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.