It is a common point made by many today, but it is unlikely that the next five to ten years will see the IRS taxing virtual items...until they are monetized into real world currency.  At that point, current law already requires you report and pay tax.  What is likely to occur is greater scrutiny and oversight on the transactions in real-currency conversion.

One important thing many people do not consider in this line of thinking is that the items you "win" are very often still owned by the regime, like World of Warcraft, and legally only "rented" to the user.  The fact that a user can transfer use (usually against the license agreement of the regime) is not a factor in taxation - irrespective of the fact that in most cases these transfers are done in violation of license and under the table.  Only when the IRS forces direct scrutiny, reporting and enforcement of tax on all eBay transactions are we going to see anything approaching virtual item taxation.  Even in environments like Second Life, one may argue that the value of the item which one does legally own (at least one may own a copyright to an original item in Second Life), its value is derived solely from its use in the virtual world in question, and therefore is subject to a transnational regime operating across international borders.  Buy a good and have it delivered across state lines - you don't pay tax.  Were a state to attempt taxing items before they were converted into local income, it would become instantly stymied in the question of whose jurisdiction governs taxation when the virtual items exist on computers and servers owned by players and operators across international lines.  Far easier in the short to medium term to simply tax gains on virtual items when they are converted into real world income.