Are Some Video Games Gambling?

Sept. 8, 2006 — -- Whoever said "you won't get rich playing video games," never played Entropia Universe -- an online computer game where players adventure, build, buy and sell everything from real estate and services to weapons and armor for real dollars.

In Entropia Universe, players create characters who co-inhabit the futuristic planet of Calypso, along with hundreds of thousands of other players.

The game uses what's called a "real cash economy." Players can exchange their own real money for pretend money their character can use in the game. Entropia uses a fixed exchange rate where $1 = 10 PEDs, (Project Entropia Dollars, the game's currency).

But the game offers players a unique opportunity -- they can take money out of the game using a regular ATM card provided by the game makers at the same $1:10 PED exchange rate. For example, a player with 1,000 PEDs could use his or her Entropia Universe ATM card to take out $100.

"Some players lose and some players win," said Mike Everest, a 17-year-old Colorado high school student who earned roughly $35,000 playing the game over the last three years. "Succeeding in the game is a combination of getting lucky and playing smart."

Mike is one of the winners. But he's certainly not the only Entropia entrepreneur to make some serious money playing the game. Last year alone, the game's 500,000 players took over $160 million out of the game.

In Dec. 2004, the game set a world record when 22-year-old David Storey of Australia spent $26,500 for a virtual "Treasure Island." A new record was set late last year when another player purchased a "Space Resort" for $100,000. He was able to break even within eight months by charging "tourists" a fee to visit the resort.

With monies ranging in the tens-of-thousands increasingly changing hands in Entropia, it likely won't be long before the tax man comes knocking. But who will pay and how much? Is this gambling, work or, perhaps, sales?

A long-time gamer, Everest got into Entropia Universe while searching for a game he and his mother could play together.

"I watched over his shoulder as someone taught him how to mine [a game activity] and I really, really liked that," said Mike's mom, Pat.