The Legal and Ethical Issues of Online Gaming

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Abstract:  This paper describes the new market growing around online gamers: professional gamers, wagered tournaments, and buying and selling virtual items. After outlining and describing several prime examples, the paper then discusses the legal and ethical ramifications of the virtual world having monetary value.  It shows that despite the positive effects of drawing more people into the gaming community, playing games for money compromise what many consider to be the purity of the gaming experience.

It used to be that computer games were for kids, or grown-up "techies." While kids were just out to have fun, grown-ups played for entertainment or pride; being good at a game garnered respect from other gamers. Gradually, the gaming world broadened with the advent of adult themed games, the Internet, and the phenomenal growth of the personal computer. Today, the gaming market has a wide range within its audience. Children, even infants, are even encouraged to play educational games on their computer. Adults can log on for a quiet game of online chess or hearts, or role-playing game, or if their blood is a little thicker, a first-person shooter. The variety of experiences to be had by the online gamer is astounding. Role-playing games can have hundreds if not thousands of players, all playing simultaneously. Internet based games make it easier than ever to find a level of competition suitable for any player. With this newfound prevalence of gaming and gamers, a new market has emerged. This market centers not upon the makers of these games, but upon the players themselves and attaches real, monetary values to their virtual accomplishments.  As this revolution draws near, what does gaming stand to lose or gain from its development as a financial enterprise, facilitated by its newfound popularity?  This paper analyzes the impact of financial import in gaming from technological, legal, and ethical points of view.

To understand the new dynamic in gaming and online gaming it is helpful to have an analogy. Compare the development of gaming to the development of professional basketball. Certainly, when James Naismith "invented" the game of basketball, he wasn't thinking of the NBA; he was just having fun with a ball and a hoop. A game of basketball would be played in the backyard. The best player in town would be known to all the other people who played basketball, but would only be famous in this limited circle.

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   Each time he won a game he gained respect, but probably nothing tangible. In contrast, today's professional basketball player is paid millions of dollars each year, not counting what he or she receives from advertising and endorsements. Furthermore, basketball games are televised nationally (sometimes even internationally). The basketball player or sports star has a high social status in the American culture.  While the computer games are still being played in the digital 'back yard', they show signs of moving into the public arena, just as basketball has done over the years.

Gaming culture is becoming less an underground activity, but more and more a legitimized form of entertainment and even a way to earn the respect of others.  Gaming is more accessible and cheaper than professional sports, and ignores geographical constraints; as such, gaming has the potential for an even greater revolution.  Currently, it is game developers, publishers, and retailers who are benefiting financially from the growing popularity of computer games. Gamers themselves may achieve notoriety and the respect of fellow gamers, but usually not much else.  Change, however, is in the air.  Gaming, as opposed to game design, is becoming a lucrative activity in its own right.  The opportunities to make money off gaming fall into three general categories: profession competition for prizes, open competition with wagers, and the trade of virtual goods.

Computer gaming competitions, including those with some award for the winner, have been around almost as long as computer games themselves.  These competitions are generally few and far between, and considered to be a novelty by most gamers.  Only recently has the idea of a 'professional gamer' who regularly competes in corporate sponsored tournaments emerged.  In recent years, gaming tournaments sponsored by game developers, game publishers and even gaming related web sites have not been not uncommon. For most of these tournaments, winning means a new computer system or a few hundred dollars [1].  However the trend is towards bigger and better rewards as elite gamers become more publicly visible.

Although not everyone has the talent of an elite gamer, there are new opportunities in the online world that allow any gamer regardless of skill level to compete for money. A prime example is Bloodmoney Universe, an endeavor by Moshpit Entertainment, Inc. to allow gamers to be rewarded for their skills:

Moshpit Entertainment is developing the Bloodmoney Universe to be the first open transactional platform. Inside the Bloodmoney Universe, video game players, game server operators, game developers, and game publishers can all make money interacting transactionally by providing a service and/or product the others want. This concept is not new, but the implementation is. We call it an open system, because it is not exclusive and does not deny access to willing participants [2].

The open system that Moshpit Entertainment is trying to create allows gamers to bet on their own skills.  A game starts with an ante from each player, and the winner takes the pot, or some portion thereof.  This kind of system brings the concept of a gaming tournament with cash prizes to the masses.

The third category of gaming enterprise centers on the community, rather than the individual.  In the wake of Massively Multiplayer Online Role-Playing Games, or MMORPGs, thousands of players have become part of a virtual community of gamers.  Part of this new social structure is the advent of new trade commodities.  MMORPG gamers will often sell rare items or powerful characters in return for money, usually through auctioning services or game-specific trading posts.  "Most have a minimum starting bid price of $10. However [some auctions have a] bid range in excess of $1,675" [3].  Some companies even offer gaming-related services such as allowing gamers to purchase virtual wealth and items in return for real money, such as the Ultima Online Bank.  The importance of the online gaming community to some participants has given real monetary value to virtual wealth and power.

Any serious gamer can't help but be intrigued by the concept of getting paid, one way or another, to play computer games.  Having a personal interest evolve into a moneymaking enterprise seems like an ideal situation.  Yet as gaming grows out of its underground status, and especially as it becomes a more valuable skill, the way games are being played is sure to change.  These changes will affect dedicated and casual gamers alike as gaming for money becomes more common.

Organized gaming tournaments will impact the least number of gamers, but for those few elite gamers who stand to become professionals, the change could mean a drastic change in lifestyle.  Already, gamers with celebrity status are beginning to emerge.  Dennis "Thresh" Fong of Berkeley, California has not only won thousands of dollars in prizes but also is the chief editor of his own website, the popularity of which is largely due to his famous gaming ability [4].  Not only has gaming been profitable for Thresh, and allowed his site to achieve mass popularity, but also it has earned him celebrated status in the gaming world.  FiringSquad.com offers personal information about Thresh for his many fans. There are the expected questions about the settings Thresh uses when he plays, or what hardware he uses, but also more personal questions about his favorite movie or interests outside of gaming - the same kind of questions movie stars and professional athletes are often asked in today's pop culture magazines.  Thresh is also corporately sponsored by Microsoft and Diamond, two major software and hardware developers.  This corporate interest shows that people who aren't directly involved in the gaming community recognized the potential influence of gaming superstars. The other implication of the emergence of "professional" gamers is that gaming may also have some life as a spectator sport, which means even more of a celebrity status for people like Thresh.

Corporate sponsorship of gaming tournaments and elite professional gamers will also have an impact on the way gamers purchase games and game-related hardware.  Traditionally, brand loyalty has been fairly low in gaming culture.  Some software and hardware developers have reputations of producing superior products.  However, even a game from an unknown startup development studio can achieve great popularity with a few positive reviews in popular gaming magazines.  In the field of gaming hardware, the companies that seem to have cornered the market can be toppled in the span of a few months.  In general, it is what the reviewers and the community say, more than the company line, which will make or break a game.  If corporate sponsorship takes hold in gaming the way it has in professional sports, gamers will find themselves the targets of advertising based on brand names and celebrity endorsements, rather than product quality.  This will make it increasingly difficult for small party-developers to find publishers and a receptive audience for their games.

Most players, however, don't have the skills that Thresh does and thus, professional tournaments and corporate sponsors will have only an indirect impact on their game experience. The open tournament system, however, will directly affect any players willing to put money behind his or her skills.  If such a system gains popularity, any gamer will have a financial reason to hone his skills.  The option of playing for money may prove to be a burden for some gamers. Addiction to gambling has been a major problem is many people's lives.  Online gaming for money may not legally considered gambling in many states, provided that "influence of chance on the outcome of these games is considered negligible" [5].  Nevertheless, online competition may present the same problems of lack of self-control and the vicious 'one more game, I'll win it all back' cycle.  Even gamers who aren't addicted could become very frustrated when they play poorly in a game for money.  Most gamers - 55.1% in the year 2000 - consider games to be a great way to relax and relieve stress [6].  The advent of gaming for money may change this for some gamers, who may lose their original passion for gaming as winning money becomes more important to them.

The option of playing for money is just that - an option - and it is a perfectly reasonable option for players with confidence in their skills to choose.  However, skill is not the only factor that determines the winner of a game.  Factors such as connection speed and server quality, the quality of the hardware a gamer is using, and hacks or cheats can also affect the outcome of a game.  Poor connections have plagued online gaming since its outset, as well as problems with server overloads and crashes.  "Anyone who plays Online RPG's knows all about losing your coolest stuff to a server crash" [7].  These issues put increasing pressure on server administrators for extremely reliable and efficient systems.  However, poor connectivity, or 'lag' as gamers call it, is generally considered a fact of online gaming, one that is simply accepted and cannot be blamed on anyone.  While the gamers should not expect the all outside factors to be resolved for them, many gamers will expect cheating to be prevented by the server software or administrator.

Currently cheating in an online game is considered to be bad form, and game designers and even some players have taken steps against client-side hacks.  MMORPGs are often protected by having all character information stored on servers owned by the company offering the game. This makes it much more difficult to tamper with game data than it is in open games where anyone can run a server.  However, "if there is a will or something to gain, someone will always cheat...and [any hack] could go on for months if not years" [8].  Playing against a cheater can mean losing a few rounds of a first-person shooter, if someone logs in with a 'bot' cheat that improves their aim or in some other way gives them an unfair advantage.  It may also mean losing money, items, or even a character in a MMORPG, which happened to several of the top-ranked Diablo II players recently when a hack circulated "allowing those who had the hack to strip characters of all they had equipped and kill them" [9].  These losses can amount to a great deal of frustration and lost time for players. 

Under an open wagering system, however, a few lost rounds of a first-person shooter will also result in a direct financial loss.  Of course, gamers in an open system could just leave the server if they suspect a hack - not true of MMORPG players whose characters must be stored on the server.  Gamers who intend to sell characters or items from MMORPGs stand to lose hundreds of dollars if a hacker comprises their character.  Since loss of a character of that character's holdings is analogous to the theft or destruction of real property, security measures will become even more important in all forms online gaming, and new legislation to protect virtual goods may become necessary.  The financial import of gaming will also fuel the hacking community.  In the words of Dr. SiN, developer of the popular Client-Side Hack Protection for Unreal Tournament, "Frankly, I'm amazed that some people are trying to run...tournaments [for money] over the net.  If there is $$$ involved, someone will cheat to get it" [8].

While cheating and hardware problems may eventually be subverted, it seems unlikely that the selling and trading of virtual characters and items will ever be curtailed. The virtual world now seems to have real world value. The obvious question is why? Why would someone pay over a thousand dollars for a virtual character or virtual item? The Ultima Online bank puts forth several reasons on its web page, including "saving several weeks of play time and avoiding... the least interesting part of the Game...[and]...saving your money in Internet-service provider payments" [10]. Beyond the saving time or energy developing a character, something that would ordinarily be considered "fun", a high-ranking player commands respect from other players online. This respect is a throwback from a gaming culture that values expertise and dedication to games for their own sake. In addition, however, a high level player is respected online because in the virtual world that character can kill or ruin other virtual characters, characters who, as has been stated before, now have a monetary value. Purchasing respect and power over others is nothing new to the real world, but it is something of a novelty in the gaming world, which has long had a different set of values.

Along with its growing popularity and acceptance, which have led to a variety of games for many different players, gaming culture looks as though it may adopt some of society's less savory qualities such as socio-economic stratification and a Machiavellian market. For instance, the UOBank mentioned earlier is run by a group of players of Ultima Online who have grown powerful enough within the virtual world to make virtual money easily and in great quantity, selling this virtual money for real money. The fact that the company is not affiliated at all with the game maker, but a group of gamers, is remarkable. Players, not the game designer or publisher, now have enough power in the virtual world to gain similar power in the real world. Further, because of their virtual-world power, they garner real world respect and admiration.

Online communities have often been a great equalizer. Everyone, regardless of race or wealth or social status, looks the same in a chat window. Everyone types in the same font and is equally anonymous online. Though gaming was not completely anonymous, as a person would represent himself or herself through a gaming character, levels of stratification occurred along skill boundaries and not along any other social constructs. A player could range from a "newbie", or novice, or a "L337" (a gamer's version of 'elite') gamer who had mastered the game.  Sometimes "newbie" players are not allowed to play on servers with elite gamers. Stratification based on skill level, however, though unfair at times also mirrors the better effects of our merit based capitalist society. If one works hard to attain a high skill level, then society will grant respect, valuing genuine expertise. In online gaming, "... successful methods of building and maintaining the online community are the key. That means figuring out why people really go to these games and what they're getting out of them that they can't get in their normal lives. In part, at least, the experts say that it allows people an intimacy and a social interaction missing in today's society" [11]. Part of this intimacy is based on anonymity and a commonality among players. In a capitalist society, on the other hand, money is often the measure of success, in lieu of skill. In a "capitalist" gaming market, intimacy and commonality are suddenly erased when people are allowed to purchase distinction. In short, economic stratification upsets the social freedom of the online world.

Gamers have seized a market of their own, one that is not based on producing or publishing games, but actively involved with the world of gaming itself. Games are at the forefront of creating a rich virtual world, but one could imagine other possibilities, such as virtual museums with electronic art or digital archives. Not to be confused with e-commerce, virtual commerce, the buying and selling of virtual items on or off-line, is developing into something that cannot be ignored.  How will online communities value virtual goods? What will be the ethical nature of virtual commerce? These questions and others are most likely to be answered by gamers. First, the passion of gamers for the games they play has been crucial to the assessment of the value of these objects. Secondly, the online gaming culture truly is paving the way for online communities and virtual commerce. Once gamers establish the link between Internet communities and the real world, they will have created a foundation for the pioneering of new virtual worlds.

 

Works Cited

1. XS Reality Homepage.  XS Reality Ltd.  3 Mar. 2001.  <http://www.xsreality.com>

2. Moshpit Entertainment Inc. Hompage. 18 Feb. 2001 <http://www.moshpitentertainment.com>

3. Allen, Ryan. Ultima Online: Profiting from Virtual Property Sales?. 1999. Gamerscorp. 9 Feb. 2001. <http://www.gamerscorp.com/articles/articles.cfm?articleid=1>

4. Fong, Dennis. The Thresh FAQ. FiringSquad. 18 Feb. 2001.
<http://firingsquad.gamers.com/thresh/faq/>

5. Bloodmoney FAQ. The Bloodmoney Universe.  2 Mar. 2001.
<http://www.bloodmoney.org/firstaidroom/faq/>

6. IDSA >> Digital Press Room. Interactive Digital Software Association. 2/ Mar. 2001. <http://www.idsa.com/fastfacts_frame.html>

7. Holkins, Jerry. News Post for 2/19/01. 19 Feb. 2001.
<http://www.penny-arcade.com/news.php3?date=2001 02-19>

8. Dr. SiN.  "Re: CSHP and Hack Protection".  E-mail to the authors.  25 Feb. 2001.

9. Another Realm Hack? - 1/1/01 News Post. PlanetDiablio Archives. 19 Feb. 2001.   <http://www.planetdiablo.com/news/index.asp?month=1&day=1&year=2001>

10. UOBank Intention. Ultima Online Bank. 18 Feb. 2001. <http://www.uobank.net/intro.html>

11. Spenser, Russ. In Depth: Beyond Men in Tights. NewMedia. 3 March 2001
<http://www.newmedia.com/nm-ns.asp?articleID=1010>


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