Legal Considerations for Pay-to-Earn Game Development 


The concept of play-to-earn gaming, where players can potentially profit from time spent playing, has exploded over the past couple years. However, as with any new industry, there are legal considerations that game developers should be aware of before full launch. Consulting with a blockchain lawyer can help identify potential issues early.  


Blockchain lawyers can provide guidance across intellectual property, regulatory compliance, corporate structure, and other key areas. We’ll overview some top considerations for play-to-earn game projects below. At Bull Blockchain Law, our experience with blockchain allows us to navigate the intricate legal complexities for your case. If you’d like more information, call us today at 215-695-5860.  

Intellectual Property Protection 


Protecting the IP of your play-to-earn game is crucial. This includes the game code, visual assets, lore, and essentially anything proprietary to your game. A blockchain lawyer can help ensure your IP is properly secured.

Copyrights

Copyrights protect creative works like art, music, lore documentation, etc. They are automatically granted, but registering them provides extra protection.

Trademarks  

Trademarks protect your game’s brand, logo, and other identifiers. You’ll want to trademark the game name, logo, and potentially prominent characters.


Patents 

You may be able to patent unique mechanics and technologies you build for your game. Patents provide the strongest protection but involve more time and money to acquire.


Trade Secrets 

Trade secrets apply to confidential information like algorithms and proprietary methods. You’ll want NDAs with staff and partners exposed to these secrets.


Proactively speaking with a blockchain lawyer about your IP is wise before launch. They can help audit what should be protected across copyrights, trademarks, patents, and trade secrets – and advise on best practices.

Terms of Service & Policies 


Crafting strong Terms of Service and internal policies upfront saves legal headaches later. Key areas to cover include:

User Content Policy 

A user content policy explains what players can and can’t upload/create. You want the rights to use player creations commercially while prohibiting illegal and brand-damaging material.

Privacy Policy

A privacy policy details what data you collect, why you need it, and how it’s handled. This is important for security and compliance.

Age & Geography Restrictions

You may want to prohibit those under 18 from playing or limit which countries can access the game due to legal gray areas.


Anti-Money Laundering & Fraud Prevention

As players can earn real money, having anti-fraud and compliance measures like KYC is prudent to limit liability. A blockchain lawyer can provide templates.


The above barely scratches the surface on essential policy areas. An experienced video game lawyer can help craft comprehensive documentation addressing safety, security, regulatory nuances, and more. Doing this intelligently early on reduces risk later.


Corporate Structure 


How you structure your gaming company has legal and tax implications down the road. Key structural decisions include:


Business Entity Type

Will you operate as a LLC, sole proprietorship, corporation, or other model? Different entities have pros/cons.

Locating Your Company

Where you incorporate and operate from also has legal and tax ramifications globally. Pick this carefully.


Token Integration   

If your game involves tokens, properly integrating them into your corporate structure is vital for reducing liability.


This is when working with a blockchain lawyer from the start can make life easier. A professional can assess your specific situation and advise on the optimal corporate structure for liability protection and global regulatory compliance.

Tax Planning & Accounting 

Taxes quickly become complex with play-to-earn gaming involving real money. A few considerations:  

Value-Added Tax Issues

How VAT is handled varies by country. You'll want to follow appropriate protocols.

Token & NFT Tax Issues

Cryptocurrencies and NFTs involve extensive reporting. You’ll want an accountant well-versed in crypto taxes.

Sales Tax Triggers

At what thresholds do you need to start charging and remitting sales tax in different states/countries? Don’t run afoul here.


We can’t emphasize enough the importance of proactive financial & tax planning with blockchain lawyers and accountants with knowledge in crypto. They can help optimize profitability while remaining compliant across different jurisdictions.

Ongoing Compliance Standards 


Even after launch, there are evolving reporting and compliance standards that legal counsel can help navigate:

Securities Regulations  

Depending how your crypto model operates, there may be securities filings required around token offerings.

Continued Tax & Audit Reporting

You have ongoing tax reporting each year plus potential audits globally to comply with. 

Shifting Global Regulations 

As countries roll out blockchain and crypto regulations, you'll want to adapt quickly to avoid issues operating in those markets.

Platform Requirements 

If you operate on particular game platforms, stay updated on their policy changes to avoid violations jeopardizing distribution.


This is the tip of the iceberg on ongoing reporting and compliance concerns. We strongly advise having a blockchain lawyer support you for the long haul.


The Value of a Blockchain Lawyer for Play-To-Earn Gaming


Hopefully the above gives a glimpse into key legal areas that play-to-earn game developers need to address – both early on and perpetually after launching. 


Competent legal guidance maximizes long-term upside while minimizing headaches. Specifically for blockchain gaming, below are a few key benefits of having a crypto-savvy lawyer in your corner:


  • IP Knowledge for NFTs & Crypto: They understand nuanced areas like patenting protocols or trademarking tokenized assets that traditional counsel may miss.


  • Mitigate Long-Term Liability: Identify any red flags early that could be exploited to sue you down the road under consumer protection laws.


  • Optimized Corporate Structuring: Ensure your corporate framework and token integration follows best practices for reduced risk.


  • Guide Ongoing Regulatory Changes: Steer you safely through global compliance rule changes that inevitably arise.


  • More Affordable Than You Think: Contrary to thought, quality blockchain counsel is quite affordable compared to cleaning up issues later.


  • Let You Stay Focused on Your Project Vision: Keep legal/admin off your plate so you can devote energy to your core gaming mission.


All in all, partnering with professionals in blockchain law pays dividends over trying to navigate a complex emerging area solo as a game developer. Don't wait to engage counsel until after issues arise. A proactive blockchain lawyer guides you through legal intricacies from day one, letting you focus on developing a Web3 game.

Frequently Asked Questions

1. Should I form a legal entity for my play-to-earn game or just operate as an individual?


We highly recommend forming a registered legal entity like an LLC to separate your personal assets from the game’s liability. Without an entity, you can be personally sued for issues tied to the game under your name. An LLC or corporation better protects your personal finances and assets. Most blockchain lawyers can easily help you form an appropriate entity.


2. What regulations apply to play-to-earn gaming with cryptocurrency involved? 


Many existing laws haven’t caught up with crypto innovations, leaving compliance gray even for blockchain lawyers versed in the space. As general guidance, securities regulations, money transmission laws, AML statutes, consumer protection laws, and tax reporting requirements likely apply depending how your model operates. We advise regularly consulting a lawyer to help interpret obligations across shifting global policies.


3. Can I patent game mechanics like a battle royale format or metaverse virtual land sales model?


Potentially, but patents require that ideas are truly novel and not obvious derivatives of existing concepts. Also, game mechanics can be very hard to patent. Simple economic systems like buying and selling virtual items are unlikely to meet the patentability bar, but truly proprietary technology like a new method of establishing digital property rights might qualify. Run specific mechanics by a registered patent attorney to see if worthwhile to pursue IP protection. 


4. How much does hiring a law firm with experience in blockchain and crypto usually cost? 


Quality blockchain counsel from an industry firm costs a fraction of what you probably expect. Typically between $150-$300 per hour depending on experience level and services required is normal. Given the significant risk mitigation legal guidance provides for play-to-earn gaming, this is a wise investment relative to lawyers charging $500+ hourly at traditional firms unfamiliar with crypto. Do your diligence across firms identifying baseline services needed for your budget.


5. I’m based outside the US - should I still consult an American blockchain lawyer? 


If launching globally accessible games, engaging US counsel knowledgeable in American regulations is generally wise given our complex compliance landscape, even if you’re based abroad. However, also be sure to have a local lawyer versed in your jurisdiction’s consumer laws, tax codes, data standards, and other country-specific regulations. The goal is having multi-national counsel to tick the boxes across regions you’ll operate in while launching intelligently across borders. Checking with more than one specialist international law firm is often prudent.

Choosing a Blockchain Attorney 

Consulting a qualified blockchain lawyer like the attorneys at Bull Blockchain Law, in the early planning stages allows properly structuring key aspects like tokens, NFTs, cryptocurrency payments and tax treatments to remain compliant. If you’d like more information, call us today at 215-695-5860.