As the nation goes to vote, the divisive issue of video game violence has finally made its way to the U.S. Supreme Court, which holds oral arguments today on whether to uphold a California law on the matter.

The case pits California Gov. Arnold Schwarzenegger and state Senator Leland Yee against the game industry’s trade groups Entertainment Software Association and the Entertainment Merchants Association. Lawyers for both sides are speaking to the Supreme Court now.

The video game industry has argued that regulating video games unfairly singles out the medium of video games in contrast to other media such as movies, music or books. They say their works are just as much works of art as those in other media and should be protected under the First Amendment’s guarantee of freedom of speech.

Defending a 2005 state law, the opponents argue that violent games are as harmful to children as pornography or illegal drugs. They want to make it a crime to sell a violent video game to minors. The case is by far the most important legal battle in video game history, and its outcome could determine how the industry is regulated in the future and what kind of games video game creators will make. The game industry has lobbied against 230 bills and only nine laws were passed; all of those laws were struck down in the courts.

Thorough discussions of the matter have appeared in publications such as 1up.com, CNET, and Joystiq. And one of the best discussions of video game violence is contained in the film Moral Kombat, in which I have a role. We also laid out the issues in our own story from Sunday. The oral arguments aren’t broadcast live, but we’ll catch up with the attendees and observers later today; eventually, the high court makes an audio transcript available.

Here’s the summary from our previous analysis, if you want to catch up:

The video game industry’s argument:

Beyond making the free speech argument, the Entertainment Software Association has long argued that parents are the best arbiter of what media their children consume. To aid parents, the ESA has created a voluntary industry-approved rating system that tells parents what kind of content they will find in a game. Critics have argued it’s far too easy for kids to circumvent the ratings by buying mature-rated games at retailers who don’t enforce the rating system.

The video game industry also does not concede the point that violent video games are harmful. It argues that California has failed to prove that game violence is harmful to children. This argument reflects the view that a game is just a game, or a form of play, and not a reflection of reality or a training program. It argues again that “offensive violence” can be found in all sorts of media, from Harry Potter books to Grimm’s Fairy Tales, with no ill effects.

Only if the state can prove that there is actual harm to children can it proceed to declare a special need to single video games out as a medium that must be regulated. Lots of studies have been cited by both sides about whether violent games cause children to behave aggressively. But, again, the game industry argues that aggressive behavior doesn’t necessarily translate into criminal behavior. Studies may show correlation between aggressiveness and games, but that’s a long way from showing causation of violence or harm. No harm, no foul.

Lastly, the industry argues that the definition of violence is vague. The California law defines extreme violence in video games as “killing, maiming, dismembering, or sexually assaulting an image of a human being.” But the ESA argued that games often include zombies, aliens, and cartoon characters that appear to be human but really aren’t. Past cases have brought up the degree of realism in the animations as being pertinent. Killing a hooker at point-blank range in a Grand Theft Auto game is far different from waging war against soldiers in Age of Empires. But the law would have regulators parse whether or not certain games are tolerable and whether or not they qualify as art. This is much like the “I know it when I see it” argument that the Supreme Court used to define obscenity in porn cases.

“The California statute is unnecessary, unconstitutional and would amount to unprecedented censorship of our First Amendment-protected speech,” said Michael Gallagher, president and chief executive of the ESA.  “For these reasons, a highly respected group of 182 civil rights organizations, elected officials, business groups, entertainment industry leaders, and social scientists filed amicus briefs asking the Court to strike down this law.”

The argument of the industry’s opponents:

Opponents argued that games that were once innocent or crude in their animation quality have evolved to become ultra-realistic “murder simulators,” or software training programs that are quite capable of turning young children into expert killers. As the games get more and more realistic, it’s harder to separate the fiction from reality.

For impressionable children, the games could encourage them to act out aggressions or fantasies that they encounter for the very first time in violent video games. Because games are such a powerful visual medium, the opponents argued that regulating them more than other media is appropriate.

Various sting operations conducted by the Federal Trade Commission showed that retailers are very lax about enforcing rules that prohibit the sale of mature-rated games to minors.

The opponents also say that the high court has allowed the regulation of pornography, particularly child pornography, allowing limitations on First Amendment rights when reasonable people can agree that the material in question is pornographic, that it is offensive, and that it lacks artistic merit. By the same token, the opponents say that courts and local communities (meaning states) should be quite capable of sorting through what is harmful and what is not when it comes to video games.

he history of the violent video game legal battle:

The regulatory cases that led to the showdown at the Supreme Court started as far back as 2001, when officials in the city of Indianapolis, Ind., drafted an ordinance to regulate arcades. They wanted to stop kids under 18 from seeing violent imagery in the arcades. The law was struck down in the U.S Circuit Court of Appeals.

Then, in another case, U.S. District Judge Stephen Limbaugh ruled that video games showed no “conveyance of ideas, expression, or anything else that could possibly amount to free speech.” The judge effectively said that games were not pieces of art worthy of First Amendment protections. It was a shot across the bow for game designers, who felt the judge didn’t understand the industry and shared a common bias against games in favor of other art. The court of appeals overturned the ruling in 2003, saying that the mere fact that artistic elements appeared in a novel medium made no difference as to whether those elements could be considered works of art. In other words, art is art, whether or not it appears in a painting or a video game.

The game industry then won case after case in Missouri, Washington, Michigan, Minnesota and Louisiana. It was a long series of defeats for anti-game activists such as Jack Thompson, a crusading lawyer from Florida.

But lawmakers kept on trying to craft laws that would be acceptable to courts. They were motivated by the outcry over school shootings where young kids inexplicably went off the deep end and shot their fellow students, culminating in the horrific shootings at Columbine High School in 1999. In that shooting, the killers made a video where they said the shootings would be like “f****** Doom,” after the seminal violent video game. Emotionally, those shootings put the industry on the defensive. The game industry argued that there were plenty of other failings, starting with parental supervision, that directly caused the shootings.

But even as then-ESA chief Doug Lowenstein defended the industry’s First Amendment rights, he encouraged game designers to broaden their repertoire beyond narrow, mature-rated shooting games to more diverse themes. There were rifts among game designers about what were the best works of art that developers could create.

With the California law, state Senator Leland Yee (pictured fourth from top) crafted a pair of bills in 2005 that were passed and signed by Gov. Arnold Schwarzenegger, who starred in plenty of violent films such as the Terminator and who made a lot of money from games based on his likeness. Yee’s law criminalized the sale of M-rated or Adults Only-rated ultra-violent games to minors.

The California law attempted to define “ultra-violent” games in detail, but critics said the definitions were still too vague. The law was challenged by the Video Software Dealers Association (the merchants who were later known as the Entertainment Merchants Association) and the ESA filed a complaint. In late 2005, U.S. District Court Judge Ronald Whyte granted an injunction suspending the law while the suit was pending. He made the injunction permanent in 2007 based on the grounds of First Amendment violations. He also said the state failed to prove that games were more harmful to children than any other media.

The State of California appealed, but the Ninth Circuit Court of Appeals upheld Whyte’s decision. In May 2009, after other states had given up their fights, Gov. Schwarzenegger appealed to the U.S. Supreme Court. In April, 2010, the justices agreed to hear the case. The high court asked both sides to answer whether the First Amendment bars a state from restricting the sale of violent games to minors. It also asked if the state is required to demonstrate a causal link between violent games and harm to minors.

After the oral arguments on Tuesday, the high court is expected to rule on the case before its summer recess.

The implications of victory or defeat:

In California, the court will either uphold the law or not. Minors under 18 would not be able to purchase violent video games with mature or adults-only ratings. Retailers will likely start strictly enforcing the law or face serious penalties.

Video game makers will likely be more cautious about the kind of games they produce, in order to avoid potential liability lawsuits. There could well be a chilling effect on the creation of violent video games. Some game makers may move to unregulated environments such as online games. The game rating and approval process will likely be more deliberate, resulting in delays of product launches. States may even try to derail product launches. And the video game companies would likely kick their lobbying into even higher gear.

If the video game industry wins, it could recover legal fees from California and continue the status quo where its developers can pretty much make anything they want. Opponents would probably commission more studies to show deeper causal links between violent video games and violent behavior.