The taxman cometh

My thought of the day from Monday about a scam in EVE lead to an interesting discussion whether ISK have a real-world value. And a request from a reader to discuss that further. So here is the issue:

On the one side it is against the terms of service to sell ISK for cash. If we consider the rules to be strict and impenetrable boundaries, we would need to conclude that ISK have no real-world value, because they are confined to inside the game. ISK are no real currency.

On the other side it is obvious that people attach real-world value to ISK: They buy ISK for real money, via PLEX. And then they exchange the ISK for something they want in the game. That turns ISK into some sort of alternative currency, Hagu compared it to a gift certificate, or we could say a ticket to an upcoming sports event. If you buy an expensive ticket to a sports event, you would consider that ticket to have value, in spite of there being rules that you can't sell it, and it spite of it ultimately being transformed only into entertainment value, and nothing physically real. Furthermore rules are NOT impenetrable barriers. Just like ticket scalpers are able to sell sports tickets against the rules of the event organizer, people are able to sell ISK on EBay or via other shady places on the internet.

In the EVE scam thread the discussion was whether stealing ISK was a crime. Obviously if you think ISK have no value, there is no crime. But if you think ISK have value, because somebody bought them for money, or because they can be exchanged back into money on a grey market, then acquiring ISK by fraud can be seen as a real-world crime. If somebody would organize an e-mail scam where he'd swindle you out of a gift certificate or sports ticket, a judge would probably consider the real-world value equivalent of these items, and not say that they are worthless because you can't legally change them back into cash, or because the scam happened on the internet and not face-to-face. I think most people would agree that if somebody hacks your WoW account and sells your gold, a crime has taken place.

Now as Oscar remarked, that is a slippery slope: Once you consider ISK (or EQ plat, or WoW gold, or whatever virtual currency) as having real-world value, what is there to prevent the taxman to come to the same conclusion, and tax you on your virtual earnings? Thus it is in the players best interest to keep that particular genie in his bottle, and demand a game design in which virtual currency is strictly confined in the game, with no means to either exchange real money for virtual currency, or virtual currency to real money.

The first half of that is easy, game companies need to stop selling virtual currency, whether that is directly or indirectly via PLEX. The second half is harder: You can't buy WoW gold from Blizzard, but Blizzard has been unable to stop third parties from selling WoW gold. To stop that sort of trade, the in-game economy would have to be completely rethought, and virtual currency would have to be transformed into something which is basically "bind on pickup", or at the very least "bind on account". That has enormous consequences on the virtual economy, not all of them pleasant. But if I had the choice between that and being taxed on my virtual earnings, I know what I would prefer.