Internet Gambling Regulation Present and Future: Technology Outpaces Legislation as the MMORPG Problem Emerges

Abstract:     
The Internet has completely changed the landscape of the planet. As a result, many areas of the law are being re-thought or re-developed, while other new issues emerge that defy all remotely related regulations. Online gambling is one of those areas in which the laws have lagged behind the technology, and are still in need of an overdue update, along with an official chosen course of action toward bans or regulation. However, as with many other fields, there are developments at our doorstep that stand to turn the concept of internet gambling on its head and re-define the scope of all currently proposed regulations.

This paper's central thesis is that current gambling regulations do not adequately account for the issue of gambling within Massive Multiplayer Online (MMO) games. Rather, these gambling transactions fall into shades of gray between what is and what is not legal.

The paper proceeds in three parts. First is an overview of gambling regulation. Second, an explanation of the MMO games themselves. From these two elements, the third portion of the paper poses a potential regulatory scheme which could be applied to MMO games to address the issue of MMO gambling more thoroughly than it is presently addressed by any regulation.

Keywords: MMORPG, MMO, gaming, gambling, video game, internet, regulation, tax, World of Warcraft, Second Life, Lineage, Everquest, Ultima Online, American culture, cyberproperty, cyberlaw, property, law and economics, online gambling, online gaming, virtual economy

JEL Classifications: K10, K19, K30, K34, K39, L83, D63, F15, H11, H20

Working Paper Series