UPDATE 3 - Linden Lab outlaws Second Life gambling
By Adam Reuters
(Adds Linden Lab comment)
SECOND LIFE, July 26 (Reuters) - Second Life’s booming gambling sector was wiped out on Wednesday night when Linden Lab, which had taken earlier steps to restrict activity amid scrutiny from real-world law enforcement agencies, prohibited nearly all games of chance.
Dozens of Second Life casinos, which had been operating in limbo due to the untested legality of virtual world gambling, were estimated to be pulling in profits of tens of millions of Linden dollars per month or more, although reliable statistics was impossible to come by.
In addition, a number of businesses served the needs of casino owners by selling lucrative items such as automated slot machines and poker tables.
As reported exclusively by Reuters in April, the U.S. Federal Bureau of Investigation visited Second Life casinos at the request of Linden Lab to assess the legality of Second Life gambling, although no opinion was issued. Linden Lab then moved to restrict casino and other advertisements, citing the “ambiguities” surrounding virtual world gambling.
On Wednesday the company said in a blog post it was instituting the ban “because there are a variety of conflicting gambling regulations around the world,” but gave no other explanation for the sweeping policy shift, which is likely to have major knock-on effects on the Second Life economy.
Robin Linden, senior vice president for community told Reuters in an email: “There was no precipitating event or investigation that led to this decision. It was a business decision.”
Linden Lab declined to answer questions about the new policy.
The new policy states:
It is a violation of this policy to wager in games in the Second Life (R) environment operated on Linden Lab servers if such games:(1) (a) rely on chance or random number generation to determine a winner, OR (b) rely on the outcome of real-life organized sporting events,
AND
(2) provide a payout in
(a) Linden Dollars, OR
(b) any real-world currency or thing of value.
The company said if it finds gambling taking place it will removed related objects and may “suspend or terminate the accounts of residents involved without refund or payment, and may report any relevant details, including user information, to authorities and financial institutions.”
‘THERE WAS NO WARNING’
The new policy left casino owners scrambling to comply. T0xic Scissor, owner of the 4 Deuces casino, one of the largest gambling operations in Second Life, used to get 725 visits to his sim a day, and employed over 50 people as dealers, pit bosses, and administrative help. Today the bustling operation stands vacant, save for a few protesters demonstrating against the new policy.
“There was no warning, no time given,” Scissor said. Running the 4 Deuces amounted to a full-time job for Scissor the past nine months. Last night, Scissor quickly derezzed his gaming tables and slot machines, returning them to inventory.
Gxeremio Dimsum, the avatar of Virginia-based Jeremy Aldrich, ran Green Star Gaming, one of many small casinos catering to an audience of a few dozen customers. Like Scissor, he complied with the new policy and quickly dismantled his operation. “The policy clearly states that if it has to be enforced the objects will be deleted (most of my games are no copy) and my account could be deleted,” he said. Aldrich said he never recouped the initial investment in his two-month-old casino.
In the wake of the policy shift, many companies whose shares trade on the World Stock Exchange issued notices to their shareholders.
“As of now, we have removed all games from the market to comply with Linden Labs new gambling policy. I am deeply sorry for the major blow LL has given our shareholders over night!” said Dan Montale, CEO of Games Ltd (GAL), in a notice on the WSE website. “There are tough times ahead, and our profit margins will be reduced significantly in the first few months, but we will hang in there!”
No shares are currently trading on the WSE in the wake of a recent security breakdown that resulted in the theft of L$3.2 million (US$12,000) by a former employee of the exchange.
“We all know that Linden has unilaterally changed the rules regarding gambling which in the short term will adversely effect the value of many stocks traded in the WSE. This was a known exposure thus gambling companies compensated for risk by paying handsome dividends,” Liquid Matrix Holding Company (LMH) said in a statement.
(Additional reporting by Eric Reuters)
