Articles Posted in Virtual Currency

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FINCEN has recently issued what is perhaps the most specific piece of regulatory Guidance on the financial regulatory issues with virtual currencies. This guidance clarifies the applicability of the Bank Secrecy Act (“BSA”) to entities creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies. These guidelines relate to a wide variety of virtual currencies.

There are a few aspects of this guidance that are surprising to some people. If you are dealing with virtual currency, you must be aware of what these guidelines mean for you.

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As the online gaming market slowly evolves, many companies are preparing to capitalize on it once the legislative process moves forward. In one of the latest announcements, Zynga has applied to get licensed in Nevada. According to a recent statement from Zynga:

Zynga has filed its Application for a Preliminary Finding of Suitability from the Nevada Gaming Control Board. This filing continues our strategic effort to enter regulated RMG markets in a prudent way. We anticipate that the process will take approximately 12 to 18 months to complete. As we’ve said previously, the broader U.S. market is an opportunity that’s further out on the horizon based on legislative developments, but we are preparing for a regulated market. We’ve also recently partnered with bwin.party to bring the highest quality real money gaming experiences to our UK players in the first half of 2013.

Social gaming has been an active field in 2012 and from what we are seeing 2013 will likely see even more activity.The legal issues and regulatory enforcements will continue to increase.

While many companies are focusing on real money gambling, many other companies are focusing on various forms of gamblification – the use of gambling mechanics for non-real money gambling purposes.  The use of virtual goods and virtual currency in gamblification models, though prevalent, further complicates the legal issues. Our team has advised numerous companies on the legal issues with gamblification, including the use of virtual goods and virtual currency. If you would like more information on thees issues please contact us.

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Kickflip, which does business under the name Gambit, sued Facebook for allegedly monopolizing the “virtual currency” market used in online games by requiring game publishers to use Facebook credits. It is also alleges tortious interference with Gambit’s contracts and prospective business opportunities.

The complaint alleges:

Image for blog·         That Gambit was a leading virtual-currency and payment-processing provider to software developers that published games on Facebook and other social networks.

·         Until Facebook violated antitrust laws, game developers turned to a vibrant and competitive market of virtual currency and payment-processing service providers competed vigorously on service and price.

·         In 2009, Facebook began offering its own virtual-currency services to compete with Gambit and its rivals and charged a 30% fee which was significantly more than the market rate (e.g., the 10% charged by Gambit), yet provided only a narrow range of services.

·         Unsurprisingly, Facebook’s virtual-currency services never gained significant market share when competing on the merits.

·         Facebook exploited its dominance in the separate market for social-game networks to force its virtual-currency competitors to the sidelines.

·         Facebook blacklisted Gambit under the false pretext of maintaining the integrity of its social network, prohibited social-game developers from accessing Facebook’s social-game network unless they agreed to only use Facebook’s virtual-currency services and forced developers to switch to its services exclusively in 2009 and 2010, thereby systematically excluding alternative virtual-currency services providers like Gambit.

·         Consequently, Facebook leveraged its dominance in the social-game marketplace to control and dominate the separate market for virtual-currency services.

·         As the result of Facebook’s actions, Gambit’s business was destroyed.

The complaint is chock full of other interesting allegations about how Facebook allegedly choreographed a perceived need for a “safe” virtual currency in the aftermath of the infamous “Scamville” incident  and made Gambit a fall guy in the process.

Among other things, Kickflip seeks an injunction barring Facebook from enforcing its policies as a condition for access to its social-game network.

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Due to “legal and regulatory pressure” Dublin-based Intrade will no longer accept bets from US customers and all existing US customers must exit their trades and close their accounts. Intrade operates a real-money based prediction market. This announcement from Intrade came just hours after U.S. regulators filed a civil complaint against it.  

This action is another example of how gambling and gambling related activities are being subject to regulatory scrutiny. This trend is important for companies to note, particularly as a broader range of companies get involved in on line gambling. This is also important for companies involved in “gamblification.” Gamblification is the use of gambling mechanics for non-gambling purposes, i.e, leveraging the fun of gambling without real money at stake. Gamblification raises a whole host of legal issues, of which companies leveraging this phenomena must be aware.

The lawsuit was filed by the Commodity Futures Trading Commission, which accused Intrade and its parent company of violating its ban on off-exchange options trading, by enabling users to bet on predictions relating to commodities prices. But commodity trading is just one aspect of Intrade’s business. Intrade’s prediction market also enables users to bet on “predictions,” ranging from who will win presidential elections or Academy Awards or whether a dictator will be toppled by a certain date.

“It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called “prediction” contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt,” Enforcement Director David Meister said in a statement. However, the CFTC has previously rejected exchange applications from companies that wanted to sell options on political outcomes, because they involve gaming and are contrary to the public interest.

A number of US-based companies operate prediction market platforms that enable users to make predictions on a range of activities, but sports-related predictions are among the most popular.  However, most of these platforms do not enable users to wager and/or win real-money. Some use virtual currency that users “wager” in connection with a prediction, but usually the virtual currency cannot be cashed out. The “win” that keeps users coming back is the bragging rights for those who are most accurate in their predictions.

While many of these models steer clear of the gambling laws, they must be done right to avoid crossing the line. Getting it right is especially tricky when virtual goods and/or currency are involved. Pillsbury’s social media team has prepared a client advisory on gamblification and the use of virtual goods/currency in these gamblification models. For a copy email us.

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

 

PlayStudios launches myVegas social casino games with MGM

Social casino game startups are the cliché of 2012. Everybody is either starting a new company in this hot market — on the bet that the U.S. will allow online gambling sites again — or spending a lot of money acquiring casino game startups. But PlayStudios believes it is different because it is a blend of Silicon Valley and Las Vegas. The company was founded by Andrew Pascal, a longtime Silicon Valley entrepreneur and former casino empire executive.

American Express launches FarmVille rewards card

American Express has created a card that rewards FarmVille users with virtual cash for their real-world purchases. Users of the hit social media game can begin signing up for the FarmVille card starting Tuesday. The card is part of American Express’ prepaid Serve platform.

[Report] Marketing Goes Local

PwC, together with the Location Based Marketing Association (LBMA), has developed this white paper to educate the industry on location-based marketing and to provide a general overview for retailers, brands and their agents, mobile network operators, and service providers on the application of these services to drive customer engagement and brand awareness.

Gamification market to reach $2.8 billion in 2016

Gamification, the process of applying game mechanics to activities that aren’t games, is rapidly becoming a big business, according to a new report by Wanda Meloni of M2 Research. She projects the market to reach $242 million in 2012 (more than double the 2011 total), and to climb to $2.8 billion in 2016.

Could Virtual Nanotransactions Solve the Mobile Payments Problem?

Very few people in the mobile industry will disagree that mobile payments are today’s biggest challenge for developers. In the Apple universe, there is a strong solution to the problem: Apple simply requires users to register their credit cards before they can use any services. But this approach only works for a very small segment of high end users in the developed world.

 

 

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

FBI:
We need wiretap-ready Web sites

CNET learns the FBI is quietly pushing its plan to force surveillance backdoors on social networks, VoIP, and Web e-mail providers, and that the bureau is asking Internet companies not to oppose a law making those backdoors mandatory.

NJ Online Gambling Bills Clear Assembly Hurdle

A pair of online betting measures cleared a New Jersey Assembly committee Thursday, moving the state a step closer to allowing horse wagers to be placed from hand-held devices at state tracks and permitting casino game betting from personal computers across the state, around the country and abroad.

Twitter:
We’re still the free-speech wing of the free-speech party

As various levels of government both in the U.S. and around the world have stepped up their attempts to track down dissidents through social networks, the pressure has intensified on companies like Twitter and Facebook to comply with these demands — even at the expense of their users’ privacy. Despite that pressure, Twitter at least seems determined to fight these incursions wherever possible. As a case in point, the company has filed a motion in New York state court to quash a court order compelling it to hand over information about a user involved in the Occupy Wall Street protests, arguing that the order violates that individual’s rights.

Social media offers sweet revenge for bad service

If you’re tired of being treated poorly by retailers, airlines and other service-industry types, take revenge via social media. You will get heard, and get action.

Leaked Report: FBI is Terrified of Bitcoin Becoming a Currency for ‘Cyber Criminals’

Published in late April but leaked yesterday, the unclassified document-of which Wired provided a PDF-outlines the federal government’s fears surrounding the Bitcoin currency, primarily that in the near future, “cyber criminals will treat Bitcoin as another payment option alongside more traditional and established virtual currencies.”

Virtual worlds can end the loneliness of the long distance learner

Students now have opportunities to learn by doing wherever they are in the world with the advent of Virtual World classrooms and 3D work enactment technology being introduced at UWE Bristol.

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

Bicycle card game owner to launch Zeniz mobile social casino games platform

Online casino games are hot. So much so that we’re renaming our site Casino GamesBeat. Just kidding, but The United States Playing Card Company (owner of the Bicycle playing card brand) and Digi117 aren’t. Those two companies are partnering to form Zeniz, a mobile social casino game platform.

The Enforceability Of Facebook’s Terms Of Service

In the recent online contracting case of Fteja v. Facebook Inc., a New York federal court held that a forum selection clause contained in Facebook’s statement of rights and responsibilities (the “terms”) was enforceable because the plaintiff assented to the terms when registering to use Facebook.

Beyonce Can’t Sidestep Suit Over Video Game Deal

Pop singer Beyonce’s attorney failed to convince a New York state judge Wednesday to throw out allegations that she violated a contract when she abruptly pulled the plug on a multimillion dollar video game development deal.

Augmented Reality Toys for iPhone and iPad: A Work in Progress

Can traditional toy makers capitalize on the rise of smartphones and tablets?
Wowwee Toys thinks it can. Next week, the company behind Paper Jamz and Lite Sprites is releasing its first toys in the AppGear line, which combine physical toys with companion smartphone and tablet apps.

Zynga Online Social Gambling

Zynga is known for its creation of a whole new breed of social games on cell phones and computers. They created social games that include gambling that is available for players to play on social networks, especially Facebook while being at home on their PC or outside through their cell phone. This creation has caused quite a stir in the world of gaming, as it made all of the console game companies such as EA forced to join this world so they don’t stay way behind.

Kids Play Educational Games And Win Real Prizes From Their Favorite Teen Celebrities At Club TUKI

Club TUKI has patented a process where kids play educational games,
earn a virtual currency called TUKI Moola, then bid or buy auction items in the TUKI auction. With the gaming platform now established, Club TUKI has launched Club TUKI News, a news site for kids that brings all of their favorite teen celebrities right to their fingertips.

 

 

 

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

 

 

 

Epic Games to make government training games

Of all the companies you’d expect to announce a big government partnership, a major video game studio is probably not at the top of your list. Nevertheless, Epic Games announced Tuesday that it has entered into a “long-term, multi-platform” deal with a division of Applied Research Associates to license the Unreal game engine for government use.

Royal Canadian Mint unveils MintChip virtual currency

Having revealed plans to ditch the Canadian penny last week, the Mint is continuing its assault on physical cash with MintChip, which it describes as the “evolution”
of currency. The system brings all the benefits of cash into the digital age,
claims a dedicated Web site, providing users with instant, private and secure access to their money.

Social Gaming Key for Advertisers in 2012

Did you know Internet marketers will spend upward of $271 million on social gaming ads in 2012? In-game advertising is the next big trend in the industry,
with analysts expecting ad spend on social games to reach $900 million annually in less than three years. The stakes are higher than ever for brands as they budget ad spend on laptops, mobile devices, and consoles.

Gamification Platform BigDoor Raises $5 Million From Foundry Group

White label gamification platform BigDoor has raised $5 million in new funding led by existing investor Foundry Group,
bringing BigDoor’s total funding to $13 million. BigDoor’s gamification platform essentially allows online publishers to add game mechanics to web interactions and engagements. BigDoor helps companies build game-like mechanics and loyalty programs into their sites or apps by enabling points, badges,
levels, leaderboards, virtual currency and virtual goods.

Facebook,
NRDC, Opower, & 16 Utilities Team Up to Create Social Gaming App

“With an initial reach of 20 million households, the effort is one of the most significant to date, enabling people to take action and become more energy efficient,” NRDC said in a statement today. “Leveraging the Facebook platform, the app allows people to quickly and easily start benchmarking their home’s energy usage against similar homes, compare energy use with friends, enter energy-saving competitions, and share tips on how to become more energy efficient.”

Google Glasses Face Serious Hurdles, Augmented-Reality Experts Say

When Google officially unveiled
Project Glass — the company’s bid to develop Terminator-style augmented-reality glasses — we saw a provocative glimpse of the future. The video Google released yesterday showed us the point of view of someone wearing the glasses, with icons, maps and other graphical overlays appearing over the user’s complete field of vision.

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

The Virtual Military

While much of the international system remains mired in the economic doldrums, many global military powers continue to increase defense budgets focused upon the research and development of simulation technologies. As part of our week-long focus on the importance of games to international relations and security, today we consider how Russia,
China and the United States are using virtual simulators to train its armed forces.

Social game Idle Worship takes Facebook gaming to new level

Idle Games is launching a next-generation social game today dubbed Idle Worship. The title opens up a new genre on Facebook — the once popular “god game” — and it has an interesting and witty approach to social gameplay. Founded by former ad executive Jeffrey Hyman, San Francisco-based Idle Games is in a “holy war against games that suck or aren’t actually social.”

TrialPay and TubeMogul Introduce Real-Time Bidding for Virtual Currency and Social Video

TrialPay,
a leader in transactional advertising, and TubeMogul, a media buying platform for brand advertising, announced a partnership that brings real-time media buying to social video advertising for the first time today.

Illinois legislation to ban employers from asking for social network passwords hits snag

Legislation that would prohibit employers from seeking job applicants’ social network passwords is on hold in the Illinois House. Democratic Rep. La Shawn Ford’s measure would allow job-seekers to file lawsuits if asked for access to sites like Facebook. Bosses could still ask for usernames that would allow them to view public information on the sites.

 Smithsonian Art Of Video Games Exhibit Opens With Gaming Festival

The exhibit is curated by Chris Melissinos of Past Pixels, a group charged with the preservation of video game history. Over the past year, Melissinos — aided by a board of advisors that includes Double Fine’s Tim Schafer, text adventure veteran Steve Meretzky, and Penny Arcade team Jerry Holkins and Mike Krahulik — designed an exhibit that encourages visitors to make what Melissinos calls “a deeply personal decision” of whether video games are art. The exhibit offers five eras of video games with both playable demos and self-playing videos,
showcasing everything from the Atari 2600 to the PlayStation 3, from the traditional platforming of Super Mario Bros. to the more experimental play of Flower.

Navy Pursues a Better Attack Submarine Virtually

Technical advances in the field of virtual reality, also known as virtual worlds (VWs), are making it possible for the U.S Navy to tap into the collective expertise of its best submariners to design and build the next generation of attack submarines. At the Naval Undersea Warfare Center (NUWC) in Newport, Rhode Island, designers are able to create collaborative environments for submarine development using a fully immersive virtual reality application similar to the popular Second Life environment, which enables them to interact with one another both audibly and visually. Numerous participants at remote sites worldwide are linked to one another through the Defense Department’s secure computer network.

 

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A weekly wrap up of interesting news about virtual worlds, virtual goods and other social media.

 

Gaming is a top priority for mobile-tech makers

“Gaming is now a ‘need to have’ category, not a ‘nice to have’ category for mobile devices, whether they be tablets or phones,” said PJ McNealy, videogame analyst at Digital World Research. “The days of a single-function mobile device are long gone.”

PixyKids raises $3M for a social media platform just for kids

PixyKids has raised $3 million to develop its social platform for kids ages six to 12. It is built on the idea that kids want to socialize, even though they’re too young for Facebook. Kids can join PixyKids under their parents’ supervision and can share experiences and pictures the way that adults do on Facebook. The company is betting that social networks, not virtual worlds or education sites, will resonate most with kids.

FanCake Debuts as First Live Social Gaming Experience for Sports Watching

Kwarter, a mobile application factory building apps that lie at the intersection of the social, mobile and TV spaces,
announced today the launch of its first app, FanCake. FanCake turns live televised sporting events into interactive and social games, connecting millions of sports fans, teams, broadcasters, brands and athletes to enhance the game watching experience.

LVFH Launches Real Vegas Casino on Facebook

Las Vegas From Home.com Entertainment Inc. is pleased to announce the launch of its social casino product, Real Vegas Casino,
on Facebook to the general public. It is expected LVFH will launch more games under the Real Vegas Casino brand shortly, coinciding with a specialized marketing campaign.

 French City Implements Virtual Currency to Avoid Financial Ruin

The French city of Nantes has plans to introduce its own virtual currency as a complement to the euro. By 2013,
participating local businesses will be able to pay, or be paid in virtual currency units called “Nanto.”

Olympic stars brought to life in world’s first ‘augmented reality hotel’

From today, guests at the Holiday Inn London Kensington Forum will be able to use their smartphones or tablets to see athletes in virtual action in the reception, corridors and bedrooms. When the devices are pointed at specific sites in the hotel, the athletes will appear on the screen. BMX World Champion Shanaze Reade can be seen performing tricks on her bike in the lobby, while Paralympic table tennis world number one Will Bayley hits table tennis balls behind reception.  Meanwhile, UK long-jump record holder Chris Tomlinson can be seen to jump in a corridor. And leading windsurfer Dempsey will – somewhat bizarrely – do his thing in the hotel’s bedrooms using a bed sheet.