A Lesson In Economics: What Can Economic Theory Tell Us About Magic Online Trading, And Vice Versa?

Supply. Demand. Scary concepts? Not really. If you want to understand why Magic Online is an economic market and thus ace your Economics 101 exam, step right up! And if you’re trying to figure out why a Foil Pernicious Deed is worth 50 tickets or what’s going to happen to your Birds of Paradise once 8th Edition comes out, we’ll show you that, too!

For years, Magic players have had to put up with jibes from their friends about the amount of money they are spending on bits of cardboard; now they are getting their own back by taking jabs at the new breed of Magic Online addicts. Magic Online has managed to emulate nearly everything, both good and bad, from paper Magic – but what I will specifically discuss in this article is the economy of Magic Online. Hopefully by, the end I will have given you an insight into why things are valued the way they are online (and maybe even offline as well).

The Ticket Economy

One of the most frequent questions you get from Magic Online newbies is,”What the hell are tics (or tix)?” Well the simple answer is that it is slang for”Event Tickets.” These virtual tokens can be bought from the online store for $1 each, and were originally used as entry fee for tournaments. However, soon after the game went live, a trend grew where people would use these Event Tickets as a currency. Instead of trading cards for other cards, people would trade cards and boosters for”tics” – which, in turn, they would then spend on other boosters and cards that they needed.

As a currency, the Event Ticket is surprisingly good. The only way tickets can enter the system is the online store, from which they cost exactly $1. At the same time, there is a steady stream of tickets leaving the system, as at least two are needed to play in every sanctioned tournament. Together, this provides an automatic stabilizer for the price of Event Tickets. One ticket can never be worth significantly more than a dollar on the secondary market because the option is always there to buy the tickets for $1 from the online store; on the other hand, if a ticket was ever worth less than a dollar, people would be less likely to buy them from the store and would instead sell cards and boosters to get them. As tickets are constantly leaving the system through tournaments, eventually enough would leave so that there would be a shortage that would push the price up. The end result is that unless Wizards fundamentally changes something, the Event Ticket will always be worth $1 or thereabouts. This makes it an excellent currency, as people are happy to hold onto something they know will hold its value.

A lot of people are unhappy about the”Ticket Economy.” The most common argument you hear is,”I just want to trade casually on a card-for-card basis, but everyone who has cards I want wants tickets for them.” I can sympathize with this argument, but I certainly don’t agree with it. The option to trade card-for-card is still there; it’s just that people tend not to use it because it is inefficient.

Let’s illustrate this. A mythical player, Dave, is looking for a fourth Exalted Angel for his Slide deck. Another player, Chris, is looking for a Ravenous Baloth. Dave has a spare Baloth and asks Chris if he is willing to trade one of his Angels for it. Chris has three Angels, and is currently not using them as he is running a Beast Bidding deck. However with Block Constructed season on the horizon, he realizes that at some point he will probably need all his Angels (and possibly another one) so he is reluctant to trade one away. Also, his latest copy of Scrye tells him that Angels are worth a bit more than Baloths and so he is getting the bad end of the deal. In the end, he mumbles something to Dave about possibly needing them for a deck and pulls out of the trade.

Now what would have happened if these two players existed on Magic Online instead? Dave would have sold his Baloth for three tickets and then looked around for a reasonably-priced Angel. Eventually, he would find one selling for about five tickets (possibly Chris’s Angel) and would buy it for five tix. Meanwhile, Chris would just buy a Baloth from somewhere, selling an Angel if necessary to pay for it. If it turned out he needed the Angel back, he could always buy another one.

Simply having a solvent currency that is widely accepted solves the problem. You may ask that if this is the case, why don’t players trade with hard cash in paper Magic? Although people are happy to buy cards from StarCityGames.com for cash, most transactions between two players are done on a card-for-card basis. This is an interesting phenomenon – and the reason is probably more to do with tradition than common sense. The average Friday Night Magic player has always been fairly young and does not have much cash available; therefore, they can use that they don’t need as pseudo-cash. These players have grown up with the impression that it’s somehow fundamentally wrong to sell cards to other players for cash. Trading in cash would be confined almost exclusively to traders. It’s an unfortunate equilibrium, but it seems that is what we are stuck with. Because of the anonymity of the internet, Magic Online players quickly found no shame in asking for tickets instead of other cards. I think it’s better this way.

Economics 101

So if you have a product that people have individual valuations of, where there is solvency, a widely recognised currency, and a medium for trade, you have what economists call a”market.” When you have several different products (in this case, different cards and boosters), and hence several different markets, then you have what is called an”economy.” Obviously, it’s very different than the economy of a country, but it has many of the same features and operates by many of the same rules; therefore, I have no problem at all with using standard economic rules to explain and predict behaviour of prices on Magic Online.

Now, the root of nearly everything in economics is the supply and demand model. To get this model to work, we have to assume that for any given person, there is a certain price that is the maximum they will pay and the minimum they will sell at for any given card or booster at any given moment. This sounds simple, but it is important to understand this fully because this is the basis on which everything else rests. Those of you who majored in economics may want to skip this section.

For example, at the moment I have one Ravenous Baloth. I haven’t really gotten into Block yet, but there are a few Standard decks starting to emerge that use Baloth in either the main deck or sideboard. Because of this and the impending Block season, I would quite like another three Baloths. At the moment, they are trading for about three or four tickets – so I could spend $10 and get the three I need. The thing is, at the moment I prefer playing Limited and spend most of my time there, so it’s not exactly urgent I get the Baloths. If the price was only two tickets, I would probably get them… But it’s not worth it at the moment. So let’s say for me, the following ticket-to-Baloth exchange exists.

Price of Baloths (in tix)/Number I would buy:

1: 3

2: 3

3: 0

4: 0

5: 0

6: 0

This is my demand schedule for Baloths. If you take the demand schedule of everyone on Magic Online and add them together, you get an aggregate demand schedule. This shows how many Baloths the market will demand at any given price. Note this has nothing to do with what people would consider a”fair price” or how much people would be prepared to pay if they wanted them (but don’t at the moment). It is just made up of how many people will actually buy at any given price.

Now let’s look at the other half of this, the supply side. How much would the price need to go up for me to sell my Baloth? I tend not to sell Constructed-worthy cards lightly; I have a lone Call of the Herd still sitting in my collection that I have never really used. Therefore, I am not really an active seller in the market for Baloths. However, if the price went up to ten tickets, I would probably sell it as that would almost finance another draft. A lot of people, however, would sell their Baloths at a much lower price. How many Baloths a person would be willing to sell at any given price is their supply schedule. In the same way as for demand, if we add up all the individual supply schedules we get the aggregate supply schedule.

So if we take the supply schedule and the demand schedule what would that tell us? Well if we make the correct assumptions, quite a lot. Let’s see what these assumptions are:

  • Demand will always fall as price rises, other things being equal.

  • Supply will always rise as price rises other things being equal.

  • There is a price low enough that everyone would want to buy (even if it is zero tickets)

  • There is a price high enough that everyone would want to sell.

Let us assume these assumptions hold as they seem reasonable. Now picture a graph with”price” on one axis and”quantity” on the other. If you mapped the supply and demand schedules on the graph, you will get a downward sloping demand curve and an upward sloping supply curve. At some point, these lines will cross!

This crossing point is important, as it is the price where exactly the same quantity is demanded as is supplied. This is the price at which the market will settle. If the price is any higher, then there will be a shortage of buyers and sellers will be forced to lower their price; if the price is lower, then there will be a shortage of sellers and so those that do exist will be able to raise their price. Therefore, unless circumstances change, the market will always return to this equilibrium at the price where supply=demand.

So moving out of the world of economics and into the world of Magic Online, what does this tell us? If we go back to our Baloth example, we have already stated that that the current equilibrium price for Baloths is between three and four tickets. This is fine – but given the number of trading platforms on Magic Online, it’s a little confusing. A trip to the trading post will show that a lot of people advertise that they are selling Baloths for five tickets, but a lot of people are buying them for one or two tickets. This makes sense, as what you are seeing are the perimeters of the market. If you want to find the true price of a card, check the buying and the selling advertisements and take a rough average. This is not perfect, but is a good approximation.

Also, we have something called the auction room added into the mix. This is a player-run room (type /join auction in game) where cards are auctioned off to the highest bidder. Here you will find that (currently) Baloths auction for about two tickets. In fact, for any card, the price will be slightly cheaper in the auction room than on the trading post. This is because another resource is being spent other than tickets – and that is time. Sellers can save time by auctioning their cards, and so their supply curve shifts out (the quantity supplied is higher at any given price). Buyers may have to sit around for ages to get what they want, so their demand curve shifts in. The result is that they cross at a lower point, creating a lower equilibrium price.


So if all this were true, then surely there would be no point in being a trader on Magic Online. If everything is bought and sold at the equilibrium price, then there is no profit to be made. I suppose in the classic sense, traders don’t really exist at all on Magic Online; you can’t buy a crate of cards and sell the singles off, because the crate would cost more than the singles inside are worth. However, there are several types of traders that can and do exist (and even thrive) on Magic Online:

The Fringe Trader:

The fringe trader will buy from some players and sell to others at a slightly higher price. He can do this because he is prepared to spend time searching out bargains in the auction channel or the trading post, and then spend more time selling to people who need something fast. These are the traders that are ten a penny on the trading post with big buying and selling lists. They often put a lot of time into trading for not a lot of reward (it works out to about a quarter of the minimum wage). However, as they seem to be enjoying themselves, we don’t have the heart to tell them.

The Drafter:

Not really a trader, but he plays about 15,000 drafts a day and as a result has a lot of cards that they are looking to trade for tickets – which he can, in turn, trade for boosters to draft again. Sometimes he can make money from this, other times he just loves drafting and is trying to subsidise his habit like a crack addict selling”The Big Issue.”

The Con-Man:

They try to make a profit by trading with people who don’t know the true value of their cards. An experiment was conducted recently whereby someone pretended to be a newbie and posted a message saying they were looking to trade casually with a small collection. The result? A lot of scammers trying to trade for that”pretty foil Wrath of God,” offering the Magic equivalent of a discarded newspaper and half a hotdog in return. I’m not gonna rant about these people that drive newbies away from the game, but let’s just say they exist and leave it at that. (He also cited an article on MTGOworld, but at the time their server was down – The Ferrett)

Determinants of Supply and Demand

Right; now we get onto the useful stuff. Now we know how prices are determined, we should be able to explain trends in prices – and maybe even predict what is likely to happen to prices in the future. First let’s go over what should be obvious from what we have discussed so far.

  • If demand increases at any given price, price goes up

  • If supply decreases at any given price, price goes up

Therefore, if we can work out what the main effects on supply and demand are, we should be able to predict prices. Let’s start with supply.

Currently, there is no way in which singles enter the market as a single. Every card that enters the Magic Online economy does so because somewhere along the line somebody has opened a booster and pulled it. Therefore, the more boosters that are opened of an expansion, the more cards will be in the market from that expansion. If more cards are in the market with the same number of users, then it’s fair to say that, on average, people will have more spares and hence will be looking to sell more.

So what determines how many boosters are opened? The answer is very simple: Drafts! Such a large proportion of boosters are opened in booster drafts, so the real question is,”what sets are drafted the most?” The answer to this is whatever the current cycle of cards is (at the moment, Onslaught and Legions).

Supply Factor 1 – Supply of the current cycle of cards will steadily increase while the supply of older sets will increase far more slowly.

Okay so far – so what about individual cards within a set? Basically, supply of a card can be thought of as all copies of that card which, at that particular price, its current owner would like to sell. First of all, a person is more likely to have spares of a card that is more common. However, how much someone will want to keep a card is determined largely by how useful it is. A lot of people may be trying to collect a complete set for posterity, but even then they will probably be looking for one of each card as opposed to four of each tournament-worthy card. Therefore, tournament cards and good casual cards will be in tighter supply than other cards.

Supply Factor 2 – The rarer a card is, the lower the supply (obviously this also counts for foils)

Supply Factor 3 – The more playable a card, the lower the supply

Now looking at the more complex factors, we have set rotation to contend with. This is quite difficult to predict. I was going to say that sets that have rotated out of Standard will have a higher supply as people will look to offload their now fairly worthless cards. However, since the rotation, IPA cards have, if anything, become scarcer. Also, as far as going out of print is concerned, this hasn’t happened yet so it’s difficult to predict. However, I am going to do the honourable thing and take a guess.

Supply Factor 4 – When a set goes out of print or will go out of print shortly, supply of the playable cards in that set will drop significantly.

Between these four factors, we have covered most of the important reasons for differences in supply. Now, let’s look at demand. The demand side is simpler than the supply side as we will see. Firstly, and most obviously, cards that are in tournament decks will be in higher demand.

Demand Factor 1 – The more current tournament decks a card is in, the higher the demand.

This doesn’t completely explain the demand for any given card, but it goes a long way. It is filled out more by the following factor.

Demand Factor 2 – If a card is not currently tournament worthy, demand will be higher for it if it is good in casual play or has the potential to become tournament-worthy.

Note that these two factors are pretty much the same as supply factor 3 above. This means that these effects provide a double whammy of increasing demand and decreasing supply, which has a two-fold increase on price.

Demand Factor 3 – Demand is higher for foil cards than non-foils, especially if that card is a tournament card.

A lot of people will take issue with this because they will say they never collect foils – or even hate foils. However, remember that we are talking about demand”at any given price” here. Would you play with foils if they were as cheap as non-foils? I know I would.

The clause about tournament cards is included because of the fascination some people seem to have of entering tournaments with a deck made entirely of foils. This still leaves gaps as to why some tournament rares are worth a lot compared with others, and this is partly explained by the following:

Demand Factor 4 – Cards that have no close substitute are valued higher than those that do.

This is fairly logical. You can replace the Tephraderms in a Beast Deck with Gurzigosts and the deck will still be okay. It’s much harder (read: impossible) to replace the Upheavals in a Tog deck.

Putting It To The Test

We now have a pretty good economic model of what determines prices on Magic Online – but it is of no use at all unless it can explain the prices we are currently experiencing in the market. What I will do now is ask several questions that may be asked about current prices and see if this model answers them.

Q) Why are Wrath of God and Birds of Paradise valued so highly?

A) Both of these cards regularly sell for 15 tickets or more on the trading post – so what makes them so special over other tournament quality rares?

Well first of all, look at all four supply factors: Both these cards are rare, from 7th Edition (which isn’t drafted all that often), usable in a number of tournament decks, and are even in a set that will soon be rotating out. Although both will be in 8th addition (at least I assume Wrath will be), some people may consider that the 7th Edition versions of these cards may be worth more in the future and may be reluctant to trade them. On the demand side, note the factors above and that neither have good close substitutes. Trust me; I have tried Akroma’s Vengeance in a Blue/White control deck instead of Wrath, and it was horrible. And no other card provides turn 1 colour fixing the way birds do.

Q) What about Coat of Arms? This can sell for 10 tickets and isn’t even a tournament card!

A) This is correct – but what we have with Coat of Arms is the ultimate in casual play card. All the casual players I know love it! With any kind of tribal deck, it can spell”game over.” Plus, it is from 7th edition and is so in shorter supply (see supply factor 1), and the price was driven up speculatively as people bought them thinking that they would become important because of the tribal theme in Onslaught. Some other cards such as Reya, Dawnbringer also have seen similar price rises independent of tournament decks.

Q) Although valued very highly to start with, Onslaught rares have steadily dropped in price since November – why?

A) This is down to Supply Factor 1 again. Because Onslaught is being continually drafted 24/7, the supply of Onslaught rares is steadily increasing while demand is fairly stagnant and may even drop once most Constructed players have their play sets. If supply increases with no corresponding rise in demand, price will fall.

Q) I heard of someone selling a foil Pernicious Deed for 50 tickets. What the hell?!

A) Pernicious Deed is a tournament rare (albeit only in Online Extended now) and in a set that will shortly go out of print, making demand high. The fact that comparatively little IPA has been opened compared with other sets means that a foil Pernicious Deed is a very rare thing indeed. This combination of high demand and low supply makes price go through the roof.

Q) Why are the contents of an Onslaught booster worth, on average, less than the booster? Surely they should be about the same.

A) This is true; the content of an Onslaught booster is worth around two or three tickets on average, while the booster is worth three to four. In paper Magic, the reverse is normally true as it is worth paying extra for the certainty of what you get. The factor online that causes this to change is that you can supply your own boosters for sealed deck and draft events. This gives unopened boosters a value independent of the cards inside and increases demand for them. At the same time, Limited players want to sell their opened cards to raise more tickets to buy more boosters, causing the supply of singles to be high. As a result, an unopened booster is a more valuable commodity than an opened one and hence sells for more tickets.

Q) Why do some things that can be bought in the online store sell for a higher price on the trade boards? For example, three 7th edition boosters can be bought in the online store for 10 dollars but can be sold on the trade boards for 12 tickets.

A) This isn’t actually a supply/demand question, but one of liquidity. Money can easily be turned into tickets (via the store), but not the other way around. Therefore, people who have tickets (through selling singles for example) may be willing to pay over the odds to get boosters and not have to run up their credit card bill any more. Plus, of course, you have the people who have maxed their card or use their parents’ cards, and so have no choice but to buy with tickets.

The same rules can be used to analyze pretty much any similar questions that come up. Love it or hate it, it is dull old economic theory we need to solve the mysteries of card prices on Magic Online. Once you understand the rules of the game, you can predict the outcome and this can lead you to a significant advantage. Consider the following:

Once 8th edition is released, loads of people will want to get their hands on the new cards. As a result, the supply of Wrath of God and Birds of Paradise will increase by a large amount and this will inevitably cause the price of these cards to fall. If you are not going to use them imminently, it might be worth selling them now while the price is high.

Wizards are planning a big marketing push for Magic Online in the summer. This is likely to result in a lot of new players entering the game who will want to buy tournament staples (read: demand increase). A few months later, Mirrodin is released meaning supply of Onslaught cards will dry up as people draft the new set (read: a supply decrease). Someone with spares of things like fetchlands will be in a very fortunate position at this point.

Look at Pro Tour: Venice and see some of the cards that were being played that are not used in Standard. When Block Constructed season starts, a lot of these cards will be in high demand.

Of course, these predictions may be way off base, but by looking at the current market, I bet I am not far off. By knowing the present, you can predict the future….


(Piemaster on MTGO and most Magic forums)

P.S. Thanks to all the people who PM’d me in game telling me how much they liked my last article. It gave me a lovely warm fuzzy feeling inside.