American gamers aren’t likely to face dictatorial decrees to limit their play time, but within the next few years the courts will begin to examine how laws relating to taxes, copyright, and speech will apply in virtual worlds. In the near future, the IRS could require game developers to keep records of all the transactions that take place in virtual economies and tax players on their gains before any game currency is converted into dollars. “It’s utterly implausible that it won’t happen,” says Dan Hunter, who has coauthored law review articles like “The Laws of the Virtual Worlds.” A trickier issue is whether an avatar can be defamed: Will we see potion merchants suing for in-game slander, much like eBay sellers have litigated over negative feedback?
In the United States, virtual worlds could eventually have the same legal status as another lucrative recreation industry: pro sports. The NHL isn’t exempt from federal legislation like labor, antitrust, and drug laws. But inside the “magic circle,” on the field of play, sports leagues are given great latitude to make judgments, even though jobs, endorsement contracts, and the value of team franchises hang in the balance.
For example, the government lets referees police behavior in a hockey rink that would normally be the purview of local prosecutors. (Try high-sticking your mail carrier to experience the difference.) But the government still reserves the right to get involved. It should be the same in games. If your thief character picks the pocket of a nearby avatar, the local district attorney won’t prosecute. But if you hack into the player’s account to loot his virtual goods, you end up in the slammer.