When play meets markets
You may have seen this YouTube video from a few years ago featuring a kindly-sounding gloved man, a camera, and a bout of excitement. With six million views, it’s astonishingly popular for something related to Magic: the Gathering. But it’s fairly easy to see why—the man’s unbridled joy at opening the crown jewel of his hobby is infectious, like watching a child open gifts at Christmas. This is exactly how it would have happened a quarter of a century ago— except, at that time, not everyone understood just how powerful this card would be.
The Black Lotus and the Reserve List
This flower with strange holes—the famed Black Lotus—wasn’t immediately seen as the powerhouse of competitive Magic that it is today. The attention grabbers tended to be, and still are, the flashy cards—the elder dragons or spells that let you go back in time. Meanwhile, Black Lotus is a flower, and all it does is give you more mana—the base resource of the game. It isn’t immediately exciting, but when you realize its potential the immense possibilities it affords become apparent—it provides the resources to cast a bevy of powerful spells far more quickly than you would normally be able to.
Useful cards printed today can range in price anywhere from a penny to $50 or more in exceedingly rare cases, but certain older cards cannot be reprinted. Magic: the Gathering creators Wizards of the Coast (WotC) made a pact with players in 1996 called the “Reserve List”, promising they will not reprint specific cards—a response after the release of the set “Chronicles” in 1995 caused outrage from collectors because of tanking card prices on the secondary market. This promise continues today and is integral to understanding the Black Lotus.
Certain information, like the current number of players—estimated to be anywhere from 10 million to 20 million—or how many of each card is printed today, is entirely up to guesswork to those outside of WotC, but the company has released data on how many of each card they printed way back in the early 90s.
Black Lotuses were printed in Alpha, Beta, and Unlimited (all long ago in 1993), and we can see their numbers were pretty small compared to the 43 million cards total at the time. 22,800 total ever printed isn’t even counting how many might have been destroyed over the years. That rarity is part of the picture—that card OpenBoosters cracked? He sent it to a company that grades cards and it came back a 9.5/10. A similar Lotus once sold on eBay for over $87,000.
Condition matters greatly for these cards. Even fresh out of the pack, some aren’t perfect. Note the investment in the description—we’ll get back to that later. It’s worth noting, though, that most Lotuses aren’t going to fetch this kind of price.
A brief history of the price of the card before I get into the dark stuff. The earliest price I could find was in an issue of Scry Magazine, a publication specializing in prices of cards, from 1994, which priced an Alpha Lotus at $30.
Fast forward to the next price I could find, this time in a Scry chart from 2002.
A tenfold increase, but still only a fraction of $80,000. It isn’t until 2012, when sites started tracking prices and sales every day, that we get good quality data There are a number of places to find graphs, but MTGStocks has the longest historical records.
Brings back all of the terrors of economics class, doesn’t it? In July 2012, the earliest date they have, the card is going for a modest $1,300—or, you know, just rent for a month in a major American city. The price slowly but surely rises until 2014 when copies start to stop circulating and it hits $5,000. At this point, the Black Lotus is twenty years old and the most iconic image in the game. And Wizards won’t ever make it again.
For Every Market, a Sub-Market Grows
Wizards can’t even openly acknowledge the existence of the secondary market at the risk of getting sued for selling what are essentially lottery tickets to minors, since powerful cards tend to be rare and contemporary players often buy boxes of booster packs when new sets are released in the hopes of obtaining them to be able to play in tournaments for prestige or prizes. While friends would be fine with cards printed on paper when playing casually, sanctioned events sponsored by WotC require the official cards. Players found using proxies or counterfeit cards face exclusion from the tournament or even a ban from playing official Magic.
And here’s is where things start to get shady. Part of the price increase of the card is merely due to price correction—it was worth more than it was being sold for early on. But this is also the rise of what many on reddit and similar communities consider the boogeyman ruining the game for everyone else: speculators.
I became involved in this community back in 2014. I saw it as a way to learn more about what was still a fairly new hobby for me, and to hear about valuable cards and what drove their prices. In writing this piece, I messaged one of the moderators of the community—/u/hp94—about its goals, and he told me that the subreddit was all about “efficiently educating its readers so that there is a more rational market.”
It was fairly innocent at the time: people would ask if a card was at its peak price or floor or if a spike in price was going to happen because a new deck was doing well. Then, in 2016, some people began buying out the stock of particular cards on the major secondary sales websites in order to inflate prices. Some speculated that these larger stores were doing this themselves around 2014 to make that initial rise happen, but there’s no confirmed evidence of this.
As card prices began to increase, community members began to realize what was happening—individual collectors were buying up cards to drive up the price, which they could then capitalize on. Craig Barry was one of these individuals. His mass purchases of the powerful Moat card drove the price from a little under $400 to $600, and in a 2016 interview, he explained his actions as the natural outcome of a free market:
“If you were playing Miracles [a powerful deck archetype] in Legacy you should have had it for forever. And if you didn’t have it could have gotten it before; all I did was expedite the process.And it raised the total cost of the deck by a few hundred dollars. So if you were going to pay $2,500 for the deck before, you’re going to pay $2,800 for it now. People are complaining, but they’re still going to buy them. It’s like taxing sugary drinks—people will complain but they’ll buy them anyway. It’s the same with Magic.”
Barry’s behavior earned him the title of “the Martin Shkreli of Magic”—alluding to a spike in price of an antiparasitic drug used in HIV management patients driven by Shkreli’s company—but this was short-lived. Two days after this interview was published, the real Shkreli got into Magic himself.
Despite community anxieties around these developments, Wizards kept the reserve list throughout the trend of buyouts that continue to this day, which have raised the prices of even marginally playable cards on the reserve list to over $100. I asked the same mod if they thought their community might have been responsible for the buyouts, but he was skeptical:
“This subreddit doesn’t direct action, only discussion, and there’s no way the group talking on reserve list cards correlates to them being responsible for them being bought out. I believe a small (5~) number of larger stores were the initial catalyst, and now there are individuals participating as well.”
The Invisible Hand
It’s becoming clear that cards that are unable to be reprinted are going to continue to grow in price until something happens—the economy stabilizes, or else the bubble pops. In the meantime, people just now getting into the game without exceptionally deep pockets are de facto excluded from the Legacy format, which consists of almost every card going back to the game’s beginnings, and which can be very rewarding—recreationally and financially—to play. I wondered what /u/hp94 had to say about this.
“It’s a real conundrum as there are two main rules to systems like this in real life, and as MTG is actually real life too. Anyone can participate in any way that doesn’t cause an inordinate amount of dispossessed people to stack up on the bottom. Anyone can participate in any way that doesn’t ruin the system for others participating, such as cutting the rungs off the ladder after they find some way to the top.
“So although 99.9% of people won’t own the reserve list cards they want—such as Power 9—there’s still enough fairness that people aren’t becoming dispossessed. People that own Power 9 typically don’t get it through means that break the system like lying, cheating, or stealing. In that sense it’s perfectly fine that there are cards too expensive for some people. Although it might suck for some people it is still a good structure overall.”
This is a very logical response rooted in mainstream economic theory, which should be expected from someone so heavily involved in a community that seeks to speculate on prices for trading cards. I don’t believe the subreddit is responsible for the buyouts, nor are any of the auxiliary communities like the Brainstorm Brewery podcast or finance sites like Quiet Speculation. I have seen some talk about many of the recent buyouts being related to money laundering, akin to the spike in BitCoin, but that could very well be a conspiracy floating around the hivemind of reddit.
It is fair to assert, however, that collectors have begun to think of pricy Magic cards as investments, and that older cards have become prohibitively expensive. The people I know who own them have had them for years, leading to a running joke amongst Magic players—if you make it past two years, you’re in it for life.
But scarcity alone can’t explain the prices rare cards command. It’s just a game after all, right? But unlike many games, Magic also provides a livelihood for many people.
Rare Cards and High-Level Play
There are the obvious examples like the vendors who sell sealed product and single cards, the writers who keep players up to date on the game, and of course Wizard’s employees. But at the competitive level, there are players who work the tournament circuit for cash prizes—and the higher-stakes ones are often those which require powerful older cards. Twitch streamer Caleb Durward had this to say about his time as a “tournament grinder”:
“Hard to quantify [how many hours a week I spent] since there was a lot of swapping testing help with other players. Some weeks it’d be zero, others over 8 hours a day. Usually testing was only a few days per week since you’d be traveling on Friday and recovering on Monday. Travel time was between 5-11 hours to get to various tournaments, and if there wasn’t something real to travel to you’d hit up as many local events as possible. Traveling was usually trying to jam as many guys into a car as possible, sleep on a stranger’s couch, anything to save money and make the margins slightly larger.”
At this level of play, Magic becomes a full-time job in a similar vein to high-level poker. But the lifestyle is a precarious one, Durward explained:
I started grinding to put food on the table, and I would not have gone as hard for as long as I did if I couldn’t pay rent off if it. Half the time I would’ve made more working minimum wage but I would’ve been miserable, so the trade-off for mental health was worth it. Somehow it turned into a real streaming career, but that wasn’t expected.
Durward now streams on Twitch six to seven days a week for about 2,000 people. But his success story is by no means typical, as hundreds of players go to tournament after tournament hoping to catch their big break.
Compare Magic to another world of competitive gaming, the Fighting Game Community (FGC). Fighting games are more about investments of time than money—you only need a console and the game you’re attempting to master, not a deck that costs hundreds of dollars and which may rotate out of play in a couple of years. It’s no surprise, then, that the FGC is more diverse than Magic in many ways—the winner of Evo 2018’s Dragon Ball FighterZ tournament was SonicFox, a black, gay furry whose victory was widely celebrated on Twitter.
The Strange Case of Magic
Wizards has been increasingly more progressive with its product, recently featuring a transgender character, two openly gay characters, and a set taking place on a what-if land where the United Kingdom never colonized the India-like plane of Kaladesh. But none of this does anything to address the economic barriers to high level play.
Unlike fighting games, or poker, or esports, Magic is a game built around markets. What started as a simple card game has evolved into a complex economic system, with scarcity tied to access to competitive play and even infiltrating casual games, to the point that players playing with their friends have increasingly turned to printing copies of rare cards to enjoy formats that would otherwise be prohibitively expensive. And while virtual collectible card games like Hearthstone have attempted to cut out secondary markets by not including a trading or selling feature in their software, it would, at this point, be impossible for Wizards to do the same.
Returning to the Black Lotus, it’s now easy to understand someone’s joy at opening one in a sealed pack. It represented not only a huge return on the investment of the old pack of cards, but a possible route into playing competitive Magic at a high level. If Wizards shuttered, the Black Lotus would become more or less meaningless and the secondary market would most likely collapse. But while it continues to maintain the Restricted list, fund high-profile tournaments, and avoid acknowledging the existence of secondary markets, Magic will remain a strange game where passion, fun, and greed are nearly inextricable.