Thieves Guilds vs Domain Rulers

Finally, my players have managed to pool their wealth, secure a domain and build a stronghold. They choose the most charismatic PC as ruler of the domain and they're starting to rack in good income. The party's thief, as expected, wants to start his own criminal guild in the domain. I, as the GM, have some doubts about the interactions between a thieves guild and the domain ruler.

It's mostly about income. If the thieves guild is very successful, stealing and smuggling left and right, shouldn't the domain income and morale be affected? Obviously, the population doesn't know that the guildmaster and their ruler are in cahoots, but once thefts and contraband start spiking, isn't it reasonable to assume that there should be consequences? Lack of tax revenue, merchants avoiding the domain, peasants protesting, etcetera.

Is there a rule for these interactions? Am I missing something? Should I just tell the thief player to build his guild somewhere else, to avoid creating problems in his friend's domain?

I'm unsure how to do it from a mechanical perspective, but from a roleplaying one, the thief could act as the eyes and ears for the ruler. Basically, the ruler takes some losses with the thief and his guild, but in turn gets the low down of other thieves and traitors doing worse things. As long as the thief doesn't go too crazy and doesn't get caught, it would be interesting to see him help take down worse corruption in the domain.

It depends on what you assume for civilization in your game. My assumption is that a criminal organization (or several) will almost always be present in any settlement large enough to have a market. If a thief manages to muscle out or take over the competition, it might not be any more distruptive than the previous situation - the gold is just flowing to the right person now. And as Opiyel mentions, if the thief is cooperating with the domain ruler, it may even be a stabilizing influence.  

As far as mechanical interactions, carousing and spying hijinks are great sources of information about illicit activities in the domain that could be passed along to the domain ruler for reward. Several other areas in the book provide ideas for operating inside a settlement ruled by someone the thief is friendly with.  It's *good* to have an in with the king!

So, basically, since there's always going to be crime in any settlement anyway, the party might as well be the ones profiting from it. Sounds reasonable! Thank you for the answers.

I'm late to this one, but this came up once before at least.  There aren't formal rules in the book, but several posters think you could reduce domain income by smuggling income, and apply other crime income as a penalty to domain morale equivalent to a tax.  I'm broadly in this camp myself, but I haven't needed to work anything out for it yet.

If you feel that's too harsh now, you might still keep it in mind if your thief player ever cracks the code on hijinks and starts spamming only the most profitable jobs.

Another thing to keep in mind is hijinks aren't just dropping gold coins out of the air to the sound of a ringing bell, they abstract something "really" happening.  I don't care much what it is on a regular carousing roll for 3d12x5 gold (except sometimes I will substitute some particular true rumor for the gold), but if someone takes an Assassination action and profits 5000 gold, that means some particular 5th level NPC just dropped dead.  That matters.  Or take Spying.  Yes it works out to gold, but what happened that was worth 2d12 x 100 x level of spy?  One time blackmail of an NPC?  Scouting the city for a rival power?  Some particular thing had to have happened, whether you work out what it was every time or not.

The thread you linked was a great read, thanks for sharing! The way I've been handling hijinks is that, as long as the hijinks do not directly target the domain ruler, domain revenue is not affected. Domain revenue will always be lowered by smuggling, because of lost tax revenue. Other hijinks only affect domain revenue if the guild gets too greedy. As long as the guildmaster shows restraint in his crimes, no harm is done to the local economy and everyone can prosper.

A while ago I attempted to calculate how much crime a city could tolerate. As long as the guild master stays within these limits and doesn't get too greedy, the domain revenue and morale shouldn't be affected. Extra hijink income should penalize the domain morale and cause problems to the ruling PC.

Just think of your main guy as Vetinari from Discworld. He's set up a Thieves Guild because this stuff is going to happen anyway, the city might make a dedicated revenue from it.

Or abstract it out so that assassination is protection payments, as is thieving itself. A particularly large roll is just the amount they managed to collect.