The quick read: Virtual and mobile games are a big business. So it’s natural that game developers are turning to blockchain to create new business and game concepts. But the use of blockchain technology could create some legal problems by turning social gaming into online gambling. (Bloomberg Law)
The facts: The key argument is whether virtual coins, pets, swords or anything else used as a prize has value. If it doesn’t have value, then there is no risk of running afoul of gambling laws. If it does have value, the legal equation changes. The tricky thing about blockchain technology is it can create value by allowing markets to form where they previously couldn’t. So players can sell those virtual pets or coins they’ve been making/collecting.
With other games a sword may only exist within the four corners of the screen, but blockchain enables players to own and trade those items long after the game is gone, Ari Scharg, a partner at Edelson PC and co-chair of the Illinois Blockchain and Distributed Ledgers Task Force, told Bloomberg Law. “With blockchain the concept of ownership changes,” Scharg said. (Bloomberg Law)
The bottom line: Blockchain can be used to create all sorts of new business ideas and technological innovations. But in doing so, companies (and their executives) need to beware of unintended consequences — especially legal ones.