Second Life Gambling Ban Gets Mixed Reaction

Some residents feel cheated by rules that ban wagering on games of chance or real-life organized sporting events if they provide a payout in Linden Dollars.

Thomas Claburn, Editor at Large, Enterprise Mobility

July 26, 2007

7 Min Read

Second Life, the virtual world that rose to fame in large part because of the freedom it offered its residents, has once again found it necessary to curtail the activities of subscribers to accommodate the law.

On Wednesday, Robin Harper, VP of community and support, writing under the Second Life surname "Linden," announced a new policy to restrict gambling in Second Life to accommodate "conflicting gambling regulations around the world."

The new policy bans wagering on games of chance or games that rely on the outcome of real-life organized sporting events if they provide a payout in Linden Dollars, Second Life's currency, or any real-world currency or thing of value.

"As you review this new policy, please remember that Resident compliance with real world laws has always been an integral part of our Terms of Service," said Harper in a blog post.

The abrupt ban left casino owners like Anthony Smith, of Brighton, England, scrambling to figure out what's next. Smith, who goes by the name "Anthonymark Alcott" in Second Life, ran a business called Casino World on a full server -- known in Second Life jargon as a sim. He said he'd invested about $3,800 in the business, plus 12 to 14 hours per day every day since founding the business in February.

"I do not know if I trust Linden Lab anymore to work with," he said. "The way they do business is not good. They change their policy and advise if you don't comply immediately, you get all your assets frozen, or even worse, dissolved. Any other company in the world who treated their clients like this would not last long."

Earlier this year, Linden Lab invited law enforcement officials to visit casinos in Second Life in the hope of receiving some guidance from authorities about the legality of virtual gambling. A company spokesperson couldn't immediately say whether those visits played a role in shaping the new gambling policy.

The spokesperson said that Linden Lab was looking "to broaden the acceptability of the platform globally."

This is not the first time that real-world laws have prompted Linden Lab to take action in Second Life. In May, for example, company officials banned a man and a woman from the virtual world after a reporter from a German television station provided evidenceof in-game sexual activity depicting a child avatar.

In fact, Second Life is a lot less free than many of its residents believe. Some of the misperception about the virtual world's freedom may be due to Linden Lab CEO Philip Rosedale's past characterizationof Second Life land as being "owned, controlled, and built by the people who are there." Such ownership and control isn't enough to stop Linden Lab from seizing virtual assets for what it claims is a Terms of Service violation, as Second Life resident Marc Bragg found out last year. Bragg is suing Linden Lab to recover about $8,000 worth of virtual assets that Linden Lab confiscated for what it deems to be a game exploit.

As for the gambling restrictions, some Second Life residents welcome the new rules.

Benjamin Duranske, a writer and an intellectual property attorney, praised the decision on his blog Virtually Blind. "It feels, to me, like Linden Lab grew up a lot here," he said. "For the first time in a long while, a potentially controversial policy statement has obviously been at least vetted, and probably written, by the legal department. Frankly, it reads better than a fair number of laws I've had to parse. So at the risk of alienating a lot of readers, I'm going to say… well done."


Other Second Life residents expressed similar sentiments, citing problems with being cheated by unregulated in-game casinos.

But many Second Life residents voiced dismay at the new policy and at their fading freedom. "I think SL is starting an implosion process," said someone posting under the name Hanumi Takakura on the Linden Lab blog. "It grew big and now it's becoming small again. In the end, it will not have much more freedom than your average MMORPG [massively multiplayer online role playing game] for example."

"I feel misled. I thought Second Life was another world where real life laws didn't apply," said someone posting under the name Bobo Decosta.

"I hate to say it, but I think the feds are really starting to close in on SL," said someone posting under the name Alex1 Richardson. "Next we will be reporting our SL income, and pay taxes on what we buy and sell here."

Others took issue with what they see as government hypocrisy.

Responding to a question posed by one commenter on the Linden Lab blog about how usury, in the form of high credit card interest rates, is permissible but online gambling is illegal in the United States, someone posting under name Chaz Longstaff responded that online gambling is "only illegal in countries such as Canada and America, where government hides behind moral blithering to make sure that gambling only happens when the governments get to pocket most of the money. And that's about it in a nutshell. They're not adverse to gambling profits; in fact, they're addicted to them. That's why they crack down so hard when someone tries to bypass them or muscle in on their turf."

Provocatively named individuals aren't the only ones taking issue with the government's approach to gambling. The Caribbean island nation of Antigua and Barbuda has been fighting U.S. gambling policy through the World Trade Organization. On Tuesday, it asked the WTO for $3.4 billion in sanctions to penalize the United States for its failure to comply with a WTO ruling in March against the U.S.'s online gambling restrictions.

Citing the illegality of prostitution in the United States, someone posting under the name Syndel Daviau fretted about the fate of the world's oldest profession in Second Life. "I wonder if the next hit will be on us escorts," she (or possibly he) said.

Brent C.J. Britton, a partner at law firm Squire Sanders & Dempsey LLP in Tampa, Fla., believes further restrictions are unlikely. "It begs the question what really there is to restrict," he said. "Gambling is the big one. It is the one real-world activity that has an obvious analog and it's easy to simulate in Second Life in a way that's just as meaningful to the law as it is in the real world. Gambling isn't dependent on any physical presence. It's just wagering something of value on a game of chance."

What laws can really be broken in a place like Second Life? "There's been some discussion in the press, and I've been one of the voices, about virtual rape, for example," said Britton. "And I think that frankly the concept of rape doesn't even belong in the discussion. Rape requires the presence of a physical body and you don't have one in Second Life. End of analysis."

But while virtual prostitution, virtual rape, and virtual battery may be unlikely to invite real-world law enforcement, Britton anticipates that charges like intentional infliction of emotional distress, libel, slander, and intellectual property crimes will continue to be made in Second Life, as they can be anywhere online.

Indeed, in early July, Second Life merchant Kevin Alderman filed a copyright infringement case against an unidentified Second Life resident who allegedly copied and sold a virtual object created by Alderman.

As to whether the United States' stance on Internet gambling will ever be reconciled with the gambling laws in other countries, Britton expressed hope that there would be some degree of harmonization. "Frankly, it would nice if we begin to realize that we all live on the same planet, which is something that the Internet makes all the more apparent every day," he said. "It's odd when you think about it that you can stand face to face with three people in Second Life and each of them can be subject to different laws because the actual users are in three different jurisdictions."

About the Author(s)

Thomas Claburn

Editor at Large, Enterprise Mobility

Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful master's degree in film production. He wrote the original treatment for 3DO's Killing Time, a short story that appeared in On Spec, and the screenplay for an independent film called The Hanged Man, which he would later direct. He's the author of a science fiction novel, Reflecting Fires, and a sadly neglected blog, Lot 49. His iPhone game, Blocfall, is available through the iTunes App Store. His wife is a talented jazz singer; he does not sing, which is for the best.

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