Gaming, Bans And Groundhog Day

Around the 25th July 2007 parts of Second Life were rocked to their foundations when Robin Linden blogged – Wagering In Second Life: New Policy. This was pretty much the end of gambling in Second Life as we knew it, although skill games would still be allowed. The blog post stated :

While Linden Lab does not offer an online gambling service, Linden Lab and Second Life Residents must comply with state and federal laws applicable to regulated online gambling, even when both operators and players of the games reside outside of the US. And, because there are a variety of conflicting gambling regulations around the world we have chosen to restrict gambling in Second Life.

This ban did unleash some pain for Linden Lab themselves, but they took a business decision knowing that would happen. The issue for Linden Lab was user to user transactions, as explained in a blog post by Zee Linden entitled Second Life Economy Grows 15% from Q4 to Q1 :

User to User Transactions. Total user to user transactions, a measure of the gross domestic product in Second Life, grew from an annualized rate of $261 million in Q4 to just over $300 million in Q1. The economy has grown 33.6% since the low point after the gambling ban.

There’s a graph in that post that demonstrates how stark the drop was in user to user transactions. Happier times didn’t arrive until Q3 2008 when Zee again blogged, this time in a post entitled Q3 closed on a high note with an unusually strong September :

Resident-to-Resident Transactions Top $100 Million. Total Resident-to-Resident transactions, a measure of the gross domestic product in Second Life, grew 21% from the prior quarter to $102M – or just under $1.00 per user hour. The Q3 total translates to an annualized rate of $408 million. By breaking $100M for the first time since Q2 2007, the Second Life economy has now fully recovered from the restriction placed on games of chance in Second Life in mid-2007.

Personally I always felt that gambling money largely stayed in gambling circles, that’s why the rest of the Second Life economy didn’t experience great pain during this period. However Linden Lab would definitely have felt the pain. However the other issue with the gambling ban was in terms of people trying to circumvent the rules with cunning plans :

ok so u have a “free” casino, but to use the machines you have to put in special prims instead of L$, but to get these “special prims” you have to buy them, eg L$5 a peice then play with those, you either win/lose depending on the game, then if you win you can give these “special prims” to someone in exchange for some lindens – A sneaky way around the gambling ban

There were plenty of these sort of ideas around and none of them really worked because people wanted to gamble for Linden Dollars, not prims in an elaborate scheme that were likely to be deemed as against the wagering policy. The horse had bolted, although some horses kicked a lot more than others as they left.

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Could Second Life Sister Grids Be The Future Way Forward For Virtual Worlds?

BopetteYossarian has posted a question regarding online gambling over at SLUniverse, namely whether rumblings in some US states regarding legalising online gambling could see a return of gambling to Second Life. Bopette links to a story on Fox News.

The story mentions that certain states are making moves, or have made moves, to allow online gambling, despite the fact that Federal law still forbids it. However in terms of Second Life, this is pretty much a non starter as far as I’m concerned.

When gambling was allowed in Second Life, it really wasn’t legal online gambling in my view. I say this because I know of no officially licensed bookmakers or gambling institutions who were running online gambling in Second Life. The reason gambling seemed to get a pass in Second Life was due to the fact that Linden Dollars were being exchanged, rather than cash and the authorities weren’t paying close enough attention to new fangled technology. That changed in July 2007 when gambling was prohibited in Second Life, with rumours that it was due to an FBI investigation, hence the authorities appeared to have noticed something may be amiss with this new fangled technology.

The only way I could ever see gambling returning to Second Life would involve Second Life adopting a new model of land ownership and this may actually be beneficial to organisations other than gambling ventures, however we’ll stick with gambling for the example of how this may work. Imagine there were no legal obstacles to gambling, Linden Lab would still probably want nothing to do with it, namely because as far as I’m aware, they aren’t a licensed gambling operator. However what if a licensed gambling operator wanted to come in and it was legally possible? That’s where the different model of land ownership comes in.

The gambling operator would be on a sister grid, this wouldn’t show on the map, but teleporting there would be possible if you signed up with the gambling operator. They would handle the registrations, the age verification and the legal right for people to gamble there, you wouldn’t take your Linden Dollars with you, they’d have their own currency system. Linden Lab would provide the support, maintenance and hardware resources and charge a fee for those services, but they wouldn’t be responsible for the account verification or the TOS on the sister grid.

Continue reading “Could Second Life Sister Grids Be The Future Way Forward For Virtual Worlds?”

Will Second Life Ever Be Able To Address International Issues?

I was listening to MetaReality Podcast over the weekend when Qarl mentioned that Second Life under Mark Kingdon had been considering ways to bring back gambling, according to some it has never really gone away, but the days of casinos on the landscape are certainly long gone.

This remined me that I’d been reading about real money Facebook apps: Facebook strikes deal with 888 to launch more real-money gaming apps in the UK. The key here being the in the UK part, so as to not fall foul of laws regarding online gambling in jurisdictions where it’s not allowed.

A quick recap on gambling in Second Life, as far as I’m aware it was never licensed. However it was popular and it did require land, so it generated tier revenue. Linden Lab took a business decision to ban it, but I can recall a forum or blog post where Zee Linden, former CFO, said they had been considering finding a way to bring it back. However that has never happened.

When Linden Lab struck a deal with Dragonfish to process payments, I wondered if this was to do with introducing gambling back to Second Life, as Dragonfish are related to 888, the same 888 who are introducing gaming apps to Facebook. When you used to email support, they had an 888 address. This was for the now defunct Local Payments System, US residents didn’t have their payments processed in this fashion.

Now one way of bringing gambling back to Second Life would have been to do what Facebook are doing, and restrict it to residents of a certain country, so for example if 888 had opened an 888 sim, only UK residents would be able to enter. This would obviously be problematic, especially as gambling winnings would find their way into the wider economy, but it does raise the issue of restrictions on Second Life based on the geographic location of Linden Lab, rather than their customers.

Continue reading “Will Second Life Ever Be Able To Address International Issues?”

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