Virtual Worlds, Real Profits http://www.virtualeconomies.net Real Money Trading (RMT) in MMORPGs Wed, 16 Apr 2008 01:48:14 +0000 http://wordpress.org/?v=2.0.3 en Virtual Taxation? Probably Not Yet http://www.virtualeconomies.net/2007/06/24/virtual-taxation-probably-not-yet/ http://www.virtualeconomies.net/2007/06/24/virtual-taxation-probably-not-yet/#comments Mon, 25 Jun 2007 00:13:51 +0000 rmiller Real Money Trading Taxes http://www.virtualeconomies.net/blog/2007/06/24/virtual-taxation-probably-not-yet/ There’s a discussion at Slashdot about the possibility that Congress may consider taxing virtual goods. The post is based on an CNet item by Daniel Terdiman which notes that Congress’ Joint Economic Committee will receive a report on virtual world economies in August. The story offers no news on what the report will say, but concludes that “it’s clear that something will happen,” basing this on comments from last December from a committee economist.

I don’t think it’s clear at all. Congress hasn’t been quick to act on complex tax issues regarding the Internet. And taxing virtual goods is complicated. If your only interest is in taxing income from the sale of virtual goods, no action is necessary, as that is income which is already subject to tax laws (see Julian Dibbell’s wonderful book Play Money and his dialogue with the IRS). If you want to tax virtual goods in WoW because they have cash market value at IGE, who do you tax? Under the ToS, Blizzard believes it owns all the in-game assets created by WoW players.

There are many unresolved issues regarding the ownership and taxability of virtual goods, as practices and scenarios vary widely across the virtual frontier. Can Congress sort this out? It would take a lot of time to do so, and I just don’t think the cost/benefit analysis on taking action makes sense for Congress.

If only they could tax all that mad-crazy income from those Chinese gold farmers …

]]> http://www.virtualeconomies.net/2007/06/24/virtual-taxation-probably-not-yet/feed/ Is Gambling Legal in Second Life? http://www.virtualeconomies.net/2007/01/12/is-gambling-legal-in-second-life/ http://www.virtualeconomies.net/2007/01/12/is-gambling-legal-in-second-life/#comments Fri, 12 Jan 2007 19:56:12 +0000 rmiller Second Life Taxes http://www.virtualeconomies.net/blog/2007/01/12/is-gambling-legal-in-second-life/ The Bush administration insists that Internet gambling violates U.S. law, to the point where last July federal agents arrested BetonSports.com CEO David Carruthers when he was changing flights at Dallas/Fort Worth Airport. If it’s illegal for U.S. residents to gamble online, what’s the legal status of an online casino in Second Life? The Second Life Herald has the story of how SL resident Magnus Rothlisberger recently lost 346,180 Linden dollars playing virtual blackjack and roulette - a sum which at current in-game exchange rates is valued at roughly $1,153 real U.S. dollars.

Valleywag quickly jumped on the issue of whether this might leave Second Life open to scrutiny from the feds:

Reality check: there’s only one reason to prefer the crude Benchmark-backed 3D environment over a purpose-built online casino. The Department of Justice, which tracks down online gambling in the US, and Paypal, through which many Second Life users fund their accounts, simply haven’t grokked yet what’s going on. If the online casino was ever busy, it would be shut down in a moment.

Terra Nova recently predicted a major Second Life backlash this year. Looks like Valleywag will continue to lead the charge.

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