(Business 2.0) - It's morning, and your cell phone directs you to a nearby Starbucks--not just for a mocha, but also for a free vial of magic potion. Spotting a friend in line, you strike him down with your virtual scepter. Three thousand points to you.

That's the future according to Peter and Robert Sprogis, whose company is making location-based games for GPS-enabled phones. Inspired by a new FCC regulation requiring cell-phone companies to use GPS technology to report the locations of 911 callers, the father-son duo founded Your World Games in 2005 and filed a patent on games that send players on virtual treasure hunts in real-life locations via GPS. Their first title, The Shroud, is due this spring. To protect a farming village from enemies, players visit specific spots all over the United States (and race against other players).

GPS games are relatively cheap to make: $150,000 is typical. (Developers spend $10 million on the average videogame.) Meanwhile, mobile-entertainment revenues are set to hit $43 billion by 2010, and the marketing tie-in potential is tremendous. KnowledgeWhere, a Calgary, Alberta, company that has already shipped two successful GPS games, is now trying to sell retailers like 7-Eleven on what it calls "the cowboy effect"--herding players into stores using the games. How much would McDonald's (Research) pay to be the setting of your personal victory over evil? The Sprogises can't wait to find out.