Feds Eye Gambling in Second Life
By: Sue Denim
Posted: 04/05/2007
When Federal Bureau of Investigation agents entered the virtual world of Second Life recently, it wasn't to play the game. The G-men visited at the invitation of Linden Lab, creator of the online metaverse, in order to check out the virtual casinos being operated by players as part of the game.
"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 that federal agents did look around in a virtual casino," Ginsu Yoon, until recently Linden Lab's general counsel and currently vice president for business affairs, told Reuters for a report the news agency published Wednesday.
Yoon told Reuters Second Life, which has millions of registered users and its own virtual economy and currency, sought advice from U.S. authorities about the legality of virtual gambling but has received no clear directives. The FBI and the U.S. Attorney's Office for Northern California declined to comment to Reuters.
Lawrence G. Walters, a prominent First Amendment attorney with clients in the videogame and gambling markets, said the issue of gambling within virtual worlds presents some thorny issues. The Unlawful Internet Gambling Enforcement Act of 2006 "generally prohibits the wagering of anything of value on games of chance," he said, and since Linden dollars (the virtual currency within Second Life) have value in the real world because they can be bought and sold between players for American currency, they have value. What's not clear is whether the wagering of Linden dollars is the sort of financial transaction prohibited by the UIGEA.
"There's an open question about whether these non-recognized currencies are covered by the law," Walters said.
Although hundreds of casinos offering all sorts of virtual gambling are easy to find in Second Life, no one has been able to estimate the size of the game's gambling economy. Casino owners and those familiar with the industry estimate, however, that the three largest poker casinos in Second Life are raking in about $1,500 monthly in profits. It is lost on neither the feds nor Linden Lab that a virtual gambling crackdown and an explosion in the number of casinos within Second Life have occurred at roughly the same time. By inviting the FBI to check out its virtual dens of iniquity, Linden Lab is just being cautious about any potential liability it might incur, Walters posited.
"Second Life is a large company; they want to remain on the right side of the law," he said. "They saw these things develop in their game space, and they invited the FBI to come in and take a look at it. They want to make sure they're in a cooperative stance with the FBI. If you can get some kind of advance determination, that's always better than waiting for something bad to happen."
"It's not always clear to us whether a 3D 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 told Reuters, adding that even if the law were clear, the company would have no way to monitor or prevent gambling within the game, although the rules prohibit "illegal activity."
The same sorts of questions surround the emergence of sexually explicit characters and situations within Second Life, according to Walters, and FBI agents hardly could have been expected not to notice how much of that exists.
"It's hard to miss in Second Life," he said with a chuckle. "Animated characters with exaggerated genitalia might not be the most prosecutable content [investigators could tackle], but they're prosecuting my client, Karen Fletcher, so who knows?"
In September 2005, Fletcher was indicted for obscenity after authoring and publishing on her website, Red Rose Stories, erotic fiction depicting the torture and sexual molestation of minors. Walters is a member of her pro-bono defense team.
