Over half of the US video game players who responded to a survey
believe the metaverse will revolutionize gaming. That enthusiasm, and the
fact that major players such as Meta, Roblox, and Epic are
bankrolling metaverse developments, is propelling the global
metaverse gaming market to an estimated $710.21 billion by 2027. While this
rapid development promises exciting opportunities for gamers and
lucrative use cases for entrepreneurs and investors, it also
presents significant legal challenges that existing laws may not
cover and jurisdictions may not be fully prepared to litigate.
What Is Metaverse Gaming?
Metaverse gaming offers features and characteristics that are
similar to everyday activities and allows players to replicate
their everyday lives in the virtual space while assuming alternate
identities and leveraging superhuman abilities. Further, it allows
users to interact with other players, trade in-game assets, and
even experience a physical sense of touch using haptic gloves,
headsets, and jackets. Some metaverse developers are implementing
play-to-earn models that allow players to accrue real money by
selling virtual assets they create or earn in metaverse games.
Metaverse gaming is similar to traditional online games, but
they deliver a more immersive experience with 360-degree views,
sensory awareness, and user-generated encounters. For example, some
metaverse casinos attempt to replicate the full Las Vegas
experience, something that is far beyond the scope of conventional
online casinos. In the metaverse’s version of Caesars Palace,
users explore a digital representation of the gaming floor,
navigating their unique avatar around the virtual space. Users can
control their avatar’s behavior in the same way they can
control their own conduct in the real world, simply observing the
high rollers, hanging out in trendy nightclubs, or betting real
money – in cryptocurrency form. Decentralized casinos are
currently one of the major draws for metaverse users. According to
sources, 60 percent of the activity in the Decentraland metaverse
comes from Decentral Games projects (most of which are real-money
gaming products and services). Differences among real-life
activities, traditional online games, and metaverse gaming create
legal challenges specific to the metaverse. The existing regulatory
framework established to tackle legal issues related to online
gaming may not suffice.
Gambling and Lotteries
Gambling and skill-based contests offering prizes or cash serve
as a bellwether in the metaverse industry. Gambling and lottery
games, which are both relatively easy to commercialize, present
early use cases both for business models and for legislation,
regulation, and enforcement. Numerous states have laws prohibiting
physical and online gambling that may apply to metaverse games. In
fact, regulators in Texas, Kentucky, New Jersey, and Alabama
recently simultaneously filed cease-and-desist orders against the virtual
casino Slotie. According to state law enforcement officials,
Slotie’s owners had been soliciting investors online to
participate in illegal gambling operations within the metaverse.
Other metaverse sites tout the availability of loot boxes for
players to obtain assets that enhance gameplay or can be sold for
profit to other players and speculators. Loot boxes have come under
scrutiny in several countries and states, which charge that these
random virtual treasure chests target minors and facilitate
gambling addiction.
It is interesting to note that defendants prevailed in three
California and Washington lawsuits claiming loot boxes are illegal
gambling mechanisms. Courts held platforms, app stores, and
streaming services harmless for their roles in making loot box
games available. Still, plaintiffs in various jurisdictions
continue to file lawsuits alleging that purchasing the boxes is
tantamount to games of chance and should therefore comply with
state gambling laws.
Privacy and Cybersecurity
Because the metaverse is a decentralized platform with legal and
ethical nuances, many privacy and cybersecurity laws that govern
traditional centralized platforms may not apply or have proven
difficult to enforce. Privacy concerns related to metaverse gaming
revolve around the possibility of cyberattacks and data breaches.
These concerns are widespread and affect the metaverse gaming’s
ability to instill confidence among players:
- What type of personal information is being collected from
prospective gamers? - Who has access to stored personal information?
- How is personal information being used?
- Is personal information being shared with third parties?
- What security measures are in place to safeguard personal
data?
The problems posed are magnified in the metaverse due to the
lack of regulations or governing bodies responsible for addressing
privacy concerns that evolve with new technology. Companies looking
to capitalize on the metaverse must be aware of these concerns and
take steps to eliminate them, as they may be held liable under
existing laws for privacy invasions and data breaches that expose
users’ personal or financial data. They can also be held liable
under other areas of law, such as torts and the law of publicity.
It is best to speak to an attorney specializing in metaverse to
understand privacy and cybersecurity challenges related to
metaverse gaming.
In-game Assets
In-game items have an actual monetary value in many metaverse
games, such as those incorporating paid NFTs. However, there is
some confusion about the legal ownership of in-game assets in the
metaverse. In fact, according to prominent legal scholar
João Marinotti, it is even questionable whether anyone can
even “truly own” something in the metaverse. This is
because the current ownership of metaverse assets is not expressly
addressed by existing property law at all. Instead, contract law
has attempted to fill the gap in legal understanding, opening the
possibility that what many individuals and companies call
“ownership” in the metaverse is not the same as ownership
in the physical world. Consequently, metaverse users or gamers may
discover that assets they thought they owned are only permitted for
use within the confines of a single game or platform. To minimize
legal risk, metaverse gaming companies should take appropriate
legal advice and have necessary legal documents which provide proof
of ownership.
Intellectual Property
The computer-implemented nature of metaverse gaming may give
rise to various hurdles or challenges related to licensing and
protecting metaverse-related intellectual property (IP). This is
particularly the case with patents. For example, an AR or VR
technology patent holder may have a significant opportunity for
licensing revenue, but experience difficulty identifying third
parties using their technology without first obtaining their source
code in discovery. Further, there might be issues related to
trademark and copyright infringement when it comes to gaming in the
metaverse. What sort of permissions are required to use images over
the metaverse? When it comes to the metaverse, it is highly
advisable to consult an attorney regarding IP-related questions or
concerns.
Conclusion
Metaverse gaming may become exponentially popular moving
forward. In fact, many hold that it has the potential to replace
traditional online gaming. Hence, it is essential for video game
companies and emerging technologies companies to be aware of legal
considerations (including those mentioned above) related to the
space. This is especially since recent court cases suggest that
there are a number of significant legal pitfalls in the metaverse.
It is best to consult an attorney specializing in metaverse gaming
to get in-depth advice on legal considerations related to metaverse
gaming.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
