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(If your answer has anything to do with the existence of the game, I am curious what you think of baseball cards.)

Yes, if you ignore the primary reason for Pokemon cards (the game), then they can magically be made to look like securities....

They then sell these things to people who are absolutely buying them with the expectation that they will go up in value.

No, completely false and this betrays a complete lack of understanding of why people buy collectibles. People buy collectibles to collect them; the value is in possessing the collectible; rare collectibles have value because it is harder to acquire them to add to one's collection.

With respect to baseball cards: they are collectibles. They have value because people collect them. To keep. They don't represent an interest in a common for-profit enterprise, and they don't derive their value from the efforts of others. The value of a card is derived from the card itself: the quality of the print, the rarity of the card in its respective printing run, and (most importantly) its physical condition. Popular players' cards are usually more valuable because more people want to own the card, not because owning the card will somehow make you more money from that player's efforts. (I still have a few baseball cards from when I was a kid. My Ken Griffey Jr card is worth about a penny because it is not in good condition; my mint Tim Belcher card is worth $1.35 because I never had a reason to look at it. But even though nobody knows who he is outside of hardcore Dodgers fans, some people out there still want to have a complete Dodgers lineup from the 1987.)

And this is why analogies to collectibles always fail for crypto bros: collectibles have value in themselves, but crypto only has value to the extent it might represent something else.

Ooh, thanks for this comment. I am not by nature a collector, but now I get it.

In a 50 mile radius around me there are 44 officially sanctioned Pokemon tournaments happening this month. If you look outside your social circle you'll find that a lot of people play the #2 TCG in the world

There were (maybe even are) a ton of people playing Axie Infinity (an NFT rip-off of Pokémon) also; does that mean it isn't a security, because some people actually play it? When I was a kid I certainly knew people (including myself) who played Magic: The Gathering, and yet most of the reason we all bought as many cards as we did was the lottery and collectible trading mechanic.

If you are willing to admit that there are "utility" to these cards, then what makes them different from cryptocurrency projects that do the same? If the game weren't so popular--maybe it is one of the numerous card games we wouldn't quickly be able to name that are all rip-offs of the concept, but didn't have the juicy IP of Pokémon--would you then suddenly consider it a security?

If a crypto token has any utility other than being a balance on an account that can be traded (which some do, or at least purport to do), I think it should be a lot harder to call them a security. As most of them are though, they don't actually exist other than as an entry in a ledger.

1) An investment of money 2) In a common enterprise 3) With the expectation of profit 4) To be derived from the efforts of others

It fails on points 2 and 4.

The common enterprise here is, similar to the argument against cryptocurrencies, the efforts to make money off of these cards; and the efforts of others here is the work being put in by the company which printed these cards to market them and design this game. If the company suddenly disappeared tomorrow--or began to mismanage their product line, potentially suddenly printing a bunch of cards they previously claimed were rare--the value of these cards would plummet, as people aren't just buying them for their prior established value: they expect that this company will defend their IP portfolio, release expansions with new content, and continue the efforts to market this game in stores.

If you disagree with this analysis, maybe you can show how this is (or is not) different to, say, Axie Infinity (a crypto company even I actually do feel is a security under this test--with centralized servers managing centrally minted NFTs--and which is very similar in nature to Pokémon as it is clearly a rip-off of their IP) or (to take a more standard example) Filecoin (one which the SEC claims is a security in their lawsuit against Coinbase)?

The common enterprise test doesn't work for things where the primary purpose for most owners is to own the card (for playing, as with Pokemon, or for display, as with baseball cards or most other collectibles). That a small fraction of owners acquire collectibles to trade in them as valuable assets doesn't taint the fundamental character of the collectible for everyone else. (Contrast to crypto, where everyone buys crypto for the purpose of ultimately selling it for higher value since it has no other use or reason for existing.)

Axie Infinity might run afoul of the Howrey test because of deliberate design decisions in the game which make it nothing like Pokemon: the ability to cash-out in-game currency, and the ability to loan out axies to other players and make money from their in-game efforts. Unlike Pokemon cards, which can be loaned out by players without any involvement from the company printing the cards, loaning out axies and earning money from other players' playing required the active involvement of the company behind the game. Moreover, making money (and especially making money pyramid-style from loaning out your axies to other players) was marketed as the primary selling point for the game for over a year, in contrast to Pokemon and baseball cards where the printing companies have never made claims about the value of the cards or the putative income that could be derived from engaging in a career trading them.

"Through the efforts of others" is the activity of the block chain itself, which is engaging in economic activity in pursuit of profit. So, Axie infinity and FileCoin clearly fall under that.

There's no common enterprise for ordinary collectibles. A truly analogous situation would be if pokemon represented a share in the pokemon company where you could participate in the profits derived from pokemon merchandising or something like that.

I play the actual card game and it is does indeed have a very popular competitive scene. In fact the most valuable modern cards are the ones that satisfy both of 1) appealing artwork and 2) high usage in competitive play.

For older cards though I disagree that the the pokemon company can just reprint more any time they want and dilute the value. The most valuable card out there is the original first edition Charizard from the 90s. They can never really reprint this card and have it be treated in the exact same way. And they do regularly "remaster" or reprint the original set from the 90s in order to cash in on the nostalgic 30-somethings who now have a disposable income (I believe there is another one coming later this year). But these are just replicas and not the "real" thing. Kind of like an original antique/book/currency/artifact vs a replica.

However I'd say at least 50% of the cards in any printed set are not useful in gameplay if you are actually trying to build as competitive a deck as possible, and are really only good for collecting a complete set. They will also print "alternate artworks" of common cards which are the exact same gameplay-wise but visually different and artificially much rarer.

I deeply disapprove of Magic and honestly think that it shouldn't be allowed to be marketed to children if cigarettes aren't allowed to be marketed towards children. But an enormous number of people actually play the (shockingly boring) game. And while there's little doubt that most of the cards being purchased now are going to end up worthless, the "long term" in Magic has already been reached because it's been around for 30 years.

Magic is being held up by the early cards having been driven up in price by millennial and young gen x players who became adults with real incomes and social lives that revolved around the game. WoC manipulates the market as much as it can manage, trying to maintain the hope that one can strike it rich, but they make their money off the new cards, not the used ones.

It's the same thing that happened with comic books and baseball cards: people who bought baseball cards in the 50s and early/mid-60s found themselves with small fortunes, because there were wealthy nostalgic baby boomers to sell to. People bought baseball cards in the 80s and 90s trying to cargo cult the price increases of those classic cards, and the people who printed baseball cards played into that. That doesn't make baseball cards a type of security where one is investing in the growth in the community that buys baseball cards any more than buying a washing machine makes you an investor in the growth of the community that buys washing machines, although washing machines also have a resale value.

Buying crypto gives you nothing but a line in the distributed accounts of the people who are coining crypto. It's nothing but an obligation. There's not even the token value that a 10 cent stock certificate might provide.

How can MtG be even remotely comparable to cigarettes? I would buy a comparison to lotteries or "loot boxes" due to boosters ...

Cigarettes are the only (legal) product it is illegal to market (in the US) except in very limited ways. The poster was saying that MtG should also be illegal to market, and therefore has to be compared to cigarettes in that limitation.

Much like if they had talked about an age limit on purchasing them, it would be related to cigarettes or alcohol (in the US).

> But an enormous number of people actually play the (shockingly boring) game.

Boring?! That's very subjective, don't you think? It's 'boring' in the sense that chess is boring.

There's an entire market around the cards, yes. You don't _need_ that if you just want to play and have fun, but people will try to min max everything. I used to play with borrowed decks since I figured out as a teen that building decks out of booster packs was far beyond what I was willing to spend.

Stellar point. I especially like the notion that cargo culting historic price increases is involved. You could look at so much of the cryptowhatever space as a series of cargo cults around different aspects of financial history. It seems like a crucial ingredient in any bubble, really.