Video Game Currency: Taming the Wild West of Video Game Economies

JOURNAL OF LAW, TECHNOLOGY & THE INTERNET • VOL. 14 • NO. 1 • 2022 – 2023

VIDEO GAME CURRENCY:

TAMING THE WILD WEST OF VIDEO GAME ECONOMIES

Josh Khorsandi

Do you know the value of digital currency? No, not bitcoin, but rather value generated

in online gaming. While on the surface, online video gaming may seem like just another

form of entertainment, the value these games are creating is intersecting with the real-

world marketplace. The exchange of virtual wealth to real-life wealth is a tumultuous

problem that has remained unaddressed by law since the inception of video games. This

legal ignorance has left the market for videogame currency in a state reminiscent of the

wild west; the wealth is guarded only by those who can protect themselves. Those who

cannot protect themselves run the risk of being held up for items worth hundreds of hours

of labor. As these markets grow, and assuming we think the online gaming space is

worthy of promotion, society must grow with them. When society does decide to move on

the issue, it might take a more fluid understanding of John Locke.

Josh Khorsandi, J.D., M.B.A., & M.A. in compliance and risk management candidate at Case Western

Reserve University School of Law and Weatherhead School of Management. Special thank you to

Professor Nard for helpful comments and advice from the beginning.

 
i 
 
CONTENTS
I.  Old School Economies, New School Problems ........................................................... 1 
II.  The Current Shortcoming of Law to Meaningfully Regulate Video Game Economies 
has left a Regulatory Gap ....................................................................................................... 5 
III.  Locke Based Property Rights Regimes Must be Recalibrated to Better Fit the Online 
Gaming Space......................................................................................................................... 7 
a.  Understanding Lockean Property Theory as an Off-or-On Switch Ignores the 
Nuance of Living Economies. ..................................................................................... 8 
b. When Interests Conflict, the No Harm Principle Must Protect the Common 
Through Economic Norms ......................................................................................... 14 
IV.  The Enough and as Good Condition Understood as the Measurement of Economic 
Health in Video Game Economies ....................................................................................... 15 
V.  The Use of Socio-Economic Norms to Guide Regulation ......................................... 17 
a.  A Theoretical Economic Justification: a Bottom-Up Approach to Regulation ..... 20 
b. A Theoretical Economic Framework to Limit Player Access to Real-World 
Economic Profit ......................................................................................................... 26 
c.  Dealing with the Criticisms of Taxation as a Solution .......................................... 27 
d. Using a Concave Utility Curve to Limit Overproduction ..................................... 29 
e.  Using Socio-Economic Theory to Develop a Regulatory Schema for the 
Regulation of Video Game Currencies ...................................................................... 31 
VI.  Conclusion ................................................................................................................. 33 
 
 

Taming the Wild West of Video Game Economies

I. Old School Economies, New School Problems

The tragedy of the commons is an ancient concept.

Perhaps the most

famous explication is given by Professor Garret Hardin. In his brief article,

Hardin paints a picture of a pasture open to the common.

He states that a pasture

that is open and free to all is bound for ruination.

For centuries, the culling of

herds brought on by wars, famine, and disease protected the farmers from

overgrazing.

However, the social stability of modern times has removed herd culling.

Without the natural thinning of herds, the open pasture is open to overgrazing.

The farmer faces two realities: (1) they can capture the benefit of overgrazing

when they raise, feed, and sell additional cattle, and (2) since the cost of adding

cattle is borne on all farmers, all share the effects of overgrazing.

The rational

conclusion is to graze until the common is ruined and unsuitable for future herds:

“The individual benefits as an individual from his ability to deny the truth even

though society as a whole, of which he is a part, suffers.”

The regulation of digital video game currency follows the same thinking.

Consider the case of Old School RuneScape (“OSRS”). OSRS is a Massive

Multiplayer Online Roleplaying Game (“MMORPG”).

Throughout this paper,

“RuneScape” refers to the sibling game to OSRS that exists parallel to OSRS. In

OSRS, you play as a human in a magical world of dragons—it uses themes from

Dungeons and Dragons.

Most players play on a single account for many years.

There is no single goal of OSRS. Players can do many activities: killing monsters,

making money, training skills, or even standing around chatting with people in

social hubs.

William Forster Lloyd, Two Lecture on the checks to Population, 6 POPULATION & DEV. REV.

473, 473 (1833).

Garett Hardin, The Tragedy of the Commons, 162 SCIENCE 1243, 1244 (1968).

Id.

Mmorpg, RUNESCAPE PLAYERS WIKI https://rsplayers.fandom.com/wiki/Mmorpg (last visited

Sept. 10, 2022).

RuneScape, The RuneScape Documentary — 15 Years of Adventure, YOUTUBE (Apr.

9, 2017), https://youtu.be/7RNK0YBdwko?t=264.

See David Jagneaux, How Jagex Is Keeping MMORPG ‘Runescape’ Alive After 20 Years,

FORBES (Sept. 28, 6:43 PM), https://www.forbes.com/sites/davidjagneaux/2021/01/04/how-

jagex-is-keeping-mmorpg-runescape-alive-after-20-years/?sh=469e212f47bf.

See OSRS WIKI, https://oldschool.runescape.wiki/ (last modified Mar. 2, 2022).

Journal of Law, Technology & the Internet — Vol. 14

OSRS lives through good economic policy. When there is not enough

money—i.e., Gold Pieces (“GP”)—in the economy, the developer adds a new

resource that players can transform into gold through, for example, magical

alchemy.

When there is too much money, the developer adds activities that

cost—i.e., delete or remove—GP to complete; this is how money leaves the

economy.

It is the role of the game developer, Jagex, to act as a quasi-regulatory

government. By setting proper economic policy, Jagex ensures a healthy virtual

society.

It is also worth noting that OSRS uses a one-of-a-kind method for

introducing updates.

Due to a politically contentious past, players must approve

any significant update via in-game poll booths, with a minimum of 75% of the

voting players voting yes.

Jagex must consider the economic impacts in terms of

the game's health and whether it will appeal to its voters. While challenging at

times, it ensures that egregious financial incentives do not make their way into the

game.

Alchemy is the process of turning an item into pure GP using a magical spell. High Level

Alchemy, OSRS WIKI, https://oldschool.runescape.wiki/w/High_Level_Alchemy (last modified

Oct. 17, 2022).

Sink (economy), OSRS WIKI, https://oldschool.runescape.wiki/w/Sink_(economy) (last

modified Jul. 15, 2022).

Polls, OSRS WIKI, https://oldschool.runescape.wiki/w/Polls (last modified Oct. 18, 2022).

Id.; See generally Mote Plox, RuneScape Historical Timeline 1998 – 2020, YOUTUBE (March.

16, 2021), https://youtu.be/tZlj694lcxA.

Loot boxes have garnered the most attention in the news. Loot Boxes Linked to Problem

Gambling in New Research, BBC (Apr. 2, 2021) https://www.bbc.com/news/technology-

56614281. Most states define illegal gambling as containing three elements: consideration,

chance, and a prize. Hap Burke, et al., Shield Your Sweepstakes from Gambling Laws,

THOMPSON COBURN LLP (Dec. 21, 2011),

https://www.thompsoncoburn.com/insights/blogs/sweepstakes-law/post/2011-12-21/shield-your-

sweepstakes-from-gambling-laws. A prize is, in part, something of value. Prize, BLACK'S LAW

DICTIONARY (11th ed. 2019). Courts have defined illegal gambling as when their prizes can be

converted back into currency, like players cashing out their chips at a casino. More recently,

courts have broadened this definition to include games regardless of the player’s ability to cash

out. See Mark Eisen, No Win Situation: The Ninth Circuit Finds Mobile Casino Applications

Can Be Gambling Despite No Cash Out Mechanism, JDSUPRA (Apr. 16, 2018),

https://www.jdsupra.com/legalnews/no-win-situation-the-ninth-circuit-22006/. In OSRS’s

sibling game, RuneScape introduced a mechanic known as the Squeal of Fortune to introduce

the ability to pay real world money to spin a wheel for potential in-game benefits such as

experience, items, or GP. Squeal of Fortune, RS WIKI,

https://runescape.wiki/w/Squeal_of_Fortune#:~:text=The%20Squeal%20of%20Fortune%20(als

o,with%20the%20Solomon's%20General%20Store (last modified Oct. 16, 2022). RuneScape

experience, items, and GP have real world value. See infra note 19. It is common within the

general community that in game purchases are unhealthy for the game and the players

purchasing them. Once introduced, selling in game benefit for out of game currency became one

Taming the Wild West of Video Game Economies

It is common for video games to have unofficial real markets for their

virtual items.

A real market is a market that exists beyond cyberspace.

OSRS’s

real marketplace surrounds its centralized currency, GP. This GP has real-world

value and even has a varying exchange rate to USD.

At the time of writing this

paper, the current ratio is about $0.52:1M GP or fifty-two cents for every one

million OSRS GP, depending on the seller.

For the average player, like me, this

number is practically meaningless. For a healthy minority of the OSRS player

base, however, this number reflects real financial gain.

Much like the times of

the open pastures of the wild west, there is a new gold rush. Only this gold rush is

invisible to the legislative eye.

As the market grows, so too does the purveyor of wealth’s hunger. Players

who sell gold gather their wealth through one of a few means: gold farming

(exclusively partaking in activities that yield high in-game monetary returns for

the sole purpose of sale), cheating (having automatic code scripts called “bots”

play the game and gather resources to sell), or hacking (getting into other player’s

accounts and stealing their items to sell).

Jagex wages a never-ending war to

of the key political talking points over the last several years. Considering the general disdain for

the practice, and the potential for legal definitional fit between illegal gambling and loot box

mechanics like the Squeal of Fortune, such business practices will likely see more litigation in

the future.

See, e.g., Venezuela’s Paper Currency is Worthless, so its People Seek Virtual Gold, THE

ECONOMIST (Nov. 23, 2019), https://www.economist.com/the-americas/2019/11/21/venezuelas-

paper-currency-is-worthless-so-its-people-seek-virtual-gold; Brad Plumer, The Economics of

Video Games, THE WASHINGTON POST (Sept. 28, 2012, 8:30 PM),

https://www.washingtonpost.com/news/wonk/wp/2012/09/28/the-economics-of-video-

games/; Alex Hern, Counter-Strike Trading Found to be ‘Nearly All’ Money Laundering, THE

GUARDIAN (Oct. 30, 2019, 13:00 EDT),

https://www.theguardian.com/games/2019/oct/30/counter-strike-trading-found-to-be-nearly-all-

money-laundering.

See Thomas Bowen, 10 Video Game Currencies And Their Real World Values, GAMERANT

(Oct. 1, 2022), https://gamerant.com/video-game-currency-real-world-value/.

Gold, ELDORADO, https://www.eldorado.gg/osrs-gold/g/10-0-0 (last visited June 26, 2021)

(Listing numerous independent GP sellers and their exchange rates); Buy OSRS Gold,

PROBEMAS, https://probemas.com/Buy-OSRS-Gold (last visited June 26, 2021); Buy OSRS Gold

– Old School RuneScape GP for Sale, PLAYERAUCTIONS, https://www.playerauctions.com/osrs-

gold/ (last visited June 26, 2021).

This number is subject to constant change based on current game updates. Id.

William Alexander, How to Make Thousands of Dollars a Month Player Computer Games,

VICE (Aug. 5, 2013), https://www.vice.com/sv/article/zn5pda/i-make-thousands-of-dollars-a-

month-from-playing-computer-games.

See Top 10 Infamous Players of RuneScape and How they got Banned, RUNE LEAK,

(Apr., 2021), https://runeleak.com/rsps-advertisement/top-10-infamous-players-of-runescape-

and-how-they-got-banned-19.

Journal of Law, Technology & the Internet — Vol. 14

identify and ban these players as it violates their Terms and Conditions to sell

GP.

Even Jagex employees are not free from financial temptation. In 2018,

Jagex fired Moderator Jed (“Mod Jed”) after discovering he had been grossly

abusing his moderator privileges.

Mod Jed stole hundreds of thousands of

dollars’ worth of GP from players and even attacked the OSRS servers during a

live Jagex tournament with a cash price of $10,000.

At the time of this paper,

the police investigation into his actions has yet to conclude.

With his real bank

accounts frozen, Mod Jed had gone into hiding, changed his name numerous

times, and is still missing.

Nonetheless, companies have an incentive to allow players property rights

in the value they create within the game. When a player creates value on their

account—their license—the game companies cannot capture the value. A game

company that takes from its players’ accounts to turn a profit is unlikely to

survive for long; players are not keen on having their labors taken

when they have worked hard to achieve them. The current model allows players

to generate any quantity of value on their accounts but does not allow anyone,

player or company, access to said value.

Players exchange in-game value for real-world currency when they feel as

though the game and its content are popular enough to warrant the deal. If a game

company were to allow players property rights to their in-game value, it would

encourage more players to play the game. This is because there is a social aspect

of playing video games. That is, players may be more likely to play a game if they

see others placing more value in its content—a herd mentality of sorts. For the

company, more players playing the game means more revenue. Since no one is

currently reaping the rewards of player-generated value and it goes against good

Terms and Conditions, JAGEX (Oct. 14, 2020), https://www.jagex.com/en-GB/terms.

Andy Chalk, Jagex Moderator Fired for Stealing 45 Billion Coins from Old School RuneScape

Player (Updated), PCGAMER, (Sept. 20, 2018), https://www.pcgamer.com/jagex-moderator-

fired-for-stealing-45-billion-coins-from-old-school-runescape-player/; see also Cammy

Harbison, Was Mod Jed Fired? Old School ‘Runescape’ Team Says a Moderator Has Been

Dismissed, NEWSWEEK (Sept. 20, 2018, 3:09 PM EDT), https://www.newsweek.com/osrs-mod-

jed-fired-after-runescape-twitter-suspended-corruption-exposed-ddos-1131931.

Id.

OSRS Mod Jed Scam Story, PROBEMAS (May 14, 2019), https://probemas.com/blog/mod-jed-

scam-story.

Shauny, In the Games Industry – An Interview with (Ex-Mod) Mat K!, YOUTUBE (Jan. 18,

2020), https://youtu.be/IX7vdMqcqsE?t=8113 (discussing the aftermath of Mod Jed’s abuse and

the police with former Product Owner, Mod Mat K).

Taming the Wild West of Video Game Economies

business practice to take away from a player base value they have generated, it is

prudent for companies to allow players to own the value they create through their

individual licenses.

II. The Current Shortcoming of Law to Meaningfully Regulate

Video Game Economies has left a Regulatory Gap

Regardless of how society views video games, many will pay top dollar

for the items in these virtual worlds. The goal of this paper is to build a regulatory

scheme for legislatures to use in the future. First, I will establish that there is a

need for regulating video game economies like OSRS. Second, I will take some

time to consider two Lockean views of intellectual property law to find the

philosophical starting point. Third, I will push a slightly more nuanced

understanding of Locke and use this as my base argument. Fourth, some

economic explanation and suggestions on solving the presented issues. Finally,

the paper will conclude with an attempt to create a regulatory coda. Future

regulators may want to use this as a model with theoretical and practical evidence

to support it.

Until now, I have presented several ad hoc examples. However, it is not

clear that it is worth the valuable time for our legislatures to examine the issue. As

motivation for property rights is not the focus of this paper, I will briefly discuss

how legislation may already cover such virtual economies before building a more

tailored, yet general approach.

A nonbank financial institution (“NBFI”) is an unlicensed financial

institution that offers individuals the ability to store money for numerous

purposes.

Currency exchanges are a type of NBFI.

The digital currency of

OSRS carries enough value to have a varied exchange rate.

The exchange rate

Buy RuneScape Rares, RPGSTASH, https://www.rpgstash.com/ runescape/rs3-rares (last

visited Sept. 27, 2022); Buy Rare Discontinued RuneScape Items -

RS3 Rares, PLAYERAUCTIONS, https://www.playerauctions.com/

runescape-items/ (last visited Sept. 27, 2022); see also Lars Holdgaard, How Much Does a

RuneScape Partyhat Cost – How I Lost 50.000 USD and How This Related to

Bitcoin, LARSHOLDGAARD (Sept. 27, 2022), https://www.larsholdgaard.com/how-much-does-a-

runescape-partyhat-cost-how-i-lost-50-000-usd-and-how-this-related-to-bitcoin/.

Nonbanking Financial Institution, THE WORLD BANK,

https://www.worldbank.org/en/publication/gfdr/gfdr-2016/background/nonbank-financial-

institution (last visited Sept. 27, 2022).

Id.

Gold, supra note 19.

Journal of Law, Technology & the Internet — Vol. 14

on private websites lists where players can pay real currencies in exchange for

GP.

Therefore, I argue that these websites act as currency exchanges.

Title 31 of Section 5330 of the United States Code (“Section 5330”)

requires the registration of all money-transmitting businesses.

Currency

exchanges fall under the code definition of money-transmitting businesses.

Title

18 of Section 1960 of the United States Code (“Section 1960”) criminalizes

unlicensed money transmitting business when the money transmitting affects

interstate or foreign commerce in any manner or degree.

Under the Titles of

each Code, websites that engage in the sale of OSRS GP must file their existence

with the government; however, none currently do.

Moreover, suppose we assume that players have property rights

(superseding the current license language that forbids property ownership

therein

) in their video game wealth that are taxable when sold for profit. Section

61 of the Internal Revenue Code defines gross income: “Gross income means all

income from whatever source derived, unless excluded by law. Gross income

includes income realized in any form, whether in money, property, or services.

Income may be realized, therefore, in the form of services, meals,

accommodations, stock, or other property, as well as in cash.”

Services,

property, or cash are considered gross income. When a player sells their GP for

USD, they have at least provided a service for money. By providing the buyer

with GP, the seller provides the buyer more time to engage in activities in OSRS

that would otherwise cost time to generate the required money for said activity.

For example, training the skill “Prayer” involves sacrificing bones to

altars that consume the bones for experience.

Bones cost the player GP.

Therefore, training “Prayer” requires GP. If the buyer pays USD for GP, they are,

in effect, paying someone else to spend the many hours to gather the GP needed

to purchase bones for Prayer training. This is a service, and therefore the profits

are taxable as gross income.

Id.

31 U.S.C. § 5330 (2021).

Id. at § 5330(d)(1)(A).

18 U.S.C. § 1960 (2018).

Eisner v. Macomber, 252 U.S. 189, 202–203 (1920) (interpreting 26 C.F.R. § 1.61–1(a) to the

fullest extent the Constitution allows).

JAGEX, supra note 23.

26 C.F.R. § 1.61–1(a); see also 26 U.S.C. § 61–1(a).

Prayer, NOCTURNE WIKI, https://nocturne.fandom.com/wiki/Prayer (last visited Sept. 12,

2022).

Free-to-Play Prayer Training, OSRS WIKI, https://oldschool.runescape.wiki/w/Free-to-

play_Prayer_training (last modified Oct. 23, 2022).

Taming the Wild West of Video Game Economies

The problem with the law is that it creates a system that encourages

adverse interests to proliferate in video game economies. That is, once enough

people begin to realize the real economic gain of their virtual worlds, a race to

ruination is imminent.

As more and more people hear about the ease of access

and possibility of wealth, more people have the incentive to make money while it

is still worth their time. Once the virtual world is economically mined of its value,

those with the misaligned incentives will drain the next game. The question then

becomes: How do we vest property rights so that players can capture some of the

value in their video games while avoiding misaligning incentives?

III. Locke Based Property Rights Regimes Must be Recalibrated to

Better Fit the Online Gaming Space

Due to the nature of this discussion, I will spend a notable amount of

space developing a theoretical backdrop. To this end, I would like to begin with a

rehabilitation of a commonly cited legal scholar, John Locke.

The current

literature applies Locke with an implied use of the common law doctrine of

accession.

The common law doctrine’s purpose is important, but it is not the

focus of this paper. As such, we must assume we live in a world where we have

vested property rights for our virtual in-game labor.

The accession solution is simple: If one party acted in bad faith by

intentionally misappropriating another’s piece of property, the property right vests

with the original owner. The interests are set against each other when

appropriating parties act in good faith. The stronger interest maintains a right to

the property. If the interest rests with the party who did not initially own the item,

they must also pay the original owner for their investment.

Hardin, supra note 2.

Contra Leah Shen, Note, Who Owns the Virtual Items?, 2010 DUKE L. & TECH. REV. 11

(2010) (discussing the Lockean nature of value creation within video game worlds as leading to

individual property rights in said value); F. Gregory Lastowka & Dan Hunter, The Laws of the

Virtual Worlds, 92 CALIF. L. REV. 1 (2004) (promoting multiple philosophical frameworks for

individual property rights in video game value). But see, Steven J. Horowitz, Competing

Lockean Claims to Virtual Property, 20 Harv. J. LAW & TECH. 443 (2007) (arguing property

interests lay within the game developer’s overriding labor claim as de facto creators).

Id.

The Doctrine of Accession test was further developed by the Supreme Court of Michigan in

Wetherbee v. Green, 22 Mich. 311 (1871). Concluding for Wetherbee, the Court decided that he

had a right to show a good faith error stemming from the belief he held a license to appropriate

logs from the land owned jointly as a tenant in common of Green; it was the former plus a high

amount of newly generated value that would go to waste that brought the Court to its conclusion.

Journal of Law, Technology & the Internet — Vol. 14

The Lockean framework seems to be a natural outgrowth of the Doctrine

of Accession.

The focus on labor as the source of property rights is an enticing

view to evaluate. However, such absolutist terms that encapsulate both theories

fail to encompass the entirety of practical situations. Specifically, Locke’s labor

theory, as applied to Intellectual Property—and subsequently license theory

—is

overinclusive of the laborer’s property rights when placed in the context of video

games.

It creates an unnecessary situation where the law must choose between

an all-or-nothing scenario. To further develop this idea, I will turn to a couple of

different theories on Locke before branching off into my own space.

a. Understanding Lockean Property Theory as an Off-or-On Switch

Ignores the Nuance of Living Economies.

In a famously cited paper, Justin Hughes examined Locke in terms of

Intellectual Property.

Locke’s theory increases value for society through labor-

based property rights.

Hughes offers perspective on this ideal, “[h]e suggests

that granting people property rights in goods procured through their labor

‘increase[s] the common stock of mankind,’ a utilitarian argument grounded in

increasing mankind's collective wealth.”

The Lockean property regimes

necessarily fail video game economies. As I will argue in this section, there is too

much nuance lost in simple argumentative ends.

Hughes boiled Locke’s theory down to three main propositions: “first,

that the production of ideas requires a person’s labor; second, that these ideas are

appropriated from a ‘common’ which is not significantly devalued by the idea’s

removal; and third, that ideas can be made property without breaching the non-

waste condition.”

As discussed below, Hughes’ arguments supporting a

Id. at 320 – 321. The same question can be analogized to video games: From within another’s

intellectual property, can I generate such immense value such that my property interest

supersedes theirs? If so, to what extent? Any references made hereinafter to the Doctrine of

Accession will assume this framework.

Thomas W. Merrill, Accession and Original Ownership, 1 J. OF LEGAL ANALYSIS 459, 465

(2009).

Justin Hughes, The Philosophy of Intellectual Property, 77 GEO. L. J. 287, 302 (1988).

One might find it curious that I do not discuss Hume’s utility-based property theory. DAVID

HUME, AN ENQUIRY CONCERNING THE PRINCIPLES OF MORALS, (1777). After this paper is

published, I will write on the matter as a separate supplement to this paper as it does merit some

discussion.

Hughes, supra note 46, at 297-330.

JOHN LOCKE, TWO TREATISES OF GOVERNMENT: SECOND TREATISE OF GOVERNMENT (1690).

Hughes, supra note 46, at 299 (citing LOCKE, supra note 49, at § 37).

Hughes, supra note 46, at 300.

Taming the Wild West of Video Game Economies

Lockean Intellectual Property law regime are necessarily incompatible with the

unique economies of video games.

Proposition 1: The production of ideas to virtual wealth production in

video games. Without delving into the nature of an idea, ideas are intangible

things that have value.

Video game gold is an intangible item that has value.

Still, ideas and video game gold exist in a slightly different theoretical space.

Pulling an idea from the infinite common does not make it lose any value. Video

game gold may also be pulled from an infinite common, albeit a temporally

tempered one.

However, each pulling reduces the value of that which has just

been produced by a small amount.

For example, if I were to digitally collect resources in a video game from

a rare tree that respawns a few seconds after being cut down ad infinitum, the tree

would cease to be rare. Its logs would become worthless as there would be

infinite supply. Future examples that discuss video game resources assume that

demand is not infinite because, as a practical matter, buyers of these logs only

need a finite amount of them. Given enough pulling from the infinite common

such that it has lost all value, the items have become worthless. This concept of

decreasing value for every pull from the common is missing from ideas.

Nonetheless, the ends of these two concepts meet in a similar place. That

is the bank. Just as the gold farmer puts pain-staking hours grinding away at

making money in a video game to sell for real-world cash, so too does the

inventor slave away at their mental workshop to create an idea from which to

profit.

Proposition 2: The “enough and as good” condition is confused under

these circumstances. Hughes underlines Locke’s common for the people as

something needing to be practically inexhaustible from others' usage.

The

problem with this thinking it does not consider large amounts of inflation from an

Locke’s treatment of the “non-waste condition” might make some readers curious as to why I

included it here. Id. at 298. While Locke ran through the idea quickly, seemingly abandoning it

within his own theory, the point in and of itself is still worth discussing because of its theoretical

implications within the context of video games.

Entry in Valuation Dictionary: Value of Idea (Intangible Asset), VALUPAEDIA,

https://www.valupaedia.com/index.php/business-dictionary/510-value-of-idea-intangible-asset

(last visited Sep. 20, 2022).

The gathering of resources in video games like OSRS are slowed by respawn timers. For

example, when you kill a boss, it takes two minutes to respawn. Some items you pick up

respawn after a shorter period. These timers slow the influx of resources. Item Spawn, OSRS

WIKI, https://oldschoolrunescape.fandom.com/wiki/Item_spawn (last visited Sep. 20, 2022).

Hughes, supra note 46, at 315–316.

Journal of Law, Technology & the Internet — Vol. 14

almost limitless source. Hughes’s definition of the common precludes any

application to video games—and does so unnecessarily.

Hughes’s standard only removes rights when the common is significantly

devalued.

In the video game world, no single activity is significant enough to

devalue the entire common. It would take someone years to have a significant

negative impact on the common. Individual player action is too minute for

anyone's specific effort to meet this criterion. If applied as Hughes has, the

standard would simultaneously force all players to lose property rights while also

depriving them of the labor they invested. The standard would thus violate

Locke’s no harm principle,

which it cannot logically do.

Video game currency exists in an intermediary space between being a

scarce commodity and a technically limitless resource. For example, consider the

case of farming a boss, Vorkath—colloquially known as “The Money Dragon”—

in OSRS.

I am going to treat Vorkath as analogous to Locke’s common.

Players can kill this boss many times per hour to generate wealth. Vorkath is a

single-player boss that any number of players can fight due to the “instanced”

mechanic of the boss fight; instance means we can occupy the same space while

participating utterly distinct from each other. The path to unlocking the ability to

slay Vorkath is behind months of work for casual players. The time it takes to

reach Vorkath is the only limitation on farming it for items sold for in-game gold.

There seems to be no problem with the “enough and as good” requirement

understood in this sense. Both you and I could kill the boss ad infinitum without

harming the other’s ability to farm Vorkath.

To see the problem, notice the parallels and differences from maintaining

a healthy level of inflation in the real world. In terms of real currencies, when we

notice a new commodity, for example, oil, being overproduced to the point of

either harming the environment or harming the oil industry, we place production

Id. at 300–01.

LOCKE, supra note 49, § 6; Wendy J. Gordon, A Property Right in Self-Expression: Equality

and Individualism in the Natural Law of Intellectual Property, 102 Yale L.J. 1533, 1540–78

(1993).

At the time of writing this note, Vorkath can be killed for a maximum of about 3M GP per

hour. At going exchange rates, that is about $1.50 per hour. Gold, supra note 19.

When a player kills a boss, they are, in effect, pulling a resource from a common. A common

is, in part, something from which a laborer injects their efforts to extract some kind of unique

value. Mining coal from a mine requires the miner’s effort and produce an item with unique

value, coal. Since anyone can mine the coal, it comes from the common. In my example, the

value is unique because it is only extractable from Vorkath. Vorkath is acting like a common

because it accessible by all those who have the skill to kill it and acquire its goods.

Taming the Wild West of Video Game Economies

limitations.

The goal is to prevent an overproduction that would result in a

devaluing the product.

Likewise, if everyone farms Vorkath forever, the items—

and subsequently the gold it drops—become worthless. The boss is now pointless

to kill.

Unfortunately, in the video game world, the parallel of over-production is

not offset by an accompanying regulation or increase in gold leaving the digital

economy.

Removing GP from sealed-off economies like OSRS requires an

Jenny Rowland-Shea et al., 5 Reasons Why the United States Can’t Drill Its Way to Energy

Independence, AM. PROGRESS (Mar. 10, 2022), https://www.americanprogress.org/article/5-

reasons-why-the-united-states-cant-drill-its-way-to-energy-independence/.

The oil analogy was a pointed one. In 2015, the world shook as oil prices hit record lows. The

Organization of the Petroleum Exporting Countries (“OPEC”) had maintained a level of oil

production as an attempt to push out major oil competitors like the United States. Larry Elliott,

Opec bid to kill off US shale sends oil price down to 2009 low, THE GUARDIAN (Dec. 7, 2015),

https://www.theguardian.com/business/2015/dec/07/opec-plan-kill-us-shale-oil-price-down-

seven-year-low. One of the countries hit the hardest was Venezuela. A former leader in OPEC,

Venezuela’s GDP was roughly 30% oil sales with anywhere from 80% to 99% of its exported

GDP coming from oil. EUR. COMM’N, E.U., VENEZUELA COUNTRY STRATEGY PAPER 2007–

2013 (2007), https://eeas.europa.eu/archives/docs/venezuela/csp/07_13_en.pdf. Beyond the

economic analogy, Venezuelans relate directly to the content of this paper. Venezuelans with an

understanding of modern entertainment methods have been farming video game currencies in

record numbers since the 2015 oil crisis. Andrew Rosati, Desperate Venezuelans Turn to Video

Games to Survive, BLOOMBERG (Dec. 6, 2017),

https://www.bloomberg.com/news/articles/2017-12-05/desperate-venezuelans-turn-to-video-

games-to-survive. A direct result of these activities are massive influxes of virtual currency into

large online video games like RuneScape and World of Warcraft. Like the ancient Ouroboros

symbol of a serpent eating its tail, the rapid inflation caused by these well intentioned—and

possibly justified—folk is necessarily destroying that which makes them money. That is, when

huge amounts of money are injected into the game, the gold will eventually become worthless.

At that point, the serpent will disappear, and the gold farmers will have to turn elsewhere as

there is no longer enough value in gold farming said game.

Robert Nozick’s “Lockean Proviso” discusses the issue of future persons enjoying the same

benefit as a right. ROBERT NOZICK, ANARCHY, STATE, AND UTOPIA 175–182 (1974). When I

play an online game, I expect the content to have the same meaning the game publisher purports

it to have—if the economy has hyperinflation, I cannot enjoy content, like Vorkath, in the same

way prior players have; there would be no purpose in killing Vorkath if it dropped worthless

items. Nozick describes three important points in his proviso. First, appropriate to this situation,

the issue is not whether one player was left enough gold to farm, but whether the gold farming

of another player left them worse off than before. Nozick uses the language of utility and

welfare as measuring sticks, but the idea is the same. For Nozick, the player has recourse only if

they have not been duly compensated for this loss in value. Id. In the terms described here,

compensation could take a number of forms. Based on my overall conclusion, players who lose

more value than others may be entitled to extensions of their property limitations. How this is

practically calculable is an entirely different matter.

Journal of Law, Technology & the Internet — Vol. 14

internal fix with some external guidance. The OSRS developer team has tried,

with some decent success, to curb the inflation by adding a tax to a popular

gambling area within the game known as the Duel Arena—colloquially known as

“The Sand Casino” for its desert locale.

Between 2019 and 2020, the 1% tax on

player gambling had removed nearly 17.5 trillion GP.

At the time, the US

currency to OSRS GP ratio was about $0.70:1M GP.

That is approximately

$12.25M removed from a 1% tax on a single section of the player economy for

one year from one game. Basic math tells us that $1.2bn was won over that year

by individual players. The previous year saw about a four trillion GP removal,

with the year prior being around 1.7 trillion GP.

However, a tax is a band-aid fix to a gaping wound. Hughes’s discussion

either leaves the wound with its band-aid or ties a tourniquet around the bicep.

His interpretation of Locke would either deny property rights and allow the band-

aid fixes to continue or give everyone limitless property rights, in which case

everyone can gold farm until nothing is worth doing anymore. By placing his

focus on the ends of Locke’s common, he may corner himself into a black and

white outcome.

Hughes’ Lockean legal framework leaves this problem unsolved. The

discussion runs against two unpleasant outcomes: (1) Granting full property rights

not only fails to prevent over-production but also encourages unscrupulous

players to prioritize gold farming or botting so long as the gold holds value, a race

Second, unfortunately Nozick did not explain fully why his proviso is satisfied in free

market economies. One interpretation asks whether the individual would be better off if all-

natural stuff had returned to the common. Id. This interpretation is incongruent to my discussion

here because it is not clear what process that would entail. Hypothesizing what that looks like is

beyond the purpose of this paper.

Third, it is still entirely possible that despite our best efforts, players will still face

problems imposed by just acquisitors. Nozick argues that even a just gold farmer creates

problematic negative externalities. Id. The more you gain, the less I have. While Nozick

provides his proviso may still survive such violation through due compensation, there are

practical applicability concerns to my study here.

Josh Khorsandi, Photograph of the OSRS Duel Arena, (July 11, 2021)

https://gyazo.com/9762bbdec265e4e0ff6c24677b3abc01; Josh Khorsandi, Photograph of the

OSRS Duel Arena, (July 11, 2021) https://gyazo.com/eaee8604e3d003998eda30b5a00385dc;

Josh Khorsandi, Photograph of the OSRS Duel Arena, (July 11, 2021)

https://gyazo.com/b6881a9cba23b3cbe1ec8bacb2ee18bb.

Old School RuneScape, Jagex, OSRS Data Stream 2020 – Old School RuneScape’s 7th

Birthday!, YOUTUBE (Feb. 26, 2020), https://www.youtube.com/watch?v=UfB2bBacxJ8 at

8:06.

OSRS Price Tracker: Check History Market Prices in USD, PLAYERAUCTIONS,

https://www.playerauctions.com/osrs-gold/osrs-market-tracker/.

Michael RS, The Duel Arena Tax took 4 Trillion GP out of the Game (OSRS) (New Data),

YOUTUBE (Feb. 22, 2019), https://www.youtube.com/watch?v=2KAbOEkkTEs.

Taming the Wild West of Video Game Economies

to the bottom of sorts and (2) Granting no property rights creates a vacuum for a

dangerous black market driven by greed and overproduction. Thus, the “enough

and as good” proposition fails. In the next section, I will attempt to rehabilitate

Hughes’s rigid understanding of Locke.

Proposition 3: There will necessarily be a conflict with the “non-waste”

proposition. Hughes argues that ideas do not create waste—whether they are

shared with society or kept within the creator’s mind.

There is no loss to my

ability to generate ideas when you withhold yours—I could just as likely have

stumbled upon the same thought myself. In Hughes’s world, this creates a

relatively easy on/off switch for the non-waste condition. Thus, ideas have no

waste and are appropriate to assign intellectual property rights.

However, consider the inflation problem. Over-producing GP creates

inflation. Inflation reduces the value of everyone’s GP. For example, consider a

random player, who made ten million GP over ten hours, a 10:10 ratio. If the

value of GP is dropping due to the over-production, then some portion of the

value of their GP is lost every day. That ten million GP is only worth what ten

million GP was worth when this player spent the ten hours earning it. Sometime

later, the ratio is now 9:10—same labor, less value.

The over-production led to a

waste of player X’s labor.

Lack of regulation allows for a gold-rush mentality among the player base,

perpetuating a downward economic spin. As more GP enters the game, the labor

the player puts in to earn what GP they currently have is worth less. After all, it

would add no value to my wallet if I found an oil deposit in a world in which oil

was an easily accessible limitless resource. As with the previous Proposition, the

black and white understanding of Locke’s property theory fails to consider the

nuance that video game economies require.

In sum, traditional intellectual property law regimes bound by Hughes’s

Lockean framework fails to consider player-driven economies' unique

circumstances. The regulatory framework needs to be flexible enough to capture

nuances unique to the online gaming community. While Hughes’ discussion of

Hughes, supra note 46, at 328–329.

I want to briefly discuss the counter argument to this point. As an economic matter, one may

retort that there is no value being lost here. When there is more supply, prices fall. This is

beneficial to the player as they can now use their current cash to buy cheaper items off the

market. As will be developed below, the reason players play OSRS, and games alike, is because

their items retain value in the market. It is the exclusivity of owning an expensive item that

players enjoy so much. When all items cost nearly zero GP, then the player will find no value in

playing the game. The game itself depends on healthy market prices for certain items. Therefore,

infinite supply is a bane, not a boon.

Journal of Law, Technology & the Internet — Vol. 14

Locke does well to account for the nuance in law and ideas, it falls short of a new

kind of labor, one with simultaneously more and fewer bounds than ideas.

b. When Interests Conflict, the No Harm Principle Must Protect the

Common Through Economic Norms

In contrast to Hughes’ more mechanical approach to property law, Wendy

Gordon offers a natural-rights approach to Locke.

Gordon’s discussion provides

for a more fluid, grassroots understanding of intellectual property law such that

the door is left open for the cross-application to video games. In her paper, A

Property Right in Self-Expression: Equality and Individualism in the Natural Law

of Intellectual Property,

Gordon revisits the roots of Locke’s theory, the Law of

Nature.

As such, the essential step in my work is to grow and apply Locke’s no

harm principle and his proviso.

According to Gordon, we must balance two entitlements to assign

property rights—the public versus the individual laborers.

Not only should

everyone be able to labor, but they should also enjoy said labor.

To meet the

enjoyment standard, the public’s relationship to the common must be further

defined. The individual must be free from the restraints that the property rights of

the public impose to maintain their proper entitlements.

The apple farmer is

entitled to enjoy their land without the public sewage treatment municipality

dumping its waste into a shared watering source. At the same time, certain pieces

of property are occasionally granted to the public when doing so provides a

significant benefit.

Suppose the water treatment municipality was the only

source of clean water for the town. In that case, the public’s right to ruin the

source of the apple farmer’s water likely supersedes the apple farmer’s individual

right to benefit from their labor.

What Gordon suggests is a middle ground “between nonownership and

tenancy-in-common: freedom to keep one’s gains, subject to a duty not to impair

others’ abilities to draw their own gains from the resource.”

When society

begins to think about applying rules and regulations to games like OSRS, it must

Gordon, supra note 57, at 1606.

Id. at 1533.

Id. at 1540–78

Id. at 1560–1562.

LOCKE, supra note 49, § 36.

Id. at § 6.

Gordon might disagree with this statement in terms of Locke’s proviso. She argues that the

good enough and as good condition does not depend on efficiency, or the great benefit offered to

society. Gordon, supra note 57, 1564.

Id. at 1560.

Taming the Wild West of Video Game Economies

employ this balancing act.

The player who spends their days gold farming is

entitled to their newly acquired property and any real money that comes from it.

Likewise, non-gold farming players are also entitled to enjoy their items and the

methods to make their own, less economically impactful, money. Each party’s

interests conflict.

To solve this issue, remember Locke’s first law of nature—the no harm

principle.

Understood by itself, the no harm principle would seemingly be the

logical end to either party’s property rights. But this produces an untenable

problem. If the public takes the product of an overproducing laborer, it also harms

the individual laborer because they have lost the fruits of their labor. The next

step might be to consider letting the laborer have claim right to everything they

mix their labor with to avoid this problem. If that were the case, there would be a

claim right for the individual laborer to harm the common from which the public

draws value. Harming the public’s property rights violates the no harm principle

and, therefore, cannot stand.

Hence, Locke’s theory forces the individual laborer to give up their rights

to the common because doing otherwise grants them a right to harm. This is

where Gordon’s theory ends, and mine begins.

While Gordon uses the Lockean

proviso to provide the nuance necessary to establish intellectual property, she fails

to dig deeper. Gordon ends the point by suggesting a theoretical economic

approach but does not define what this means.

Defining a potential economic

justification for a legal framework surrounding video game currency property

rights is the purpose of this paper.

IV. The Enough and as Good Condition Understood as the

Measurement of Economic Health in Video Game Economies

Locke’s famous proviso is the basis for my theory. First, I need to

establish the proviso and then argue for an even more nuanced interpretation of it

using an economic theory.

Locke’s proviso states:

Hardin argues for a systemic approach to this balancing act. Hardin, supra note 2, 1245. “The

morality of an act is a function of the state of the system at the time it is performed.” Id. While

only mentioned in passing, one suggestive thought of his is to supplement our statutory

framework with special administrative powers. Id. His question of watching the watchers may

be a valid critique to this thought, but it is of no consequence to my task here. Id.

LOCKE, supra note 49, § 6.

Gordon’s theory continues onward to discuss copyright and first amendment issues. I will

only touch on her arguments sporadically from now on.

Gordon, supra note 57, at 1562.

LOCKE, supra note 49, §§ 27, 33.

Journal of Law, Technology & the Internet — Vol. 14

It being by him removed from the commonstate nature hath placed

it in, it hath by this labour something annexed to it, that excludes the

common right of others men: for this labour being the

unquestionable property of the labourer, no man but he can have a

right to what that is once joined to, at least where there is enough,

and as good, left in common for others.

The no harm principle is absolute. More clearly, it means that when one takes

from the common such that there is not enough and as good of it remaining, they

have caused harm. This proviso stated above establishes two important rules: (1)

the laborer has an unquestionable right to their fruits, and (2) this right is limited

by a consideration of the public’s interest. Unfortunately, these terms are vague. It

is not clear what it means to have “enough” and “as good” left for others. Locke

himself did not clearly define the limits. My first step is to apply it in terms of

OSRS and then apply an economic theory.

Before defining what will be my socio-economic theory, I must explain

the proviso’s inherent malleability. What it means for something to be “enough”

and “as good” is entirely context dependent. The depletion of a coal mine is

measured in different terms than the depletion of an oil field.

By gold farming a boss in OSRS, the gold farmer reduces the value

player’s actions have when pulling from it. The ratio example I used above will

suffice here, though I will add some nuance to it.

Imagine two casual players are

killing Vorkath for the first time and that no one else is killing it. Assume a casual

player is someone who plays at most three hours per day. Upon each of the

player's first kill, each one gets a (lucky

) valuable drop that only Vorkath can

drop. Basic economics tells us that the duplication of the Vorkath unique lessens

the value of the item: more supply equals less value. This lessening is not too bad,

though; there are only two in the game, after all. Each player will still want to

return to Vorkath to try to get the drop again—so they can make more money.

Now, consider the impact of a gold farmer in this interaction. The gold

farmer spends twelve hours a day, six to seven days a week, doing nothing but

killing Vorkath for this item. Over time, the gold farmer is able to acquire the

item much more often than the average player. The supply of the item has

artificially increased, and the value in killing Vorkath for money has now

Id. at § 27.

See infra, at p. 18.

Vorkath, OSRS WIKI, https://oldschool.runescape.wiki/w/Vorkath (Last Modified Sept. 25,

2022) (Detailing the features of Vorkath, including the 1/5,000 drop rate for his unique drop, the

Skeletal Visage).

Taming the Wild West of Video Game Economies

decreased. What results is a race to deplete the relative commons that exist within

OSRS. As the highest-order-common of sorts, OSRS itself would be depleted

once enough of the important sub-commons, such as Vorkath, depletes.

The two original players may now find the activity pointless. Instead, they

may move onto other money-making methods. Eventually, the gold farmer will

follow them and repeat the process. At some point, the average player will have

no more money-making activities. There will be nothing to do that generates

meaningful money, and everything will be reduced to a price so low, that there

will be no need to generate meaningful money. OSRS, as the common, will have

lost some of its value. There is no longer “enough” and “as good” for the average

player because there are so few enjoyable activities. In theoretical OSRS terms,

the “enough” and “as good” condition is measured by the current OSRS economic

landscape, which necessarily conflicts with the ideal economic landscape of the

gold farmer—whose aim is to make real money selling GP for USD.

V. The Use of Socio-Economic Norms to Guide Regulation

I will argue in this section that rights balancing is best suited to a sliding

economic framework rooted in current cultural beliefs of a given space—in this

case, the OSRS space.

The first step in developing an appropriate economic theory is to

understand the OSRS economy's goal. In his essay, Vilfredo Pareto theorized a

perfectly balanced economic state.

Pareto’s neoclassical economic view, aptly

named “Pareto Optimality”, aims for a state where no additional changes can be

made to the economy to make any person better off without making another

person worse off.

As pie in the sky as it may seem, Pareto Optimality can serve

as a solid line in the sand from which to measure my theoretical progress.

To push this thought through Locke, imagine a set of perfectly balanced

property rights: both the individual and public have their interests and rights met

without violating Locke’s no harm principle. To create a regulatory scheme

around this, we need to put it into real economic terms—a market equilibrium of

rights of sorts. To return to my apple example, imagine now that the apple farmer

and sewage treatment municipality have found their economic Pareto Optimality.

In this case, both parties can meet their demand needs and deal with any harm to

their supply that might otherwise interrupt their ability to meet demand. Their

Vilfredo Pareto, The New Theories of Economics, 5 J. OF POL. ECON. 485, 494 (1897).

Iain Fraser & Laurence Smith, 4.6 Pareto Optimality, UNIVERSITY OF LONDON,

https://www.soas.ac.uk/cedep-demos/000_P570_IEEP_K3736-Demo/unit1/page_26.htm (last

visited Jan. 1, 2022).

Journal of Law, Technology & the Internet — Vol. 14

economic and legal interests balance out. If we were to push either side to

produce more, they would harm their neighbor’s economic and legal interests.

Pareto Optimality is practically not possible to achieve. Instead, we might

give a unique, norms-based privilege to those creating the rules of these new

online economic worlds. We can then use these norms and point them at the ideal.

Let the norms lead you to Pareto Optimality using mutual coercion.

The phrase seems to conflict with itself, but mutual coercion may save the

day. Mutual coercion places the burden on the group to decide where to draw the

line. For example, OSRS players can vote on an issue presented by the game’s

developers.

Acting as quasi-agency and administrative authority, the game

developers can use data, hold hearings, and develop a plan that the voting

population must agree upon.

To be clear, I am not developing a theory in contrast to Adam Smith’s

laissez-faire perspective. My concerns, I argue, marry well with Smith’s theory.

GP has value that is perhaps one of the purest manifestations of the free market

creating valuable products. For many years, the OSRS economy was left

untouched by Jagex.

Some players (including larger groups and companies)

Hardin, supra note 2, 1247.

Polls, supra note 14.

The OSRS development team is incredibly unique. The game was born from a poll back

which asked whether old players would be interested in a sister game to RuneScape 3, entitled

OSRS. With the support of hundreds of thousands of players, the OSRS version of RuneScape

would return. Mark Gerhard, Old School Runescape: Poll Results In!, OLD SCHOOL RUNESCAPE

WIKI, (Mar. 1, 2013)

https://oldschoolrunescape.fandom.com/wiki/Update:Old_School_RuneScape:_Poll_Results_In!

[https://perma.cc/A4RZ-FSXK]. This polling system is the most unique characteristic and is

what allows for my theory to work. Now, players vote on every major change that happens to

the game. If 75% of voting players vote yes, the content is added, and if not, it will not enter the

game. The players and developers have an incredibly complex relationship that almost exactly

mirrors how our democratic republic operates today. As a matter of fact, the things I have

suggested already occur—I am just offering a new way to use the same tools that already exist.

See ADAM SMITH, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS

(R. H. Campbell et al. eds., Liberty Classics 1981) (1776).

On Dec. 9, 2021, for the first time, Jagex instituted a major shift in economic policy by adding

a tax and item sink to the GE. Update: Grand Exchange Tax & Item Sink, OSRSWIKI,

https://oldschool.runescape.wiki/w/Update:Grand_Exchange_Tax_%26_Item_Sink#:~:text=We'

ve%20added%20a%201,from%20the%20initial%20sale%20price (last modified Aug. 23, 2022,

5:30 AM) [https://perma.cc/472K-ZGVG]. See also, on Aug. 16, 2018, multiple years after the

release of OSRS, Jagex implemented a tax on the Duel Arena to help curb inflation and

gambling. Duel Arena, OSRSWIKI, https://oldschool.runescape.wiki/w/Duel_Arena (last

modified Aug. 23, 2022, 5:19 AM) [https://perma.cc/HM2J-Q7AD].

Taming the Wild West of Video Game Economies

built websites to support a new market throughout those years—a market based

on the sale of OSRS GP for USD.

Despite the fact that these sales are a

violation of the rules and could subject a player to bans,

the market persisted.

In a never-ending game of cat and mouse, Jagex attempts to catch and ban

all Real-World Trading (“RWT”).

However, Jagex’s failure to stop these

activities allowed a free market of GP-selling to exist. The Invisible Hand of the

market has kept GP valuable in terms of USD.

This is potentially concerning as

it may be the discovery of a currency coming into existence underneath the law’s

nose.

The core issue is: “[A]ll persons have a duty not to interfere with the

resources others have appropriated or produced by laboring on the common.”

An OSRS player plays OSRS because they find value in spending time in the

game’s digital world. They find such value because (1) others find it valuable,

and (2) the individual player finds it valuable. There is a necessary

interdependence between other people enjoying the game and the individual

player’s enjoyment of the game.

To the other players, the value of being a part of a community is

inherently fluid and exists as a social set of beliefs. These social beliefs depend

upon each individual player’s views on what the correct belief are. One of these

beliefs is that player actions should carry value beyond the act itself. Due to the

interdependent nature of OSRS’s economy, most of this value comes from the

idea that the fruits of one’s labor are somewhat unique, and that the OSRS market

values this uniqueness by putting a price on a given commodity; the rarer the

commodity, the higher the price. The belief holds that my labor is valuable

because it can produce rare items that are worth money and desirable for their

rarity.

Real World Trading, OSRSWIKI, https://oldschool.runescape.wiki/w/Real_world_trading (last

modified May 11, 2022, 10:03 AM), [https://perma.cc/6KB6-V2WV].

Id.

In his theory of moral sentiments, Smith argues that it is the appearance of utility that gives

production of art their beauty. See ADAM SMITH, THE THEORY OF MORAL SENTIMENTS 259

(London, Henry G. Bohn 1853) (1759). This can be applied to how modern gamers might come

to value seemingly pointless objects in a videogame.

Gordon, supra note 57, at 1543.

Not all activities in OSRS are money based. Though many activities are limited by the amount

of wealth you have, there are other ways a player can engage with some of the content. See

Minigames, OSRSWIKI, https://oldschool.runescape.wiki/w/Minigames (last modified Oct. 13,

2022, 12:15 PM) [https://perma.cc/L646-UW9V]. However, these are of a strong minority and

Journal of Law, Technology & the Internet — Vol. 14

When mass producers enter these markets without the same social beliefs

as the general playerbase, the mass producers no longer exist within the same

culture as the playerbase. The mass producers are a part of the counterculture.

Mass producers enter the OSRS world with a single, shared value in mind: real

monetary gain. Real monetary gain involves trading in-game items or currencies

for real-world cash—usually USD. A logical end to their actions is to pull as

much from the digitally infinite common as possible and then sell said common to

other players for real cash.

Invariably, the price of whatever they gather falls, as

does the price of the item owned by the cultural-values-abiding player. Over time,

this incongruency between cultural values destroys any value that either party

might glean from the game.

Eventually, no items will be scarce, and nothing will be worth selling for

cash. Parasitically, the mass producers will vacate the dead game and search for

another value-laden infinite common to begin the process again. The average

player is left with meaningless items from which they find no joy. Just as the gold

panner leaves once their stake depletes of gold, so too does the player leave

OSRS when their items are economically—and by extension, socially—

worthless. The player's membership is no longer worth what they paid, as nothing

of value remains for them in the world. The player cancels their license

membership, and Jagex loses revenue.

a. A Theoretical Economic Justification: a Bottom-Up Approach to

Regulation

The problem of unanticipated consequences

100

manifests itself in the

background of any new legal framework. In my study here, it is unanticipated

economic consequences that matter.

101

My suggested economic justification will

are arguably still problematic. The similarities between the money and nonmoney activities are

beyond the scope of this paper.

See Real World Trading, supra note 92.

See Hardin, supra note 2, at 1246 (discussing the self-eliminating nature of an appeal to an

individual’s societal conscience as a solution to overproducing and other instances of an

individual exploiting a commons).

100

See Robert K. Merton, The Unanticipated Consequences of Purposive Social Action, 1 AM.

SOCIO. REV. 894, 894 (1936).

101

See generally FRÉDÉRIC BASTIAT, SELECTED ESSAYS ON POLITICAL ECONOMY 1 (George B.

de Huszar ed., Seymour Cain trans., Found. for Econ. Educ. 1995) (1848) (“There is only one

difference between a bad economist and a good one: the bad economist confines himself to the

visible effect; the good economist takes into account both the effect that can be seen and those

effects that must be foreseen.”).

Taming the Wild West of Video Game Economies

follow the same principle as my philosophical justifications—namely, fluidity.

First, I need to build the bottom of this bottom-up structure.

The late nineteenth-century Austrian School of Economics wrote ten

propositions on the importance of selecting the individual as the basis from which

to view valid economic theory.

102

Below, I discuss the ten propositions to support

my conclusion that the individual knows best the norms that guide economic

policies.

Proposition I states that only the individual makes choices.

103

The

institutions we think of as making choices are really only comprised of groups of

individuals that concur about the choice each independently agrees upon.

Proposition II states that any study of markets is about “exchange behavior.”

104

Understanding a market is best viewed through the exchange relationships

individuals make when bargaining, as well as the institutions where this occurs.

105

Proposition III draws the distinction that the facts of the social sciences are

subjective.

106

To the individual, making a choice will depend on a myriad of

things that uniquely affect them.

107

The goal is not to predict how to use this

legislation, but to interpret people's choices and build a framework that allows for

the most flexibility to meet the variation. The first three propositions lay the

foundation for justifying looking to the individual as the basis of economic

theory.

The next four propositions shift the focus to individual decision-making

via microeconomics. Proposition IV states that utility and costs are also

subjective.

108

The former is a recitation of why people choose the items they do—

because it offers them personalized utility. On the other hand, the latter suggests

that costs are subjective because we make decisions that are always accompanied

by opportunity costs, and that the value of the forgone opportunity is dependent

on the individual.

109

Proposition V states that price systems provide signals to

102

Peter J. Boettke, Austrian School of Economics, ECONLIB,

https://www.econlib.org/library/Enc/AustrianSchoolofEconomics.html (last visited Sept. 10,

2022) [https://perma.cc/DH8S-BC4V]; see also CARL MENGER, PRINCIPLES OF ECONOMICS

(James Dingwall & Bert F. Hoselitz trans., Ludwig von Mises Inst. 2007) (1871).

103

Boettke, supra note 102.

104

Id.

105

See id.

106

Id.

107

See id.

108

Id.

109

See id.

Journal of Law, Technology & the Internet — Vol. 14

individuals who then economize their usage of a given item.

110

Regardless of

access to supply and demand information, when the restaurant owner expects

increases in food prices, they economize—or make last longer—what food they

have left to buffer against the cost.

Proposition VI—and the two that follow—warrant additional discussion

as they form the strongest pillars of the Austrian School as applied to my study.

While Proposition VI argues from an antithetical position from Socialism, which

is not congruent with my task here, it establishes what has been up until now an

assumption. To make a rational economic calculation for the limitations of

property rights granted to virtual laborers, they must have private property

rights.

111

When individuals own private property, they create a market for the

means of production.

112

The output creates money prices which are reflections of

the scarcity of said means.

113

Money prices are how planners make policy

decisions how, for example, to regulate oil prices.

114

Game companies act like quasi-governments who forbid private

ownership of their IP through explicit language in their license agreements.

115

Failure to communicate the USD money price of GP creates the problems I have

discussed at length in this paper.

116

Without access to private property, a

centralized government holding all property rights makes its policy decisions in

myopathy. If online games like OSRS are to be healthy, then we need them to

make these decisions with detailed consideration of the player’s individual

choices. The players, through some external means, perhaps voting, can signal

their views to their developers. The developers can then use this to make rational

economic calculations and set limitations on the extent of property rights in

player-owned GP.

Proposition VII uses the price system and market economy as ways for

entrepreneurial discovery.

117

Whether game companies like it or not, they create

mini economies. Astute players with entrepreneurial spirits capture the value

revealed through the discovery of these mini economies. There is no clear way for

110

See id.

111

See id.

112

See id.

113

See id.

114

See Elliott supra note 61.

115

See Terms and Conditions, JAGEX (Sept. 2022), https://www.jagex.com/en-GB/terms

[https://perma.cc/YS57-6LBX].

116

See infra, at p. 4.

117

See Boettke, supra note 102.

Taming the Wild West of Video Game Economies

Jagex to reasonably inhibit the exchange of GP to USD. This creates a free

competitive market for the players to discover over time.

As a personal estimate, the RuneScape GP to USD market has been

around for roughly two decades. In that time, even Jagex itself has made efforts to

make use of this value. In 2013, the Well of Goodwill allowed players to donate

GP to an in-game well, removing it from the game. For every ten million GP

thrown in, Jagex would donate one US dollar to charity; a GP to USD ratio of

$0.10:1M GP compared with current exchange prices of the time likely being

closer to a $1.00:1M GP ratio. Within the single month that it was open, over

544.79bn GP was donated for a total donation of $54,497.

118

The Well of

Goodwill would open four more times during its lifespan.

119

When the entrepreneurial-minded individual is allowed to have property

rights in their GP, they create the most efficient use of their resources. The Well

of Goodwill demonstrates that, in competitive markets, even Jagex itself has

recognized a more efficient use of its virtual currency, albeit in a more limited

respect. If we allow these efficiencies to develop under the guise of the law,

economic efficiency develops as well.

The final set of propositions move up to the macroeconomic level.

Proposition VIII explains that when governments distort the monetary unit of

their economies, they also distort the exchange of said monetary unit.

120

Whenever a policy distorts the current monetary unit, all exchange is also

distorted.

121

Whatever the policy's intention, price adjustments do not occur

simultaneously,

122

and the ripple effect is felt randomly throughout the economy.

The cost of inflation harms the socio-economic landscape. Whenever the

government passes inflationary legislative measures, it disturbs people's trust in

their government because it effectively removes individual wealth.

123

Furthermore, when the effect of new policy changes ripples out in unpredictable

ways, the individual cannot make sound financial decisions, as they do not know

the actual value of a given item. Thus, money cannot be neutral, and government

intervention is prone to problems.

118

See Well of Goodwill, RS WIKI,

https://runescape.fandom.com/wiki/Well_of_Goodwill#cite_ref-1 (last visited Oct. 20, 2022)

[https://perma.cc/GFM5-DUE2].

119

See id.

120

See Boettke, supra note 102.

121

Id.

122

See id.

123

See id.

Journal of Law, Technology & the Internet — Vol. 14

It is important to consider the individual’s interest when making new

policies because monetary policy impacts them. For example, OSRS players

savvy with economic trends make investments into certain items before the

release of a significant update to profit. Weeks before Vorkath was released,

players began stockpiling food (to heal) and potions (to boost character strength),

anticipating an increased demand.

124

Taken in large sums, wealthy players can

capture and profit from a decent chunk of the new demand. If Jagex makes a

unilateral decision that creates inflation, players cannot protect their investments

by selling their newly acquired food and potions before a price drop occurs.

On the same thought, however, giving all credence to the player’s interest

is also problematic. If the company does not step in to change areas afflicted by

gold farmers, inflation problems continue to occur. The Revenant Caves

125

are an

area located in a Player-versus-Player (“PVP”)

126

enabled space. The Revenant

Caves were highly sought after because they boasted one of the highest GP per

hour at 4M GP per hour

127

while also being incredibly easy to farm. It introduced

large amounts of inflation; massive quantities of GP were entering the game.

Before the update that occurred on October 21st, 2020, this space was

actively controlled by player-run cartels.

128

The cartels would control the

Revenant Caves on multiple game-world servers and have scouts looking for

people in worlds not controlled by other cartels. Due to the PVP nature of the

Revenant Caves, these cartels could effectively control these areas by amassing

and killing anyone not permitted in the caves.

129

Players would have to pay to get

into the caves at a rate of 1M GP per hour; paying players would also receive the

protection of said cartels while in the Revenant Caves.

130

124

See id.

125

See Halloween 2020, RUNESCAPE (Oct. 21, 2020),

https://secure.runescape.com/m=news/halloween-2020?oldschool=1 [https://perma.cc/QG6M-

2QEE].

126

Id. Most of the OSRS world is considered non-PVP. That is, other players cannot attack you

and you cannot attack other players. There are certain designated areas that allow for PVP. This

is noteworthy because of how death in PVP zones works. When player X kills player Y, player

Y drops everything they have on their person for their killer to loot.

127

See Mac H, OSRS Revenants Guide, YOUTUBE (Feb. 17, 2018),

https://www.youtube.com/watch?v=-xhVCN2nCqI.

128

See Halloween 2020, supra note 125. See also Revenant Caves, RUNESCAPE (Oct. 16, 2020),

https://secure.runescape.com/m=news/revenant-caves-proposal?oldschool=1

[https://perma.cc/H9WS-JL4D].

129

See Halloween 2020, supra note 125.

130

See id.

Taming the Wild West of Video Game Economies

Further, these cartels made large sums of passive income, generating large

yearly salaries for the more sophisticated individuals.

131

The annual revenue was

rumored to be well over $1,000,000 per year,

132

but this has not been confirmed

beyond player anecdotes due to the nature of the activity. Leaving the world to

the players is also not an option because the misaligned incentives problem still

exists. A balance between player interest and economic stability could ameliorate

the issue. However, per Proposition VIII, the solution would need to come from

the perspective of the non-gold farming individual.

Proposition IX states economic resources are lost when price systems are

distorted.

133

Capital structures are heterogeneous in nature.

134

The complexity

requires a specific alignment of investment and price signals. When poor policies

distort these systems, the economic actors will try to adjust to their new reality,

losing resources in the process. In OSRS terms, changes to content—like the

October 21, 2020 game update described above—can result in real economic loss.

When the Revenant Caves updated, the entire mini economy collapsed

overnight.

135

The gold farming transferred to new locations.

136

While happily

removed,

137

it does prove that significant changes to price systems can have great

effects.

Proposition X states that an individual’s strife to better their life produces

public benefits, not intentional human design.

138

Every discovery was, at some

point, to the direct benefit of the discoverer, not a complex series of human

designs aimed at discovery.

139

The individual scientist wants to find the cure for

an illness that will earn them honors or heal their elderly parent. Further, optimal

government intervention in such a process is unlikely. The writer ends their

discussion of the propositions with a suggestion to adopt the doctors’ creed: “First

131

See Mat Ombler, How RuneScape is Helping Venezuelans Survive, POLYGON (May 27,

2020), https://www.polygon.com/features/2020/5/27/21265613/runescape-is-helping-

venezuelans-survive [https://perma.cc/PBA4-5QEL].

132

25 Buttholes, Venezuelan Cartels are Taking over Runescape, YOUTUBE (Sep. 8, 2020),

https://www.youtube.com/watch?v=kns-GIJeUkc [https://perma.cc/E8FS-4BD6].

133

Boettke, supra note 102.

134

Id.

135

FlippingOldschool, What Caused the Runescape Markets to Suddenly Crash? November

Market Analysis! [OSRS], YOUTUBE (Nov. 2, 2020),

https://www.youtube.com/watch?v=ZQhfOCPIiU4 [https://perma.cc/8Q7P-WXYB].

136

Id.

137

The Old School Team, Revenant Caves Proposal, JAGEX GAMES LTD., (Oct. 16, 2020)

https://secure.runescape.com/m=news/revenant-caves-proposal?oldschool=1

[https://perma.cc/LR5L-L2LU].

138

Boettke, supra note 102.

139

Id.

Journal of Law, Technology & the Internet — Vol. 14

do no harm.”

140

Whatever the policy discussion ends up being, the goal of

creating appropriate rights must not come at the expense of the in-game

economies.

b. A Theoretical Economic Framework to Limit Player Access to Real-

World Economic Profit

There is a cost to every activity in an economy. My discussion begins with

social and private costs—not uncoincidentally analogizing to Locke’s public and

private interests. Preceding is an application of the aforementioned legal and

economic theories to the primary economic theory of my paper. This section aims

to explain how the previous sections are tied together with Arthur Cecil Pigou’s

The Economics of Welfare.

141

My conclusion for this section suggests that a

socio-economic theory should use an industry's norms. The individuals drive

these norms within the community whose interests are tied to a Lockean common.

Thus allowing the people—with some minor government intervention—to draw

the bounds of normal production.

To understand the bounds of production, I must first define the different

kinds of production. Private marginal product (“PMP”) is the direct benefit a

private firm receives.

142

The USD captured by a player selling GP is their PMP.

Social marginal product (“SMP”) is the direct benefit society receives.

143

Banning

overproducing gold farmers provides OSRS, as a society, the SMP of removing

an overproducer. A negative externality occurs when the costs of one person’s

actions are felt only by others.

144

Inflation caused by overproducing activities

occurs when SMP is less than PMP, thereby externalizing the negative impacts to

the general economy. The player who sells billions of GP per year does not feel

the pain of seeing the OSRS market lose value. It is the average player who feels

the loss in their OSRS bank account.

145

There are three potential solutions to the negative externality problem:

taxation, regulation, and property rights. I argue for a Pigovian Tax.

146

When

140

Id.

141

ARTHUR CECIL PIGOU, THE ECONOMICS OF WELFARE (1920).

142

ARTHUR CECIL PIGOU, THE ECONOMICS OF WELFARE 108 (4th ed. 1932).

143

Id.

144

Negative Externality, BRITANNICA, available at https://www.britannica.com/topic/negative-

externality [https://perma.cc/2N3E-3PVN].

145

FlippingOldSchool, One of the Biggest Market Crashes Just Hit Oldschool Runescape!

[OSRS], YOUTUBE, (last visited Jan. 2, 2022)

https://www.youtube.com/watch?v=S1W0XXp8OiI [https://perma.cc/DL5W-4GJG].

146

PIGOU, Supra note 141, § 11 at 168.

Taming the Wild West of Video Game Economies

firms overproduce, there is a social cost that we pay as a society.

147

Pigou argues

that when an industry’s SMP is less than its PMP, a state tax on overproduction

will increase the national welfare.

148

Placing a tax on production that would

impose a social cost on society discourages inflation and the social harm that

accompanies it.

c. Dealing with the Criticisms of Taxation as a Solution

Measurement Problem: Pigou was not advocating for intense

government intervention.

149

A drug only heals when taken in the proper

quantities,

150

so too does a Pigovian tax heal an economy only when applied

moderately. Pigou later acknowledged the first criticism of his proposed tax: “It

must be confessed, however, that we seldom know enough to decide in what

fields and to what extent the State, on account of [the gaps between private and

public costs] could usefully interfere with individual choice.”

151

Measuring what

the appropriate tax ought to be is an assumption not accounted for in Pigou’s tax.

The theory does not account for the individual’s economic views.

The Austrian School’s philosophy best fills this gap. Critics of Pigou’s tax

noted the practical difficulty in understanding how to value the loss borne onto

players in OSRS. Jagex has a record of pertinent data points. Measuring the rate

of inflation is an important task when releasing new content.

152

Presumably, the

current rate is too high. Ideally, Jagex would have a preferred number.

Simply put, Jagex could create options and discuss them with the player-

base. The players could vote on what they think is the best option, as they

currently do with most updates. The practical problems of measurement may

147

Basic laws forbidding individuals from overproducing lead to a privatization of the common.

Hardin, supra note 2, 1247. Hardin suggests that instead, a proper solution would be to make it

exhaustively expensive for the overproducer to participate in their current ends. Id. Notice how

implicit fluidity is in his suggestion: using price as the deterrent allows for the rule to change

over time as new events occur—what was once a fair price to participate will not always be the

same. Any legal remedy must reflect this theoretical reality.

148

PIGOU, Supra note 142, § 11 at 168.

149

Id.

150

Taking too Much Vitamin D can Cloud Its Benefits and Create Health Risks, HARV. HEALTH

PUBL’G, (Aug. 7, 2022) https://www.health.harvard.edu/staying-healthy/taking-too-much-

vitamin-d-can-cloud-its-benefits-and-create-health-risks [https://perma.cc/RH3D-WGVE].

151

ARTHUR CECIL PIGOU, SOME ASPECTS OF THE WELFARE STATE 6 (1954).

152

Old School RuneScape, Old School Economy! Mods Ash, Ayiza & Sarnie – OSRS Q&A

November 4th, YOUTUBE, https://youtu.be/z-

jToQ0er0s?list=PLRs68iqW7gYtgaxXkzBcfCZh9HYREiXMx&t=1711 (Nov. 6th, 2021)

[https://perma.cc/VH53-XEQJ].

Journal of Law, Technology & the Internet — Vol. 14

always exist to a certain extent, but perhaps not to a meaningful extent with

modern practices.

Reciprocal Cost Problem: Ronald Coase argued against the Pigovian

Tax.

153

The reciprocal costs associated with a Pigovian tax would unfairly burden

the overproducer.

154

He argues that all social costs are reciprocal.

155

Consider a

factory next door to a neighborhood.

156

The smoke produced from the factory is

not entirely the responsibility of the factory.

157

The problem exists because there

are people there to suffer.

158

Likewise, the problem exists because there is a

factory to cause smokey suffering.

159

A tax placed on the factory might encourage

them to produce fewer items—and therefore less smoke—or invest in smoke-

reducing technology. However, the more the factory reduces its smoke output, the

more people move into the neighborhood. The more people in the neighborhood,

the more sensitive to smaller amounts of smoke the people will become,

inevitably leading to ever-increasing taxes to maintain a balanced SMP and PMP.

As with the distinction between ideas and video game economies, a

categorical difference precludes such criticism. The SMP of living near a steel

mill is that the town has access to steel, a valuable material. Likewise, the steel

mill gains PMP because there is a demand for building buildings that use steel—

the SMP balances with the PMP since both parties benefit.

The SMP of GP sellers is significantly lower. Public opinion of GP selling

is notable. Players discuss the USD:GP ratio as an indicator of economic health of

the game; players use it as a finger-in-the-wind method to understand how others

view the USD value of their OSRS items. Nonetheless, the benefit is always

associated with the cost of a downward trend. Players expect the USD value of

their GP to decrease as the problem of GP selling continues. The ratio becomes a

timer to ruination rather than a method of understanding real economic value.

Placing harsher restrictions on the amount of GP a player can sell may push

against the downward trend of the exchange ratio. Thus, the reciprocity is not

damaging enough for the critique to matter here.

153

R. H. Coase, The Problem of Social Cost, J. L. AND ECON. 29 (1960)

154

Id. at 35–36

155

Id.

156

Id.

157

Id.

158

Id.

159

Id.

Taming the Wild West of Video Game Economies

d. Using a Concave Utility Curve to Limit Overproduction

In OSRS, the pre-existing polling system is excellent at gathering player

feedback.

160

It has a reasonable voting requirement—to prevent people from

making new accounts to vote more than once—and is easily accessible.

161

Further, the weekly live streams are functional hearings where Jagex staff answer

player-submitted questions.

162

This time also allows the more senior staff to speak

directly to the player base on important issues.

163

Beginning with the individual is

possible because there is a clear line of communication between the legislators

and the public.

Fair regulation requires clear communication between the legislative

branch—game developers—and the public as an initial requirement. While Pareto

Optimality is the end, the means must account for aggregated social norms. Back

and forth communication eventually develops a social intuition about healthy

inflation levels.

Once decided, a Pigovian tax on overproducers could curb

overproduction. The goal is to balance the public and the individual laborer’s

interest in the common. We still want to avoid any claim rights to harm the

public’s interest. Still, we also want to ensure that well-intended laborers can

capture a reasonable amount of value based on established social norms. We must

bite the harm to overproducing laborers to avoid the claim right issue. Limiting

production through tax reduces the value in producing excessive amounts of GP.

Jagex could find the difference between the current inflation rate and the

ideal as the numerical starting point using their on-staff economist.

164

Based on

Jagex’s current estimates on how much GP enters the game due to GP sellers,

Jagex could take that estimate, divide it amongst the known

165

GP selling

services, and then do some internal investigation to decide what proportion of GP

160

OSRS WIKI, supra note 11.

161

Fresh accounts may only vote once they have reached a total skill level of 300. This can take

a wide range of time depending on how the player chooses to train their skills to reach a sum of

300 levels between their various trainable skills. Nonetheless, this might take a player over ~50

hours to achieve. Here, the barrier to entry is time. Id.

162

Old School RuneScape supra note 152.

163

Id.

164

Id. at 14:10.

165

The word known here carries a lot of weight. Later on, I discuss the legal identification tools

that would have to be used for this theory to work. While all of the sources would be practically

unknowable, it would become prudent for GP sellers to notify Jagex of their existence. Getting

caught operating without proper registration would carry heavier legal ramifications that would

automatically begin; the player has now knowingly defrauded the U.S. government.

Journal of Law, Technology & the Internet — Vol. 14

sold a GP seller should retain. Jagex could then present its recommendation to the

community to spur a legislative discussion.

I suggest that companies like Jagex use a concave utility curve. Using

tiers, Jagex could create several options for players to think about and discuss.

Consider a logical proof with a mathematical visualization:

1. The ideal inflation rate is 2%.

2. The current inflation rate is 6%.

3. The difference is 4%.

4. Assume 1,000bn GP entered the OSRS this past year.

5. Therefore, the economy inflated by 40bn GP.

6. Assume that it was GP sellers who brought in the additional 40bn GP to the

OSRS economy this past year.

7. Assume there were ten players selling GP in equal amounts.

8. Therefore, on average, each GP selling player brought an additional 4bn GP to the

OSRS economy.

9. The current assumed exchange rate is $0.52:1M GP.

166

10. Therefore, the average GP seller made $1,560.00 USD from selling GP this year.

This proof explains how a person captures 100% of the value from selling

GP. Rather than allowing the current state of affairs to continue, the following

could represent the maximum profit a single GP seller could make each year.

167

166

See infra, pp. 4–5.

167

These numbers are based on my own intuition from playing the game and researching GP

selling websites. Some websites will post how much GP they have in stock. Gold, supra note 14.

From my research, I think that it would be exceptional for a website to have over 100bn GP in

stock. That is the limit as it encompasses the few players that overproduce.

GP Exchanged for USD (in Millions) Maximum USD Profit Per Annum Non-Limited USD Profts

1 0.52$ 0.52$

5 2.57$ 2.60$

25 12.35$ 13.00$

100 46.80$ 52.00$

500 208.00$ 260.00$

2,000 676.00$ 1,040.00$

20,000 4,680.00$ 10,400.00$

100,000 10,400.00$ 52,000.00$

Taming the Wild West of Video Game Economies

While the numbers may change, in principle, the above example should apply to

any game that shares similar features. Importantly, the game must have an item

worth real-world currency, that can be produced infinitely, and is transferrable to

other players in-game. When present, the preceding may act as a model for

developers to limit the inflation that enters their game.

e. Using Socio-Economic Theory to Develop a Regulatory Schema for

the Regulation of Video Game Currencies

Building a regulatory schema/coda is the final step for this paper. As was

discussed in § II, current laws may already include the activities of GP sellers.

168

See infra, § II.

GP exchanged for USD (in millions) Legal Utility Limitation GP kept for sale (in millions)

1 0% 1

5 1% 5

25 5% 24

100 10% 90

500 20% 400

2,000 35% 1,300

20,000 55% 9,000

100,000 80% 20,000

Journal of Law, Technology & the Internet — Vol. 14

On the other hand, analogous laws also fail to account for the differences between

video games and real-world economies.

169

In this final section, I suggest a new

rule to append to laws that fall short imbued with the spirit of analogous laws.

Section 5330 and Section 1960 define money transmitting business,

require the disclosure of such business, and criminalize unlicensed operation.

170

GP sellers would likely fall into this category. The issue I discussed in Section II

considered the possibility of over incentivizing gold farming. Assuming players

have vested property rights in their GP, recognizing and legitimizing GP selling

would open the door to limitless production. People would have a streamlined set

of guidelines to sell as much GP as they possibly could. The game would suffer

as more people came to cash in on the easy money, driving inflation even further

than when the market was unofficial. The new rule needs to include a mechanism

to prevent this. Without it, the games companies and non-GP selling players lose.

a. This rule should be considered a coda to 31 U.S.C § 5330 and 18 U.S.C

§ 1960.

b. Game developers shall work with qualified non-employee players to

regulate the rate of inflation to a reasonable extent.

c. Within 180 days of the date of the first sale, any person engaged in

selling valuable items for real-world currencies shall register with the

Secretary of the Treasury according to 31 U.S.C § 5330 and shall notify the

developer of the video game.

d. Within 15 days of creating a currency exchange, players must provide

the Game developer a reasonable amount of information to identify the player

to any state or federal judicial agent upon request.

e. Game developers may create a currency exchange to allow others to

buy and sell items in their video game for any country-backed currency.

169

The background logic I apply here is found in several areas of regulatory law. The Clean

Water Act (“CWA”) focuses on “recapturing and preserving [the] biological integrity

of [the] nation’s water by creating web of complex interrelated regulatory programs.” U.S. v.

Holland, 373 F. Supp. 665, 668; accord St. Andrews Park, Inc. v. U.S. Dep’t of the Army Corps

of Eng’rs, 314 F. Supp. 2d 1238, 1242 (discussing cease and desist orders under CWA with

analogy to the Clean Air Act); API v. Johnson, 541 F. Supp. 2d 165, 171 (“The purpose of the

Clean Water Act is to ‘restore and maintain the physical, biological and chemical integrity of the

Nation’s Waters.’”); 33 U.S.C § 1251; see also 42 U.S.C § 7401. Legislative focus on the

wellbeing of the environment through regulatory limitation is the same kind of reasoning I

employ here. Through their insistent gold farming, players who affix their actions to antithetical

cultural norms should have their actions regulated. The goal, similar to Holland, is to preserve

the integrity of the—economic—environment.

170

31 U.S.C. § 5330; 18 U.S.C. § 1960.

Taming the Wild West of Video Game Economies

f. A Game developer that does not choose to establish a currency

exchange shall not hold any liability for the actions of players who run

currency exchanges within the developer’s video game.

g. According to subsection (a) of this rule, game developers who do not

create a currency exchange shall require players who wish to sell valuable

items to create and register individual currency exchanges according to

subsection (a) of this rule.

h. In addition to the definitions referenced in subsection (a) of this rule,

the following definitions apply:

1. A Game developer is an entity that sells video games.

2. A player is a person who interacts with a Game developer’s video

game.

3. The definition section of 31 U.S.C § 5330(d) shall be interpreted to

include the sale of valuable items in video games in exchange for any country-

backed currency, cryptocurrency, or any other crypto commodity [116 H.R.

6154(1), (2)].

171

4. A valuable item is a digital item that exists in a video game developed

by a Game developer that can be sold for any country-backed currency,

cryptocurrency, or any other crypto commodity [116 H.R. 6154(1), (2)].

172

There is more detail to be discussed in my proffered coda. My goal was to

simply provide a starting point to help guide the conversation in a ground up

approach. Further additions may be warranted should the subject find its way into

the public’s eye.

VI. Conclusion

More and more people are spending significant time and effort gathering

resources in video games.

173

Some make their livelihoods off the sale of these

digital assets.

174

GP and USD share enough qualities that they have become

practically indistinguishable from each other. OSRS is no outlier in this regard.

Games like World of Warcraft, Counter Strike: Global Offensive, and Fortnite all

171

H.R. 6154, 116th Cong. § 2 (2020).

172

Id.

173

Nicholas Deleon, Let’s quit our jobs and become World of Warcraft gold farmers,

TECHCRUNCH (Mar. 6, 2009), https://techcrunch.com/2009/03/06/lets-quit-our-jobs-and-

become-world-of-warcraft-gold-farmers/.

174

Id.

Journal of Law, Technology & the Internet — Vol. 14

have mini economies that have developed naturally.

175

Like a piece of art, the

value is in the eye of the beholder. And like art, that value can lead people to

engage in harmful activities.

In this paper, I have assumed that players have vested property rights. I

have put myself on the edge of new legal theory. My aim for this paper is to show

that old ways of thinking can apply to new problems and likely will for years to

come. But fair questions still remain. Some may argue that the game developer

has categorical claim rights to all the labor produced. As has been the case for

many new industries, the law will follow as cases crop up. In the end, the ideas

laid out here will hopefully help guide those who come across these problems in

the future to understand the issues.

Perhaps this is the just result as well. The law must reflect the increasing

complexity of our world. Rules that create black and white outcomes do not cut it

anymore. The world is driven more and more toward a state of fluidity. The

fluidity of thought, and by consequence law, frees rational thought from the past,

present, and future. I believe that there is much to be gained from reimagining the

law through the lens of fluidity. The starting point rests within our intuition.

175

WIKIPEDIA, Category: Virtual Economies,

https://en.wikipedia.org/wiki/Category:Virtual_economies (last modified Jan 4, 2018).