Retired baseball pitcher Curt Schilling has a thing for MMOs. Having lots of time and piles of money lying around, he started his own game company, 38 Studios. He brought in all the big names. R.A. Salvadore is the Director of Creative Content. Todd McFarlane is the Executive Art Director. They even hired Travis McGeathy, the lead designer of Everquest. Schilling wasn’t messing around.

Since their founding in 2006, they’ve been working on a big, expensive MMO. We don’t know anything about it, only that it’s been in the works for six years. Investors tend to like seeing MMO development. After all, World of Warcraft makes more money annually than some small nations, so they have to be profitable, right? Right?

In June 2010, Rhode Island guaranteed a $75 million loan to 38 Studios if they would relocate there, and bring 450 jobs with them. That’s right, Rhode Island paid $167,000 per job. Oh, but they’d get their loan money back, right? Because MMOs never flop and always make lots of money, right?

To date, 38 Studios has only released one game, Kingdoms of Amalur: Reckoning. While it garnered moderate commercial and critical success, it was mostly completed when 38 Studios acquired Big Huge Games. Meanwhile, development of 38′s mystery MMO, codenamed Project Copernicus, continues to suck money away like a black hole. To date, the only things we have about its existence are words from the governor of Rhode Island and a trailer showing landscapes. Take a good look to the left: this might be all you’ll ever see of it.

Now, reports are saying that 38 Studios isn’t making payroll. When (not if) the studio implodes on itself, Rhode Island taxpayers will be on the hook for the initial loan, plus interest, making this move to manually develop the state’s economy a $100 million bungle.

The problem isn’t the loss of the studio (as much as we liked Amalur), but that the governor of Rhode Island thought it was a good idea to gamble with $100 million of taxpayer money. What makes this even worse is this loan was made after 38 Studios had four years of development without a title or screenshot to show for it. It’s one thing if private investors take risks: it’s their money. But this is playing poker with other people’s money, and despite all the good intentions in the world, you’ll always play a little more loose when your wad isn’t on the line.

There are many things that government shouldn’t do. Picking winners and losers is one of them. This is why. Folks, don’t let your government gamble on MMO developers.