As games like World of Warcraft, Second Life and EverQuest grow and develop more sophisticated communities, that question will become more and more important. So much so that a group of experts appearing Friday at the fourth annual State of Play/Terra Nova symposium at New York Law School here spent nearly two hours putting the subject in context.When disputes arise over in-world fraud or avatars attacking avatars, for example, what law should prevail?
Despite what the designers of some virtual worlds might like to imply, the group agreed, such environments are not autonomous countries and are therefore subject to real-world national laws. But because lawmakers in countries like the U.S. have been slow to understand virtual worlds and the legal, social and economic issues that arise in them, the experts said, legislators have not yet addressed many of those issues.
Perhaps the biggest question is --weapons, armor, clothing, buildings and the like, all of which have real-world financial value--is taxable. Because that is such an important question, a separate panel is planned for discussion on it Saturday.
But beyond taxation are plenty of legal issues, which the experts addressed at the event, largely an academic gathering where professors from a slew of top universities come to talk about the intellectual, legal and social issues around virtual worlds.
One of the first questions was what game designers can do to stop players from defrauding each other. Such activity can happen in many ways, including dishonest transactions of virtual assets.
"If fraud is fun, and built into the game, and people are defrauding each other with virtual items with real-world prices, you might say, 'You defrauded me,'" said Josh Fairfield, a panelist and associate professor of law at Indiana University School of Law. "Well, yes I did."
And while many players may expect that rules governing fraud are set in games' terms of service or end-user license agreements, Fairfield said that's not true.
"Contract law cannot regulate players' interactions with each other," Fairfield said.
That means there's nothing a publisher can do to stop such behavior, and players who find themselves with such complaints may have little choice other than to seek legal redress. But such help may well be slow to come, the panelists suggested.
Another issue Fairfield brought up was so-called real-money trade, the buying and selling of virtual goods for real money that occurs largely outside online games. It doesn't take place officially under the auspices of the games because most publishers say they oppose such behavior. But hundreds of millions of dollars in such goods are traded on markets like eBay each year, and the publishers have done little to stop it.
"They say publicly, 'No, we don't like it,'" Fairfield said of the publishers. "But privately, they support it...Why? Because it makes them money."
To Greg Lastowka, a panelist and assistant professor of law at Rutgers School of Law, the virtual-world governance landscape boils down to two categories: internal and external views of governance.
Internal governance, Lastowka said, is that which takes place between players and publishers. External governance is how any organization handles disputes with the real government.
As far as internal governance goes, he explained, legal disputes between players or between players and publishers are likely to be treated like any such dispute.
"The ultimate governance of virtual worlds is the state," Lastowka said. "The law doesn't treat virtual worlds as any different. The state is not going to accept" virtual worlds being treated as autonomous regions. That leads, however, to the examination of external governance, which means disputes between real governments and the community of players and designers.
Thus, Lastowka said, the question of whether real-money trades is good or bad for virtual worlds is a lot like a yacht club dispute over whether members need to wear jackets in the dining room: it's something that can be resolved without getting the law involved.
And that's probably good, as he suggested that the law is not particularly attuned to the issues revolving around games.
"Law is so close to games, in that games set up rules and structures, and try to set them up around specific rules and behaviors," Lastowka said. "The reason the law is dismissive of games is that it recognizes a similarity and wants to say, 'No, that's not what we're doing.'"
Thus, he suggested that the law of virtual-worlds is going to be similar to law of sports and other forms of private organizations.
To Thomas Malaby, another panelist and an associate professor of anthropology at the University of Wisconsin-Milwaukee, governance comes from the confluence of control--of players and their behaviors--regulatory schemes, social and structural conventions and material constraints.
Malaby said any form of governance, in virtual worlds or beyond, comes from law and regulation--the idea that enforceable rules are put in place and that there are consequences for breaking them.
Yet, clearly, virtual world players want more clear lines of demarcation when it comes to governance, and when it comes to players asking for such help, publishers often reply that it's too hard to build it into their products, said Timothy Burke, a panelist and an associate professor of history at Swarthmore College.
"Secondly, they'll say, honestly, 'We're scared of the consequences of having more robust tools for governance.' Governance isn't fun. (Publishers) don't want that in their games. It's just a small group of freaks (who want it, they say) and most?don't want you to have it, because they don't like what it does to their games."
Ultimately, then, the panelists seem to suggest that if players want real governance, at least when it comes to issues between themselves, they are going to need to self-govern. As to complex issues between players and the publishers, it's likely that real disputes will need to be elevated to the courts.
"The rules players develop do stop each other from bad acts," said Fairfield, "and that's all the governance we probably need."