The sale of in-game assets and virtual currencies has become a massive industry, with some virtual items selling for thousands of dollars. Players invest huge amounts of time and effort into building up valuable in-game assets, so being able to sell them provides an opportunity to profit from that investment.
However, selling virtual goods also comes with risks, taxes, and legal considerations that sellers need to keep in mind.
How does Selling Virtual Items Work?
Many online multiplayer games feature virtual economies where players can buy, sell, and trade in-game items. This includes things like:
- Weapons, armor, and other gear
- The virtual currency used in the game
- Cosmetic skins that change the appearance of characters
- Power-ups and boosters that enhance gameplay
- Accounts with high-level characters or rare achievements
Players acquire these items through regular gameplay, but they often want to sell any valuable or rare items they obtain. This allows them to make real money from their gaming achievements.
There are several methods players use to sell in-game assets:
- In-game auction houses – Some games feature official marketplaces that facilitate transactions using in-game currency.
- Player-driven markets – Players connect directly to buy and sell items for real money, using forums, social media, or intermediary sites.
- Black markets – Prohibited by most game publishers, but still exist on the dark web.
Once a buyer and seller agree on a price, the trade is conducted by the seller delivering the virtual item or currency to the buyer. Payment is usually made through third-party payment platforms like PayPal.
The Legality Of Real Money Trading
Selling virtual assets for real money is known as Real Money Trading (RMT). The legality of RMT depends on each game’s End User License Agreement (EULA).
Most publishers prohibit selling virtual items outside their official channels if they allow it at all.
However, enforcement against RMT sellers is often difficult.
The EULA is considered a civil contract, so violating it does not constitute criminal law. The worst penalty publishers can impose is banning accounts involved in unauthorized transactions.
Some key legal considerations around RMT include:
- Intellectual property – Game publishers own the IP rights to all in-game assets. Selling them could be considered copyright infringement.
- Corrupting gameplay – Publishers want to control game economies and progression systems. Unregulated RMT can destabilize the game.
- Account theft – Stolen accounts are frequently sold on black markets, violating publishers’ rules.
While banned by most EULAs, small-scale personal sales are unlikely to be pursued by publishers. But commercial-scale RMT does carry legal risks, even if enforcement is inconsistent.
Making Money Selling Virtual Assets
Selling desirable in-game items can be extremely lucrative. Virtual assets change hands for staggering amounts on player-driven markets. Some examples:
- MMORPGs – High-level World of Warcraft accounts can sell for thousands of dollars due to the many hours required to level up and acquire rare items.
- Cosmetic Skins – Rare character and weapon skins in games like League of Legends have sold for over $30,000.
- Virtual Real Estate – Virtual land and properties in games like Decentraland have sold for equivalents of hundreds of thousands of dollars.
The most profitable virtual item sales involve
- Rare Items – Unique, hard-to-obtain gear, skins and collectibles. The lower their supply, the higher their value.
- Powerful Characters – Max-level characters with top-tier equipment and achievements command premium prices. BlackOPS 2 characters and assets are highly valuable due to the game’s popularity.
- Early Adopters – Being one of the first to acquire valuable assets in new games provides profit potential.
In-game entrepreneurs even engage in arbitrage – buying underpriced items in one game, then selling at a markup in another.
However, consistent profits require deep expertise in analyzing game economies and markets to identify valuable niches. Cashing out into real money also involves fees, taxes, and currency conversions that cut into earnings.
Risks Of Dealing With Virtual Assets
While selling virtual items can generate real cash, there are also significant risks to consider:
Bans For Terms Of Service Violations
Most publishers ban the unauthorized sale of in-game assets and regularly monitor trading sites and forums to catch rule breakers. Getting banned results in losing access to games along with invested progression and items.
Account Theft And Fraud
Scams are common when buying/selling virtual goods. Fake sellers take payment without transferring items, while fake buyers reverse charges after receiving items. Recovery options are limited for these thefts.
Tax Compliance
Profits from selling any valuable assets are generally taxable income in most countries. Not properly reporting earnings from virtual item sales violates tax laws. However, tracking and documenting every transaction can be challenging.
Money Laundering
The anonymity of virtual currencies potentially facilitates money laundering. Criminals may use laundered money to buy assets, and then sell them back into clean currency. Regulators are increasingly monitoring this.
Currency And Payment Risks
Getting paid through third-party platforms carries risks like fraudulent transactions, sudden account closures, or policy changes. Currency conversion and wire transfer fees also cut into profits from sales.
Optimizing Virtual Item Sales
Here are some tips for maximizing profits and minimizing risks when selling in-game assets and currencies:
- Research item values – Check active listing and sold prices to accurately price your goods.
- Pick reputable marketplaces – Use established trading sites and check buyer/seller ratings.
- Document transactions – Keep records of all trades, payment amounts and buyer identities in case disputes arise.
- Avoid shady practices – Don’t buy or sell on unauthorized black markets to minimize legal and ban risks.
- Beware scams – Refuse requests to trade outside normal marketplace methods.
- Cash-out incrementally – Don’t accumulate a large virtual currency balance. Cash it out periodically. Releasing a Call of Duty for low-end PC on a free-to-play model could attract players unwilling or unable to pay full price for new titles and hardware.
- Report earnings – Keep track of reportable income from sales and pay applicable taxes.
- Use buyer protections – Only use sites that offer fraud protections and transaction dispute resolution.
Are Virtual Items Considered Real Property?
No, publishers retain ownership of all in-game assets, so players cannot legally own virtual items. However, publishers allow players to trade them within game rules.
What Are The Risks Of Using Unauthorized Black Markets?
Black market sites have higher risks of scams, account theft, and bans. Publishers aggressively police unauthorized trading channels to protect their game economies.
Do I have to report in-game item sales on my taxes?
If you profit from selling any type of goods or property, it’s considered taxable income in most jurisdictions. Keep documentation to calculate earnings and costs from virtual item trades.
Can I deduct in-game purchases as business expenses?
Typically no, since individual players don’t qualify as running a business. Exceptions may apply if you formed an actual registered business dealing in virtual goods.
Are there legal ways to sell in-game assets for money?
A few games like Second Life expressly allow players to retain IP rights to sell creations. But always check each game’s EULA to see if RMT is permitted to use authorized channels. If not, proceed at your own legal risk.
Conclusion
Selling virtual goods provides players an opportunity to profit from the time they invest in games by trading items for real money. This gray market spans everything from weapons in FPS games to collectible cosmetics in vehicle simulators.
However unauthorized trading also carries significant risks, from account bans to potential legal issues around violating game terms of service. Players looking to explore selling virtual assets should thoroughly research in-game market values,
Use trusted trading platforms, and comply with all tax obligations. Proceeding cautiously and selectively trading only high-value items can provide lucrative returns without running afoul of publishers’ restrictions against illicit Real Money Trading.
