PLAYING IT SAFE IN ONLINE GAMBLING

6 April 2007

Linden's "Second Life" invites the FBI in for an opinion

"Second Life," the increasingly popular online virtual world which already has millions of registered users and its own economy and currency, known as the convertible-to-US dollars Linden Dollar, is probably unique in the US online gambling world - it actually wants the FBI to visit and give it an opinion on its US legality!

Although the legal position of online gambling - and particularly online casino and poker gambling - in the USA is confusing to say the least, the company has revealed that FBI investigators have visited Second Life's Internet casinos at the invitation of the virtual world's creator Linden Lab, a Reuters news report reveals.

"We have invited the FBI several times to take a look around in Second Life and raise any concerns they would like, and we know of at least one instance where federal agents did look around in a virtual casino," said Ginsu Yoon, until recently Linden Lab's general counsel and currently vice president for business affairs.

Yoon said the company was seeking guidance on virtual gambling activity in Second Life but had not yet received clear rules from U.S. authorities. And when Reuters asked, the FBI and the U.S. Attorney's Office for Northern California declined comment.

Hundreds of casinos offering poker, slot machines and blackjack can easily be found in Second Life. While it is difficult to estimate the total size of the gambling economy in Second Life, the three largest poker casinos are not earning big profits.

The surge in Second Life gambling coincides with a crackdown in the real world by the U.S. government, which has arrested executives from offshore online gambling and e-wallet firms.

Most lawyers agree that placing bets with Linden Dollars likely violates U.S. anti-gambling statutes, which cover circumstances in which "something of value" is wagered. But the degree of Linden Lab's responsibility, and the likelihood of a any crackdown, is uncertain.

"That's the risk; we have a set of unknowns and we don't know how they're going to play out," said Brent Britton, a Florida attorney specialising in emergent technology. Britton said Linden Lab could potentially face criminal charges under the 1970 Illegal Gambling Business Act or the Unlawful Internet Gambling Enforcement Act. The latter law, passed last year, takes aim at credit card companies and other electronic funds transfers that enable Internet gambling.

"What they did was go after the processors, and made it a crime to process payments that relate to online gambling sites. Linden could potentially be held as the same sort of processor," said lawyer Sean Kane.

"If you're buying money on the Lindex (a virtual currency exchange) and utilizing it for gambling purposes, Linden could have a much higher level of responsibility," he added. "If they would be found in violation, that's difficult to say, but I can see a much stronger case being made."

Linden Lab's rules prohibit illegal activity.

"It's not always clear to us whether a 3-D simulation of a casino is the same thing as a casino, legally speaking, and it's not clear to the law enforcement authorities we have asked," Yoon said.

Even if the law were clear, he said the company would have no way to monitor or prevent gambling in Second Life.

Online Casino News courtesy of InfoPowa

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