The announcement from Second Life yesterday was that they have officially banned gambling. The image to the right is of a popular casino, pictured in its recent incarnation here, now gone to seed. As that article from Valleywag suggests, as well as one from Business Week, this move is hardly a surprise. The FBI has been fishing around SL for the last few months, presumably trying to decide what to do about the casinos.
Of course, the casino owners are not happy with the new rules, and the general opinon seems to be that Linden needs to offshore its servers. This is based on a romantically erroneous assumption that the reach of US law enforcement ends at the US border. There are plenty of examples that would suggest that making SL an outlaw environment would make SL residents from the US–whether or not they gambled–into outlaws. But now, all those people who invested serious time and effort in replicating real-world games, or inventing their own, seem to be out on their ear. It has to give pause to others who are interested in developing in Second Life; what happens when Linden doesn’t like you any more?
But as the comments on the Second Life Blog suggest, this raises another issue. If Linden Labs is now saying that Lindens are real money, then it means that people should have control over their own funds. Linden should not be able to suspend people’s service without releasing their Lindens to them in US cash. This has already come up at least once.
This question of virtual money being real money is a hot one right now. China is dealing with the rise of the qq coin–again, relating to its use in gambling. A lot of that gambling is, in fact, currency speculation. The question now is how far the idea that Lindens are “real” will go. Does that mean, for example, that an SL company is bound by SEC regulations if they want to sell stock? Where casino gambling has thrived, will we see the rise of stock schemes and fraud? Are the Feds going to be setting up an SL office with men in black to investigate?
These are the kinds of questions people were asking about the web ten years ago, and the answer was an unequivocal “yes.” How SL contorts to fit into existing international legal structures, a process that is only just beginning, will be an interesting thing to watch.