The MTGO Virtual Economy: A Case Study on a “Play-to-Earn” Game That has Existed Since Before Cryptocurrency Was Even Invented

Introduction

Technological advances in the past 30 years have led to enormous developments in what is currently the multi-billion-dollar industry of online video games (Claydon, 2021; Ding et al., 2021). One of these developments is the creation and growth of virtual game economies: systems of interactions among players within a game that simulate economic activities such as production, consumption, and trade (Earle, 2019; Lehdonvirta, 2005). Interest in these virtual game economies is heightened by the recent rise and sometimes fall of games touting the so-called “play-to-earn” model, where players are enticed to play and interact with the game's virtual economy by the promise of potential earnings that they can take with them to the real economy (Delic & Delfabbro, 2024). This is a case study on the virtual game economy of Magic: The Gathering Online (MTGO), an online trading card and fantasy game with a thriving virtual game economy for over 20 years. MTGO is a virtual simulation of the tabletop card game, Magic: The Gathering (M:TG), which is recognized as the first and one of the most successful collectible card games in history (Galov, 2023; Long, 2014; Stafford, 2014). While different from Massively Multiplayer Online Roleplaying Games (MMORPGs) in terms of gameplay, MTGO has the same elements of production, consumption, and trade that comprise a virtual game economy. Moreover, it has implemented strategies that tie their game's virtual economy to the real-world economy since its inception, something that MMORPGs have only relatively much more recently done and is the key element of the play-to-earn model.

In the succeeding sections, some background on MTGO is provided and literature on the development of virtual game economies is examined. Then, the different aspects of the MTGO economy are described and from this, the MTGO economic model is established. This model is compared with other virtual economies that have been popularly studied. The paper concludes with some directions for future research given the characteristics of the MTGO economy that were established.

Magic: The Gathering and MTGO: History and Research

Magic: The Gathering is a collectible card game (CCG) created by mathematician and game designer, Dr. Richard Garfield in 1993 (Zilio et al., 2018). It is distributed by Wizards of the Coast (WotC), which was acquired by Hasbro as a subsidiary in 1999 (CNN, 1999). The game has experienced phenomenal success, with over 40 million players (Galov, 2023) and over $1 billion in revenue in 2023, accounting for over half of Hasbro's earnings (Hasbro, 2023).

Magic: The Gathering Online was launched in 2002 as one of the attempts to create a digital platform for playing M:TG (Olive, 2015). Prior to MTGO, video game developer Microprose published the game Shandalar in 1997 which likewise digitally simulated M:TG gameplay but focused on a single-player, role-playing game style. More recently in 2017, WotC released Magic Arena, another virtual simulation of M:TG but one that operates on a free-to-play business model and does not involve an interactive virtual economy (Tarason, 2018). To date, MTGO is the only platform for playing M:TG that has adopted the trading card game nature of M:TG in its gameplay, with players being able to trade cards and other digital assets with each other in the game. MTGO was initially produced by Leaping Lizard Software under an agreement with WotC, which lapsed in 2003 with WotC taking over production of the game (Olive, 2015). This continued until 2022, when WotC licensed production of MTGO to Daybreak Games, the well-known massively multiplayer online game producer that produced EverQuest (MTGO, 2022), which in turn is known for being the first virtual game economy that sparked interest in economics research (Castronova, 2001; Knight, 2002). An article about the acquisition estimated that MTGO would generate $9–$10 million in annual revenue for Daybreak (Royce, 2022).

Both M:TG and MTGO are collectible trading card games where cards can be acquired mainly by opening packs. The game producer (WotC for M:TG and Daybreak for MTGO), sells the packs which contain randomly distributed cards with predetermined rarity. For example, a play booster pack of 15 cards contains at least six cards of “common” rarity, three cards of “uncommon” rarity, and can contain at least one card of “rare” rarity, except when that card is replaced by a card of “mythic” rarity, where the probability for this is listed as 12.50% (Rosewater, 2023). Players then assemble a deck of cards from their collection which they can use to play matches against other players. In order for their deck to contain the cards that they want, it is typical for players to need to trade with others to get cards that they have not opened from packs, or to purchase these cards from the secondary market.

Magic: The Gathering has been the subject of research interest across different fields. Some have focused on evaluating the complexity of the game (Chatterjee & Ibsen-Jensen, 2016; Churchill et al., 2019; Magruder, 2022). Churchill et al. (2019) claimed that M:tG was at least as complex as “the Halting Problem,” an open problem in computer science. Magruder (2022) examined how the game's continuously evolving design has enabled it to survive and remain relevant to players. More broadly, Ham (2010) examined the long-term impacts of collectible card games’ rarity system to casual playability. Some studies have focused on social and educational aspects of the game (Dodge, 2018; Zhu, 2023), while others have examined optimization strategies for winning at the game (Hau et al., 2015; Ward & Cowling, 2009; Ward et al., 2021). Medlock (2025) interviewed M:tG players and found that nostalgic reminiscence was prominently brought about by acquisition of gaming capital. Aquilina (2023) examined the genuineness of M:TG's depiction and narrative-development for underrepresented minorities in its characters. Much less attention has been given to its virtual counterpart, MTGO. While there are studies that have examined the secondary paper market for M:tG cards (Pawlicki et al., 2014; Weber, 2021), none have been found that focused on the secondary market in MTGO, which has critical differences from the paper market. Just as some studies have examined how different players’ actions and habits impact virtual economies and create opportunity for profit or risk of loss (Bergstrom et al., 2013; Kim et al., 2015; Taylor et al., 2015), there is prospect to do the same in MTGO. Moreover, as the use of virtual game environments in economic experiments gains more popularity (Chesney et al., 2018; Horky et al., 2023; Li et al., 2021), there is potential to use MTGO as one such environment.

Development of Virtual Game Economies and the Play-to-Earn Model

Virtual game economies have progressed so much that they have garnered continued interest in literature spanning decades (Castronova, 2001; Delic & Delfabbro, 2024; Kumar et al., 2024; Morrison & Fontenla, 2017). These studies have typically focused on Massively Multiplayer Online Roleplaying Games (MMORPGS) such as EverQuest, World of Warcraft (WoW), or EVE Online. In recent years, considerable attention has been paid to emerging virtual economies and how these can or do interact with the traditional financial systems (Kumar et al., 2024; Morrison & Fontenla, 2017; Xia et al., 2022). Some of this attention is particularly on how in-game currencies are being traded for real-world money (BBC, 2015; Heeks, 2010). For World of Warcraft, players traded in-game gold for U.S. dollars at a rate of 100 gold to a dollar in 2010 (Heeks, 2010). By 2015, the rate inflated to 500–750 gold to a dollar (BBC, 2015), and by 2024, a website that serves as a marketplace for people to trade in-game digital assets such as WoW gold lists the exchange rate at 28,800 gold to a dollar (WoW Gold to USD Price, 2024). It should be noted that actual trading of these virtual goods for real currency is typically prohibited by these games’ terms of service but remains prevalent (Ayers, 2023; Constantiou et al., 2012). Some have discussed that the practice is a legal gray area (Ayers, 2023; Martinelli, 2017), with game developers needing to include stipulations against real money trading in order to protect their virtual assets from being considered as actual property of the player who has it in their account (Ayers, 2023). More recently, these games have implemented means by which players can convert in-game currency into more flexible value that can be used outside the game (Zacny, 2015). For WoW, tokens can be purchased using in-game gold and then used to pay for subscription to the game, or converted to credit balance in the game developer's digital distribution platform.

These trades of digital goods for real-world currency predate the coining of the term “play-to-earn” or P2E model, which typically refers to a game model that incentivizes play by providing opportunity for players to generate cryptocurrency by playing (Duguleană et al., 2024; Haqshanas, 2024). For P2E model games, trading in-game resources for real-world currency is not just allowed by the games’ terms of service, but is the point of the game. An example of a P2E game is Axie Infinity, where players accumulate resources and compete to generate non-fungible token (NFT) cryptocurrency, with the resources used to generate the NFTs being tradable goods as well (Delic & Delfabbro, 2024). While unlike Axie, games such as WoW or EVE online were not developed as P2E games, players in the game have clearly developed opportunities to convert in-game effort and competence into real-world value, and game developers have themselves later introduced official means for players to make such exchanges (Zacny, 2015), making P2E as much a characteristic of these games as it is of purposefully P2E model games.

The ability of virtual game economies to thrive and persevere through challenges has also been of interest. Stephens & Exton (2022) discussed how many virtual economies, including WoW and EVE Online, have struggled with hyperinflation brought about by consistent and ever-growing activity of its players generating in-game resources at a much faster rate than it can be consumed. This in turn affects the value of these in-game assets in real-world currency, as demonstrated by one U.S. dollar being worth 48 times more in WoW gold in 2024 than it was about 10 years ago. A similar problem, coupled with the cryptocurrency crash in 2022, led to the collapse of the Axie Infinity economy (Friedman, 2022). As explained by Friedman (2022), the marketing success of Axie Infinity as a P2E game led to a tremendous boom of player activity, especially in developing countries where playing the game generated more income per hour than those countries’ minimum daily wage. However, the income was based on production of consumable in-game resources for which the supply is infinite, and of which only 5% was being consumed, with the rest simply entering the market, making a price crash inevitable. Friedman (2022) argued that any P2E game is susceptible to the same fate; since all players in the game are motivated to play only by the extrinsic reward of earning but no actual real goods are being produced. This is consistent with findings that gameplay in Axie Infinity was generally perceived by players as unenjoyable (Delic & Delfabbro, 2024; McMahon, 2022).

Pillars of the MTGO Economy

Tickets, Playpoints, Qualifier Points, Treasure Chests, and Direct-to-Store Products

Tickets (tix) and playpoints (pps) are the in-game currencies that can be used to enter events. In addition, tix is the currency used to trade other in-game assets among players and with bot-chains (which are also run by players). Playpoints cannot be bought directly from the store, and are typically granted as prizes in events. Unlike tix, playpoints cannot be traded, and are only used for entry in events. For use in event entry, players can usually choose between playing in tix or pps, at a rate of 1 tix = 10 pps. For example, a draft league event that needs 12 tix to enter can instead be entered with 120 pps. As previously mentioned, Limited events can also be entered using packs. For the given example, a player can also choose to enter the event with three packs and two tix. Qualifier points (qps) are a special kind of playpoint. Like pps, qps can only be won from events. Qps are typically used to join premier play events, and are more limited in terms of what events they can be used for (e.g., they cannot be used for the usual Constructed/Limited event). Unlike the other assets discussed, qps expire each season. They are simply removed from players’ inventories when they expire. Table 1 shows a summary of the in-game currencies and their different characteristics.

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Table 1.

Summary of In-Game Currencies.

Currency name	Can be used to enter events	Can be traded	Can be purchased from the in-game store
Tix	Yes	Yes	Yes
Playpoints (pps)	Yes	No	No
Treasure chests	No	Yes	No
Packs	Yes a	Yes	Yes
Cards	No	Yes	Yes b
Qualifier points (qps)	Yes	No	No

a

Typically requires additional tix to enter with packs.

b

Only some cards can be directly purchased from the store.

For trading cards among players, tix is the most widely used currency. One major limitation of tix is that it is indivisible. To address this, the bot-chains store credit for its clients for fractions of tix that are left over from a transaction. This enables cards to be valued and traded at a fraction of a ticket. For example, a card may be valued at 0.0005 tix. In order to obtain the card, a player may give a bot-chain one ticket in exchange for the card and the bot-chain will record 0.9995 tix as credit for the player to use in a later transaction. This utility of bot-chains is a critical element of the economy and is why nearly all trades are done through bot-chains.

Treasure chests are prizes that are given in Constructed and premier play events. Treasure chests are tradable assets that can be opened to obtain different items. The possible contents of treasure chests change and are managed by Daybreak and can include playpoints and cards from across all sets. As such, treasure chests also act as a supply source for cards and are used by Daybreak as a means to regulate card prices. If demand for a card becomes so high, price can increase considerably that access to the card becomes severely limited, which in turn affects the quality and attendance of Constructed events. Daybreak can include such cards as possible contents of treasure chests, which would gradually increase supply to lower price.

Finally, there are direct-to-store products. These are cards or complete decks that can be bought directly from the store. Unlike packs, the contents of these products are fixed. Once purchased from the store, these products can be traded with other players just like other tradable assets in the game.

MTGO Economic Model

Based on the previous section, there are different ways to characterize the MTGO economy. At the macroeconomic level, Figure 1 shows the flow of assets into and out of the MTGO economy, while Figure 2 shows how those assets are distributed within the economy. These figures show that the MTGO economy is composed of both tradable and non-tradable assets and that the non-tradable assets are only useful for event entry where they can, at least partially, turn into tradable assets. Moreover, there are two main sources of growth for the economy, which are the purchase of assets from the MTGO store using outside currency and the generation of non-tradable assets in positive-sum events like Constructed events. The former is completely player-driven and is essentially equivalent to how much money players spend in MTGO. The latter is a shared exercise between Daybreak and the players. Daybreak determines the event payouts and thus can control how much new pps can enter the system per batch of games played, but players determine the rate at which matches are played.

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Figure 1.

Model for the flow of value into and out of the MTGO economy.

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Figure 2.

Model for distribution of assets among players in the MTGO economy.

While Constructed events are positive-sum games, events other than that are typically negative-sum games, and even positive-sum games in MTGO are positive EV only for players capable of winning at some minimum win rate τ%, albeit τ% can be less than 50% for some events. For example, based on goatbots.com's event calculator, a constructed event currently has an EV of +0.45 for players with a 50% win rate. This means that the average player will earn 0.45 pps worth of value on average per constructed league played. Correspondingly, anyone with a win rate of 48% has an EV of −0.33, which means they are unlikely to make their value back by playing and will lose more as they play more. As such, Figure 3 shows an example of the expected concentration curve of pps and qps as a measure of total wealth with respect to players’ win rates constrained to wealth circulating through events (i.e., not including wealth from trading or buying more assets from the store). It demonstrates that over time, only players with win rates greater than some parameter τ% (49% in the example) will have stored surplus pps. Theoretically, these players will continue to generate more pps than they lose, which has been described as “going infinite” (Carl, 2014); being able to play as much as one wants without needing to pay outside currency. For example, as shown in the figure, it is expected that players who maintain a win rate of 50–60% will possess about 15% of the total surplus pps, whereas players with win rates between 50% and 75% will possess about 40% of the total surplus pps. However, this is contingent on either the players with win rate less than 49% to keep re-buying assets with external currency to re-enter events, or for new players with win rate less than 49% relative to the existing player base to keep entering the game and buying assets to enter events. More likely, a level of competitive attrition exists where some players who have to keep buying more assets to play events simply leave the system, reducing the size of the player base as well as the variability of the distribution of players’ average win rates to some state of equilibrium. At the same time though, MTGO is a source of entertainment, a digital simulation of a very successful card game that is played by millions, and so there is an enjoyment premium to playing events such that some players may be motivated to keep playing despite losing money consistently by doing so.

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Figure 3.

Concentration curve showing pp and qp distribution among players across average win rates.

Other than doing well in playing the game, Figure 2 shows that wealth distribution in the economy is also affected by players’ ability to trade efficiently. Being able to play Constructed events well requires having access to the cards needed to make competitive decks, and what these cards are can change drastically over time and as new cards are introduced or other cards are banned or unbanned in a format. Thus, cards in the economy can rise and fall in price depending on this demand dynamic. Moreover, cards that enter the economy can only ever be removed from the economy via set redemption, which is only possible for a limited period of time. After that period expires, cards from a set that remain in the system are there indefinitely. Treasure chests can also contain cards from across every set. As such, every opened treasure chest can add some number of new cards into the global supply. This creates a situation that is not uncommon in virtual economies, where some goods are indestructible and thus, the supply for them can only grow over time (Castronova, 2001). In theory, this means that the price of every card in MTGO that can no longer be redeemed could only decrease over time. While this is observed in examining card prices in general, changes in the competitive relevance of cards can lead to sharp increases in demand and correspondingly, price, especially for cards that have not seen play in Constructed events for many years. A players’ ability to take advantage of these sudden changes in the playability of a card is a function of both the player's insight into how formats can change with the introduction of new cards or other changes to the game and their capacity to hold cards in their inventory. Toward the latter of these two, bot-chains have considerable advantage, having huge volumes of inventory collected across time, typically at very low initial positions. For example, Scion of Draco, a card that had averaged in price to around 0.50 tix since shortly after its release in 2021, jumped to an average of 5 tix from February to April of 2024 (Scion of Draco, 2024).

The critical role that bot-chains play in the economy cannot be overstated. Their existence and prominence demonstrate the classic concept of voluntary exchange (Musgrave, 1939), where players exchange their tradable virtual goods for virtual goods that they need from bot-chains, while trusting them to hold the fractional value that players need to leave behind due to the indivisible nature of tix and cards as currency. There is no formal obligation for bot-chains to adhere to honoring the credit that players store with them, but they do so in order to keep players’ trust. This trust, which a handful of bot-chains have cultivated from among the entire player base, is what makes efficient and convenient trading possible. Without it, players would need to take the time and effort to find other players that need the goods they want to trade away, have goods that they want to trade for, and have these in quantities that will match up in value. Indivisibility of currency in the game makes the last requirement practically impossible. Also, while bot-chains are not recognized in any official capacity by Daybreak, the credit system they employ to bypass the indivisibility of tix does not break MTGO's terms of service.

The MTGO Economy Compared to Other Virtual Economies

The MTGO economy can be characterized with respect to other virtual game economies that exist and that have been prominent in literature. While MTGO's gameplay may be far removed from those of WoW or EVE Online, all share fantasy and role-playing elements and more importantly, have strong parallels in their economies. All of these games are pay-to-play; WoW and EVE operate on a subscription service, while MTGO is microtransaction driven; players generally need to continuously pay money into the game in order to be able to keep playing. However, some part of the value that is paid into the game goes into its virtual economy, with players spending time to do in-game activities generating virtual wealth that is transferable into real-world wealth. As with other games like WoW or EVE Online, MTGO prohibits real money trading in the terms of service, but players, including bot-chains nonetheless engage in such activities, with bot-chains openly publishing the exchange rate for tix to US$ on their websites (Cardhoarder, 2024). This is consistent with prior discussion of real money trading as a gray area, with game publishers needing to include rules against them in their terms of service to protect them from potential legal claims to in-game assets as real personal assets, while not necessarily enforcing them (Ayers, 2023). For MTGO however, the set redemption feature has served as an official outlet to convert virtual value into real value. Even for players who do not redeem a whole set, it can be argued that each redemption made is the outcome of collective effort from the player base, with some players contributing by opening the cards from Limited events and trading them, until ultimately, the set of cards is redeemed by someone who paid for the virtual cards with tix.

This dynamic of Limited play and set redemption can be paralleled with the “mining” that is typical in P2E model games like Axie Infinity as well as with cryptocurrencies in general. New cryptocurrency is mined from solving complex mathematical problems that make use of considerable computer processing capacity (Taylor, 2017). In Axie Infinity, players play matches to win smooth love potions (SLPs) that are consumables used to breed the Axies that are used for in-game battles (Ongweso, 2022). Similarly, players “mine” new MTGO cards by playing Limited. However, unlike in Axie where exchanging in-game resources for real currency translates to passing it on to the in-game secondary market while consuming them removes them from circulation in the market, conversion of virtual cards in MTGO to real-world assets means removing them from the virtual economy. Thus, while the exchange process in Axie leads to an oversupply of the exchangeable asset, the reverse is true for MTGO. As more sets are redeemed, fewer sets remain in the virtual economy. As such, after set redemption ends for a set and a new set is introduced, a level of scarcity for cards in the previous set is maintained, allowing useful cards from that set to retain value. This process is only feasible if the redeemed card sets have real-world value. Like cryptocurrency and P2E game assets, redeemed sets as well as M:TG cards in general have no intrinsic value. However, they all have demand-driven extrinsic value. For example, the latest set at the time of this writing has a real-world market value of $229. The set can be redeemed from MTGO using 55 tix and $45 for redemption and shipping cost in the United States, indicating that buying a set through set redemption has a discount of at least 56% compared to the real-world market.

Another important comparison between MTGO and P2E games is the importance of the game's playability. P2E games have been described as generally unenjoyable to play (Alper, 2023; Delic & Delfabbro, 2024), and Friedman (2022) argued that part of the reason for the failure of Axie Infinity and P2E games in general is that the sole motivation for playing was earning. In contrast, MTGO is a simulation of arguably the most popular collectible card game in history, and Limited play in M:TG is considered as a premium format enjoyed by many. As such, MTGO provides a good opportunity for players who are unable to play in person to still enjoy the game. That is, playing on MTGO provides a value beyond the potential of winning one's money back. For any P2E game, competition implies that only some top percent of players will ever generate extrinsic value from playing. As such, it is essential for there to be a sufficient number of players who find intrinsic value from just playing and enjoying the game, even if they end up not earning any money back from their efforts.

MTGO has been less susceptible to the hyperinflation that affected other games. Tix have been going in and out of circulation in the economy for more than 20 years, but has remained stable in its value with respect to the U.S. dollar at $0.75 to $0.99 per tix. The same cannot be said for WoW's gold, EVE's ISK, or Axie's SLP, which have drastically devalued with respect to real currency over time (Friedman, 2022; Stephens & Exton, 2022). Part of this is that the in-game store has not changed the price of tix sold from the store from $1 per tix since its inception, giving tix the stable-coin-like quality of being tied to fiat currency. At the same time, the stable value implies that enough of the purchased tix are being consumed instead of just circulating in the secondary market, and the amount of tix in the secondary market is just enough to facilitate trade among players, mainly through bot-chains. Another factor to this stability is how the MTGO economy approaches “free” resource generation. WoW's gold or EVE Online's ISK are primary game resources that are used for both trade and consumption. These resources are generated by taking in-game actions such as completing missions. These actions are typically non-competitive; players just need time to play and generate them. Thus, over time, an oversupply of these free resources can be expected, leading to inflation. In MTGO, the comparable resource is playpoints, which was introduced to the game about 8 years ago. Unlike in the other games mentioned, playpoints in MTGO are not tradable, and can only be used to join events. Thus, while positive EV events that award playpoints cause this resource to flow into the economy like game missions do for gold/ISK in WoW/EVE, the surplus only goes to event winners, which is around 50% of the players, and only a smaller fraction of those players maintain a high enough winrate to obtain enough playpoints to not need to spend more money into the game.

Conclusion and Future Research

Through its unique set redemption feature that connects it to the real-world economy, we showed that MTGO has enabled its players to develop a robust in-game economy that has stood the test of time. In this case study, we described the economic model of MTGO in detail and compared with other virtual game economies. We argue strongly that the MTGO economy is both a prototype of the modern P2E game model and an exemplar of how such a model can be sustainable for decades. Despite its longevity and comparable complexity, the MTGO economy has received far less attention in both gaming and economics literature than virtual economies in other games such as World of Warcraft or EVE Online and P2E model games such as Axie Infinity, some directions for future research are identified as follows.

Throughout its existence, MTGO has been operating at least in the spirit of the more modern concept of P2E gaming. However, very little has been documented about the extent to which players have actually been able to generate income from playing, and moreover, how much the practice and outcomes of doing so have changed across the decades and how its viability as an income stream can differ across geoeconomic locations. While anecdotal evidence can be found from online forums where this topic has been discussed sporadically throughout years, a focused study can yield useful insights to inform microeconomic literature in general and economic models for P2E game development in particular.

We discussed the expected value of playing different events in MTGO and its handling of playpoints as a “free resource” in relation to how the game has remained stable and avoided hyperinflation, as well as the importance of set redemption in providing an outlet to the real-world economy and maintaining the value of staples within the MTGO economy. These discussions need to be explored empirically, potentially by examining actual transaction flows in MTGO servers or surrogates to this such as bot-chain trade records. This is another potential avenue for future research that can be explored with sufficient resources and partnerships with either bot-chains or Daybreak.

Finally, historical card prices suggest that MTGO's virtual card market is quite dynamic and opportunities for both short and long-term gains as well as risk of loss are ever-present. However, formal study into this is absent, and evidence on the extent to which optimal trading strategies have been identified and are being practiced is anecdotal at best. It is also interesting to examine player behavior around trading, and the extent to which players make logical decisions in relation to choices such as buying treasure chests to use for playpoints when the EV of chests exceeds market price.