• by Shankar Gupta , September 8, 2006

It was a simple plan. Dentara Rast, a space pirate about to hit the big time, operating with his accomplice Cally (no last name), ran a fraudulent investment house--the Eve Interstellar Bank--and, after amassing a truly massive sum of money by paying early returns out of new investments, transferred all the bank's funds to Rast, and made off with it all.

This is the top news story circulating about "Eve Online," a massively multiplayer online sci-fi roleplaying game with a relatively small but dedicated following. Rast's scam, the biggest in "Eve Online"'s history, netted him roughly 700 billion ISK--the game currency of Eve, Interstellar Kredits. Rast and Cally are two characters, played by the same user. Using Cally as a frontwoman, the player established the bank, built up its credibility among other players, then transferred all the funds to his other character, Rast, and posted a boastful video on various video-sharing sites, proclaiming himself the victor of Eve.

To put 700 billion ISK into perspective, few "Eve" players will ever see even 1 billion ISK. It is a truly absurd amount of game money, representing thousands of man-hours of play, and enough to buy literally anything in the game, and multiple copies thereof; the best ships, the best technology, multiple space stations. In the words of one player on the "Eve" forums, "that amount of money can literally break the game."

But it's all play money. Right?

Well, not exactly. Game currency on MMOs has some value--people spend a lot of time trying to amass in-game wealth and property, and, though game developers frown upon the practice and try to stamp it out, game cash can be bought with real cash through brokers or on eBay.

And "Eve" is special in this respect, too. Game money in "Eve" is directly convertible into a real-world asset: game time. CCP Games, the development house, allows players to purchase "Eve" playtime--otherwise bought with cash--for ISK. The going rate for a game-time code (GTC) in ISK is roughly 90-120 million for a 30-day card. CCP Games sells 30-day GTCs for $14. Doing a little math, at the average ISK price of GTCs, 700 billion ISK makes for roughly 6,666 GTCs, and at $14, Rast's scam is valued at roughly $93,324. CCP appears to sanction the sale of GTCs by third parties, and voila, ISK becomes an asset that is tradable for cold, hard cash. CCP did not return phone calls to comment on its policies.

And now, Dentara Rast, who scammed his fellow players out of nearly $100,000 of assets, could be in a bit of a fix. Are all those ISK taxable by the IRS? Did he commit fraud by lying to them, and thus depriving them of their hard-earned cash?

The IRS and the tax courts have yet to touch on these issues. But the truth is, people already consider their in-game holdings assets. They work their asses off for a few extra gold coins, or a few million ISK; a new starship or a magical sword. A Chinese man fatally stabbed his friend who sold a dragon sabre, a $700 sword he had been lent in the game "Legends of Mir." Also in China, three men are currently being prosecuted under copyright laws for using game exploits to duplicate and sell weapons for cash, netting roughly $250,000.

In general, the end-user license agreements (EULAs) of MMOs state that the development house technically owns all the in-game property and money, regardless of which player is in possession. But EULAs will not necessarily sway the IRS when it comes to look for its piece of the action. Who knows? In the not-too-distant future, we may see IRS seizures of dragon sabres and space stations.