlds.
There’s a host of tricky rules surrounding gambling of course — whether or not what is played is a tournament versus other people, whether or not “skill” is involved, and so on, and a lot of it varies state to state.
But there are simple luck-based activities in almost all MMOs. Many support games of chance paying out in game currency, often using literal gambling metaphors, like roulette wheels. But it’s deeper than that: loot drops are frequently games of chance, with a given drop having odds of appearing on a given kill. I’d be stunned if someone in Second Life hasn’t built a casino of some sort yet. Arguably, Entropia Universe is a casino in some ways. And as we all know, you can usually manage to get a real world cash payout from any of these worlds.
Long ago, at a conference, I described the volume of RMT transactions to some folks who were ignorant of virtual worlds but steeped in social policy issues. “Hmm,” they said. “That’s not drug level money, but it’s sure terrorist level money.” The discussion moved from there directly to the question of when regulation was coming — not if.
At another conference, I recall walking down New York City streets on the way to dinner, and chatting with the law professor next to me — I can’t remember if it was Yochai Benkler or Jack Balkin — about how exactly the regulation would hit. He was of the opinion that it would take international treaties, so he thought the regulation would eventually come via international bodies such as the UN, WTO, and so on. But this current effect, causing massive losses on the stock market in the UK, is a reminder that economic pressures can accomplish quite a lot.
Of course, it’s possible that out little niche might earn itself the same exception that betting on the ponies did, but given our limited exposure and near-total lack of lobbying, that seems unlikely; more likely that we will simply run under the radar.
In the meantime, the bill is not yet signed, and focuses on restricting certain types of credit card transactions. What happens when legislators realize you can cash in and cash out untraceably? Who knows.
Edit: it’s worth reading PlayNoEvil on this issue.
21 Responses to “Gambling with the future”
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For work, a while back, I spent some time reading through what I could find of the legalese regarding skill-based versus chance-based games for different US states and Europe. Generally I think we’re ok. Mostly gambling restrictions are based on specific elements (such as dealing cards, or rolling dice) or on the stipulation that something is predominantly based on luck. Looking at other games that have been allowed, I don’t think MMO’s have a lot to worry about (for example, it is “skill-based” to award prizes based on answering trivia questions, even if the trivia questions are randomly selected).
There is chance in any game. One way to look at “skill” is just that it is a reduction on variance. I.e. hitting 95% of free throws instead of 50%. And so it’s not necessary to remove all chance from a skill like free throw shooting in order to recognize that it is a skill.
So I think we’re safe there. For now. But that doesn’t mean that there won’t be some other regulations on RMT, if not from the gambling angle. And a casino in SL would certainly be suspect.
I hope we aren’t safe.
I hope the feds clean SL/EU’s and item seller’s clock.
I don’t want to play games with people who want make money.
Granted, I live in Vegas and my view is somewhat tainted as far as gambling is concerned, but I do think there is a place for gambling in society. Bookie is one of the oldest professions. As soon as the first farmers learned to harvest crops, there was probably some guy taking action on who’s field would yield the most.
Gambling is just another vice, like smoking and drinking, it should be regulated and taxed, heavily. Barring that, technology is just growing too fast for the law to catch up with it. I could see cookies as being one way to track a person’s gambling and whatnot, but here is the question, Can the 4th amendment protect us from a government cookie designed to see if you are gambling in an online casino in Barbados? Will it become a free speech and free expression issue if the country were to ban the IPs? Regulation may be coming, but how far would the government have to go to prosecute? How many online actions can they track, and are they allowed to?
For my part I think mmos will remain under the radar as long as lawmakers remain convinced that video games are just for kids.
The law that’s being talked about considers gambling to be anything that involves an element of chance, and has at least an indirect correlation to money changing hands. So no, MMO’s aren’t safe, technically.
The real question is if companies putting a line in the EULA banning sales of virtual goods counts as going far enough. And microtransactions becomes really murky…what if I bought a +exp boost with the expectation of using it on a raid boss? Am I gambling since my group may not succeed?
The hammer will fall when:
The first case of money laundering via in game mechanisims occurs and crosses international boarders.
Where you have the ability to tie an account to a financial vehicle, and multiple identities? Man thats low hanging fruit for black market money transfers, and politicians.
Raph-
“near-total lack of lobbying”
Is that seriously true? Thats just scary.
StGabe you want this:
http://www.gpoaccess.gov/crecord/index.html
http://firstgovsearch.gov/ (try typing in “video games”)
There is chance in any game.
Thomas Malaby calls this “stochastic contingency” (link), and it does not necessarily exist in every game.
I don’t want to play games with people who want make money.
There are some very nice single-player games.
Can the 4th amendment protect us from a government cookie designed to see if you are gambling in an online casino in Barbados?
First off, a cookie can’t do that. You’d need a piece of spyware. Second, the contents of your computer are, insofar as I know, protected by the 4th Amendment. A warrant should be required to search or seize it or its contents. However, a program like Carnivore is legal, though abusable. An adaptation on this program wouldn’t be all that hard, nor would it likely be illegal, for the purpose of tracking what and where you’re gaming.
Will it become a free speech and free expression issue if the country were to ban the IPs?
Freedom of expression is not a protected right in America, despite popular opinion on the subject; it is a protected right under the United Nations, under Article 19 of the Universal Declaration of Human Rights.
SL has quite a few full blown casinos with all types of games (poker, blackjack, keno and a wide variety of slot machines including big progressives). They work exactly the same way as any casino. You bet and based on some odds programmed into the machine script, you win or lose. The house always wins in the end due to the odds they offer which are generally poor. In many ways, it can be worse in there as there are no regulators, monitors or whatever to ensure even those odds are being paid out (although there are some operators that work hard to ensure their sites are considered fair and pay out appropriately).
I was always curious why LL decided to get into the inworld currency exchange since that just completes the cycle required to be a full blown casino operation since converting inworld currency to real US dollars is pretty easy and risk free now.
I have always assumed that SL will someday get hit for running a gambling site.
I’m not sure MMORPG’s or other games would be viewed as gambling in the same sense since few, if any, charge per opportunity to essentially win or lose something.
Meret
First, some clarification, gambling has three elements (in the US, at least): A payment or consideration to play, an element of chance, and a potential reward that has monetary value.
There is no real definition of a game of skill, it is basically a non-gambling game (a negative definition). Thus, there are a number of states that have a stricter definition of gambling … which precludes what most people understand to be skill-games and so they don’t do business in those states.
Most MMOs do not have a potential reward within the game. Thus, just like football (which carefully stays away from gambling or the appearance of being involved in gambling), as long as the MMO firm does not participate in the RMT world, it is not in the gambling business. Thus, as long as the game companies do not have anything to do with the RMT, there is no gambling in the game. The RMT firms themselves may or may not be in the gambling business – after all it is not even wagering.
Raph – I would love to understand how Sony rationalized the Station Exchange. It seems to me that they are effectively participating in creating cash value for game items though a commission on the sales… putting themselves at risk of being accused of running a casino.
One part of the law that may have a real impact on a number of gaming companies is that apparently free games for cash (like some promotional businesses) are banned… check with your lawyer!
My commentary on the law plus a proper legal analysis.
I have long been concerned about using games as a money laundering tool or as a way for criminals (or terrorists, to raise funds with low legal risk) – see MMO Mafia as well as several other articles.
Gambling and terrorist funding would make the gaming an even easier target than violence and “protecting the children”. The ESA doesn’t even seem to know that online gaming exists.
Generally, yes, there is. I make games that are categorized as “skill-with-prize” and there are legal definitions, across different countries and states, that regulate what exactly comprises this category of games (“skill-with-prize” is actually the British terminology but there are counterparts in the law for other regions). There are many companies operating in this space offering “skill-based” games for cash prizes (see Worldwinner, Games Media, Skilljam etc.). Worldwinner’s spin on the legality, for example:
Although the distinctions between skill-based games and games of chance are clear, there are a few states within the U.S. that have not yet permitted skill-based games to be played for cash or prizes. For those states, WorldWinner games can be played, but only on a free basis without cash or prize offerings.
So there is definitely a precedent for a category of games offering rewards with actual value that are not held accountable to any definition of gambling — at least in most states and most countries (generally in Europe this is much less of an issue).
He may well do so. “Stochastic contingency” is just a fancy way of saying “chance” (look up “stochastic” in a dictionary). And generally no games are without chance. For no action is without chance. Quantum probabilities if nothing else. Chess does not involve rolling dice, and, formally speaking, is without chance, but that then humans get involved, and start thinking, and may make “lucky” deductions or “unluckily” not notice something that they almost always notice.
My point about Malaby’s categorization was that there are three other types of contingencies in his paper. Chess is specifically described as involving social, not stochastic, contingencies, and most sports are based on performative, rather than stochastic, contingencies.
Having listened to the way Thomas talks after he posted his paper on Terra Nova, I’m not really inclined to put words in his mouth since he is very deliberate on his choice of them; thus, the generalities I outline in the previous paragraph are my own examples, and I’d prefer it if you read his paper to determine what he meant.
Right. Picking a fight with Malaby isn’t my interest — you brought him up. I’m not sure how his words are relevant to mine (you seemed to be saying they were). He may use words in a particular way but it’s really not saying much about how I’m using them. Stochastic contingency does just mean “happening by chance” which is what I mean. In particular I was talking about how “happening by chance” is important even in “performative” tasks (as this Malaby fellow would presumably say) and, in particular, that “performative” skill is often seen to be simply the reduction (but not elimination) of dependence on chance or variance. For example making the throwing of a round ball through a hoop occur through with high probability through skillful performances and not with low probability simply by tossing the ball willy-nilly and hoping it goes in.
[rant]Performative? Stochastic? I used to be an academic and I know it’s possible to publish papers that use language that is well, actually in use by normal people. Stochastic (a word I often encountered reading about machine learning) is a particular pet peeve. It just means “random” darn it (more strictly it is defined as “involving chance” or “involving a random variable”). Why can’t we just say that???[/rant]
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Physics (I twitch, and the ball goes wide) != Mechanics (A dice is rolled; the ball goes in).
Using language not used by normal people is really a very good tool for inducing sleep though…and I find some people need naps more than others….
I try and type what I mean, usually in fact, with horrible spelling and grammer….
Best Book Ever: Plain English for Lawyers (should be read by all academics and those who publish)
Steven Davis-
Thanks for the links good reading
The number of US laws that get broken virtually on Second Life right out in the open is mind-blowing. On the other hand, that’s part of the appeal.
And which do you think I am talking about? Or can I only roll dice in theory? And never theorize about throwing basketballs?
You’re claiming that rolling dice to determine if the basketball goes in is the same as accidentally twitching and failing to make the shot, is what I think you’re doing.
Who ever said anything about rolling dice to see if a basketball goes in a bucket? In real life, skill with playing basketball translates into reduced variance on the outcome when shooting a basketball or, said differently, an increased probability of being able to correctly sink a shot.
Or to put it another way,just because you can be a very skilled poker player doesn’t mean it’s not gambling.
I ran across this discussion after writing my own summary, so I’m happy to see others are as concerned as I am. Let’s organize some lobbying! ESA?
crossgamer.com/gambling
[…] All in all, it’s a huge ugly furball of a mess, and particularly interesting when set in contrast to the recent legislation on Internet gambling here in the US. […]