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Many debates over the legality of various transactions in virtual worlds and MMO games come down to this question: is the currency really money? Most of the time, providers load their Terms of Service with language designed to distance in-world currency from real world currency. Kwari BetaOne company, however, appears to be taking a decidedly different approach. In Kwari, a new first-person shooter that is now in beta testing, real money changes hands. In fact, the movement of money from one player to another is the whole point. So when somebody sneaks up behind you with a railgun and drops you like a sack of hammers, your real money becomes his real money, just like that.

The folks that run Kwari are straightforward about the fact that this is cash you’re playing for. And if their Ayn Rand-meets-Starship Troopers logo is not enough to convince you, they lay it all out on their site:

Every time you hit another player in Kwari you make money. Every time you are hit by another player it costs you. Every shot counts. How much is down to the stake level you play in. But this is not the only way to win.

Doing damage to yourself, breaking crates, use of certain map features or picking up additional weapons, pickups and health packs may have a fractional cost attached. This cost is transferred between a series of jackpots, prizes and awards available in the game, all of which can be won by any player, regardless of the skill or stake level of game they prefer to play.

At no point, however does Kwari take any of this money. 100% of the cash generated through playing the game goes back to the players in the form of prizes.

Wait. 100%? Well, 100% of the cash generated through playing the game. But you can’t exactly shoot people without bullets, can you? And bullets, my trigger-happy friend, are going to cost you real money too. Kwari says:

Think of us as your virtual arms dealer – we supply you with ammo (which works in all weapons) for a fixed cost. Depending on your style of play the amount of ammo you need will vary.

This whole system, obviously, is not going to appeal to everyone. It not only breaks the magic circle, it breaks it, then stands back firing cash-fueled rocket-propelled grenades at the pieces until there’s nothing but a magic smoking crater. Critics are already coming down fairly hard on Kwari following a post on Joystiq, though the game has some supporters too. Kwari’s developers address the more obvious issues regarding cheating, team play, and monitoring in advance in the Kwari FAQ and forums.

That discussion, and VB’s take on the legality of this whole thing, below.

Kwari’s developers say that they’ll keep ad hoc gangs from forming by anonymizing players, that they’ll match players for tournaments based on formulas that are “not purely based on your accuracy, or the number of kills you’ve gained, [but] built up from many areas of the game” and that they’ll use “a suite of Gamemaster tools … to monitor the game and individual players within it in real time.” But in my experience, people are remarkably creative when there’s money on the line. If the developers don’t have Kwari running closer to bug-free than anything on the market right now by the time they go live, their forums will be bloodier than the arena. (While Kwari is in beta, real money does not change hands.)

Kwari CashIs it legal? It appears so, at least in most U.S. states. As long as the underlying game is 100% skill-based, it is generally legal to run fee-based tournaments. Kwari appears to be trying to distance themselves even from that model by selling virtual ammunition. But even if they just charged a fee, it appears, to me, that they’d likely be fine in most states.

Common examples of fee-based tournaments from the real world are pool, dart, golf, and fishing tournaments. And closer to Kwari’s digital home, and similar sites run skill-based tournaments on the internet on everything from Chess to solitaire, and have for years. Though it is obviously a bit self-serving, Worldwinner’s FAQ actually contains a reasonable summary of the law on this. The states that Worldwinner won’t let users participate from (which would likely be excluded from participation in Kwari too, if Kwari takes a similarly conservative and seemingly smart approach) are Arizona, Arkansas, Connecticut, Delaware, Florida, Illinois, Iowa, Louisiana, Maryland, Montana, South Carolina, South Dakota, Tennessee and Vermont.

There is some debate on the legality of Kwari, even between legal commentators. Law of the Game, which I frequently agree with, is on a different page this time, and compares Kwari to poker. Based on that comparison, Law of the Game’s finds that Kwari may run afoul of the UIGEA and appears to believe it will continue to do so until and unless the proposed Skill Game Protection Act (SGPA) is passed.

I see Mark’s point, but I have to disagree. The SGPA is an attempt to create a carve-out from the UIGEA for poker, but the “Skill” part of that title is somewhat deceptive. Poker is, at bottom, largely a game of chance — one might know the odds and be better able to take advantage of that information than one’s opponents, but it is still a game of chance when that last card falls. While the SGPA, if passed, would make it clear that Kwari isn’t in violation, I think that unlike poker, there is a much better argument that games like Kwari are not covered by the UIGEA in the first place. That is because whatever else might be wrong with it, Kwari does appear to be entirely a game of skill, and thus outside of the explicit and intended coverage of the UIGEA.

However you come down on the big picture legal issue though, no money changes hands in the beta — so if you can score a spot, you can check it out guilt-free. I don’t see a lot of cash gaming in my future, but I put my name on the list anyway. You may want to poke your head in too (where it will be immediately blown off by an over-caffeinated middle-schooler) if for no other reason, just to see what kind of an arena the first self-proclaimed “virtual arms dealer” has in store for the gaming public.

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7 Responses to “Kwari Wants to Be “Your Virtual Arms Dealer””

  1. on 06 Sep 2007 at 3:51 pmMark Methenitis

    Trackbacks, unfortunately, don’t work with Blogspot.…html

    I still think the SGPA carves out more than that, as it cites chess as a carve out and chess is a pure skill game. The real problem is the UIGEA doesn’t draw the line of where its coverage starts and ends in any meaningful way.

  2. [...] 5. דר’ אשר מאיר (שכבר זכה לקצת ביקורת בבלוג הזה) פרסם בשבוע שעבר טור בו הוא שואל “מה כל כך רע בפשעים וירטואליים?”. מאיר לא מתכוון לפשעים וירטואליים בהם כסף אמיתי נשדד וגם לא בפשעים וירטואליים בהם נגנבת זהות של אנשים, אלא הוא מתכוון למשחקי מחשב אלימים שלא גורמים נזק לאיש (ואולי כאן סעיף ההגדרה היה צריך להשתנות). אולי הוא צריך לקחת את Kwari כדוגמא ואולי אנחנו צריכים לשנות את הלך מחשבתנו. [...]

  3. on 22 Sep 2007 at 2:36 amLerk

    I would never play a game where you have to play for real money all the time. The danger of addiction is way to big!

  4. on 12 Nov 2007 at 10:15 amKonstantin

    Well, I tell you, it’s gonna be a huge success. There’s not many fps games where you can play for money. With proper marketing… Well, it’s still in beta now, but I’ve aready started working on fan site

  5. [...] posts on this site about and Kwari have both raised some eyebrows about my particular interpretation of the UIGEA as it relates to games of skill and games of [...]

  6. on 31 Jan 2008 at 8:06 amhitman

    Deutsche Infos zu Kwari gibt es auf der Kwari-Fansite

  7. [...] posts on this site about and Kwari have both raised some eyebrows about my particular interpretation of the UIGEA as it relates to games of skill and games of [...]

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