An interesting article in Wired Magazine (4/2006) discusses law in the world of massively multiplayer online role playing games (MMORPGs) like World of Warcraft, Everquest, and Second Life.

The question it explores is how far will and should governments go to impose laws on the virtual world. For instance, last year in China, the government tried to limit the number of hours gamers could spend playing games online. Gamers protested online - with a mass suicide of virtual characters in World of Warcraft.

Other governments are taking an interest in MMORPGs as well. Players in South Korea have been prosecuted for stealing virtual property. More than half of the 40,000 computer crimes investigated by South Korea’s National Police Agency in 2003 involved online games.

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?

The taxing issue doesn’t much surprise me now that states are beginning to tax digital downloads like music and ebooks. Still, I suspect that given how difficult it is to tax online transactions now, taxing transactions in the virtual world will be monsterously complex.

Unfortunately, I couldn’t find the Wired article (Global Gaming Crackdown by Chris Suellentrop) on their website anywhere so I can’t link to it.