Broadening Definition Of Gambling May Include Virtual Worlds

from the definition-creep dept

Stories about the large amounts of real money cycling through the in-game economies of virtual worlds have become rather common. In addition, there have been and will continue to be many vexing legal issues, as law enforcement tries to resolve the blurry boundary dividing in-game and real world activity. So it’s not surprising to see a discussion on whether playing in and making money from virtual worlds constitutes gambling. This is a pretty big question, as it brings with it a host of other issues. Should it be illegal for young people to play these games, just as it’s illegal for them to gamble? How should a player’s profits be taxed? Should the game be banned? All this isn’t even considering actual in-game casinos, such as those in Second Life. Trying to pin down a definition of gambling might be impossible, though many people might intuitively sense that playing one of these games is different than playing online blackjack. But we wouldn’t have to bother with this question if the government didn’t insist on heavy handed regulation of online gambling. In the meantime, the CEO of Sony, the company behind Everquest, and any other executive in this space, might want to consult with a lawyer before entering the US.

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Comments on “Broadening Definition Of Gambling May Include Virtual Worlds”

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socrates3001 says:

Re: Newsflash: Cat definitely out of bag.

The biggest difference between online gambling and virtual gambling is the winnings. In theory, online gambling can result in a player winning money that can be spent in the real world. Virtual gambling, an a fantasy environment, will not benefit anyone but the company acting as the host to the virtual gaming system. Only the virtual player, and not the real wold player, can benefit from the winnings of gambling.
This is obviously too simple of a concept for any government official to understand. So, I do not expect any logical regulations to be developed.

Yo ho ho... says:


I’m trying to understand just whisch interests are being protected here by the US law enforcement…

1. The casinos? (As if the $45 billion a year casino profits isn’t enough)

2. The state lotteries? (Gosh, would hate to eat into that $55 billion a year of tax-free revenue for the state coffers; however, most of that money is made from people who don’t own a computer)

3. The consumer? (hmmm, anybody sophisticated enough to be an online user of a virtual world and pays for the privledge of being a member probably doesn’t need the “big brother” over the shoulder)

4. Must be the politicians who are looking for some platform to distract the voters from the real issues plaguing this country!!! Like lack of educational spending, health-care, etc., etc.

Wish people in authority would focus on the real problems facing this country…. oh well, then again, guess I should just move to never-never land…

ChronoFish (user link) says:

If it's a loop-hole......

What a vexing problem…..

If I play a game in which you partake in a virtual world, and in that world there is a slot machine that pays out “credits” – can you attribute hard currency to those credits and then be taxed on them?

What if you played 2nd life, and someone created a virtual network of virtual PC’s – and on that network (a “2nd life Internet” if you will) there existed a game called “3rd life”. And in that game there was a virtual -virtual-PC which existed a virtual My.Yahoo! with a virtual Texas Hold’em table, and which the points could be traded in for virtual-virtual goods. And a market grew on 2nd life for 3rd life texas-hold ’em “points”. And since there is already a market for 2nd life “points” in the real world, would the virtual-virtual texas hold’em be considered “gambling?”.

And IF NOT: What happens if a real-world CEO gets paid a modest salary + real-world valueless gifts (I mean wouldn’t honor “2nd life” points in my real-world store) of virtua-virtual -points?

Would those be taxable?

After a lengthy lunch-hour discussion, my colleques and I have deciced that it’s only when those “virtual” credits are transfered into real-world cash that it becomes taxable. Since it’s your time that is being invested, it would be taxed in the sameway that a contract job would be.

In terms of gambling… looks like a loop-hole to me. Otherwise real-world token-only gambling (aka just for fun) would also fall into the realm of gambling – Of course maybe that is the way to go after all the Churches that raise money via “Bingo”.


Woody says:

Real earning from virtual playing is already taxed

In the US, the IRS already requires you to report ALL income even that gained through non-traditional means. Which means that under the current already existing laws, yes, you are taxed on money made playing online games. ie: if you sell your level 2000 warrior on ebay, you have to report that income and pay taxes on it.

cdwatters says:

Online -> Real World Income

Well, there is some distinction between “games of chance” and “games of skill”, at least in Ohio. The former is gambling and the latter is not. At one time, even pinball machines were gambling if there was a chance for a replay (i.e. payout).

If the game results in some tangible “real world” benefit, even if it’s something like additional hours of online play, then it’s likely income of some sort, and likely could be taxed. Prizes which are internal to the game and can’t be translated into real-world valuata isn’t.

Content created and “bartered” within a system like Second Life will probably be taxed at some point, since the US Government doesn’t like barter without taxation. I know there’s forms for income derived from HOBBY activity.

Given the current “how can we get our piece of this?” mindset of the governments, there’s going to be something. I’d not be suprised for someplace like Ohio (which expects me to pay USE TAX if I buy something online and have it sent as a gift to family members in another state) to try to charge USE TAX for fees paid to online games/services.

Tek'a says:


EvE for great justice.

but anywho.. this is a tricky one..

if I bet a few isk on.. say.. an alliance that Illegal gambling? and if I win a couple billion, whats my taxable percentage? where are my writeoffs for repair, medical services, clone implantation.. can I deduct that from my tax? its only fair.. and do I evemail my 1040 EZ to “Uncle Sam” (must be in BoB) or just directly wire the isk?

for an online world.. cooked up by nutty icelandic shark-eaters. run on european servers. played by people on every part of the world (except antarctica, but only because they have terrible lag and thin pipes)

oh how I wish lawmakers and policy choosers had something better to do. they already slammed down with their iron fist in outrage and fury! .. and only managed to isolate and outrage the people they are trying to control, forcing them Out of areas where they could be controlled and taxed, and into a near untouchable black market.

seems like gub’mint does this all the time.. who pays for it? you and me.

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