Five Years In Prison For SL Casino Opertors ?

The reason that Paypal has not been handling gambling transactions is not the result of action by the SEC.

In 2003 Paypal was charged by the US Attorney in Missouri of violating the Patriot Act by processing gambling transactions.

The U.S. Attorney's office had alleged that PayPal had, in 2001 and 2002, provided services to offshore gambling sites in violation of The USA Patriot Act which prohibits transmitting funds "derived from a criminal offense," or that are "intended to promote or support unlawful activities".

Paypal in settlement agreed to pay a fine of $10 million and PayPal also agreed to maintain a corporate compliance program.

When eBay took over Paypal in October of 2002 it had announced that it was halting the use of PayPal to process online gambling transactions. EBay, attributed its decision to an "uncertain regulatory environment surrounding online gaming."The U.S. House of Representatives at the time began reviewing legislation to prohibit Internet gambling, and eBay determined it was too risky to continue offering the service.

PayPal is particularly sensitive to the gambling issue since any finding of a civil or criminal violation by PayPal, or potentially any settlement, could also endanger PayPal's ability to obtain, maintain or renew money transmitter licenses in jurisdictions where it requires such licenses to operate.


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I stand corrected, and apologize for not having researched my response better than I did.

To reasure those reading, however, the status of the Linden as a game token having no guaranteed redeemable value effectively states that money is not, in fact, changing hands in SL. Lindens are, and while they can be redeemed for cash, they're not legal tender. Unless and until Congress legislates that Lindens are legal tender for all debts, public and private, the laws against internet gambling simply don't apply to activities in Second Life. It's like arguing that playing poker for walnuts instead of dollars is illegal because you can turn around and sell the walnuts.

As an earlier poster said in this thread, "Full Stop."

Likewise, the threat of federal taxation of virtual economies is a non-starter as well, since the only taxable activity is the point at which the Lindens are translated into actual currency - at which point the recipients of the funds must identify and pay taxes on these monies under existing federal law.

Another conspiracy theory here, I say if you fall for this sad tale then hang out for a bit and the MOTHER SHIP will be here to pick you up soon. Who do you think is going to police this? It is the internet. I can not believe the paranoia on some of these issues.

The new law in effect makes banks the enforcers since it holds banking institutions responsible for monitoring and prohibiting online gambling transactions.

That's interesting - so from this we can infer that since the money trail essentially stops at Linden Labs front door - because after that it's effectively game tokens and not money - that's where their interest stops too. And since they're the enforcers of the new law, that would put the owners, operators and customers of virtual gambling establishments well outside the zone of effect of the law.

I think as seems to be true with so many laws, we won't know what this means for SL Gamers and casino opperators until it is tested in court. Am unfortunate situation, but all to frequent.

Bingo. Of course, there's a big difference between theoretical and real risk.

First, the feds are likely to go after the biggest ($-wise) offenders first. The SL economy seems big at over L$1G, but it's about US$4M, and only a fraction of that is gambling. (More worries on the porn issue, frankly!) Of course, easy targets are also high on the list, and gambling is obvious here.

Second, LL no doubt has a legal staff looking after their end. LL may be in trouble here, if the feds start going after small-time operators or want to make a point about virtual stuff in general. But LL isn't supposed to look after YOUR liability. Meaning, if you have megabux$L, you could lose them in an instant if SL gets shut down. I doubt that's likely, though -- it would be an extreme measure for the feds to take.

Third, if they just go after the gambling venues here in SL, only the biggest ones really need to worry.

My guess is this really is (mostly) a tempest in a teapot -- but only due to practical concerns, and not due to legal reality. The US Government is going to have its hands full concerning all the on-line gambling, as well as legal challenges to the law. It isn't in their best interest to muddy the waters with issues like SL. The media would dress it up like going after Monopoly players, and much of the public would buy it.

BTW, the reason I found out about SL was reading an article in the WSJ, that mentions that the IRS is trying to figure out the tax ramifications of SL property. Now, THAT's something worth worrying about!

In any case, it's been an interesting discussion. I appreciate Hot W's correcting a number of misguided posts about the US monetary system. I agree with those who say that L$ have real value, and evidently so does the IRS. What's interesting is they seem to think that even SL property has value (which it does). But just imagine having to do assessments and depreciation on our SL property!

IMHO, SL property should be addressed by RL only when converted. But I bet I'm being naiive about that, and SL could be a way to hide value from the Treasury. Damn them, they follow us everywhere!

The US dollar has a representation in gold.

http://en.wikipedia.org/wiki/US_dollar

The credit card provided by credit card companies is used represent those dollars directly (AKA, it represents cash.)




Even though alot of people get their Second Life confused with their Real Life, it is still just a game. The Linden is the chosen form of value in a fake world that does not really exist. The only thing that sets value for Linden is supply and demand. The chosen value by someone selling Linden when someone else is willing to pay that chosen cost. If it was possible for a SL casino to set up machines with payment in US currency, then it would be a problem. If you choose to buy or sell your fake money, it's no one elses business, not even an SL casino. You can just as easily NEVER buy or sell Linden and still have plenty of casino fun.

Also, please don't think me overly rude, but it's the same as any other MMO. People who think the Linden or any other game's currency has real value need to get their game and RL separated.

Sorry for the double post, but I just had to comment on your IRS comment. It's not really the same topic, but it is related.

First, The 'property' they are looking to tax you on is nothing more than computer parts. In fact, it's not even computer parts since it's not even tangible as computer parts are.

Second, let's step ahead and decide they find virtual property taxable (which is insane, but we'll play along for a moment.) What's the value of non existant property? Even if we go by what I payed in Linden for it and the estimated value of the Linden as determined by supply and demand, with my 1 acre of land, what is it going to cost the IRS to collect taxes on my virtual property? LOL

They can't collect taxes on anything intangible. What are they going to do, take possession of your island (which, once again, is nothing more than dedicated server space)? Frankly, whomever is wasting such time in the IRS on matters like this needs to be investigated.

I played poker for years and have been hit by the new legislation. The run up to it pre-occupied all semi-professional (me) and pro-online poker players.

The situation is this. Some poker rooms are closed to USA residents - others are openly challenging the legislation (Bodog, Absolute poker). There is enough of a grey area for some rooms to hold their ground - not least because the new laws violate the World Trade Organisations terms for members. It is about this point that Antigua are appealing to revoke the decisions taken by senate.

LL are promoting/facilitating gambling - no question!!. Many players I know run websites (for profit) and have run into trouble for simply promoting the poker in the USA.

IMO, LL has escaped this simply because it hasn't come to anyones notice. It is one thing for Calvin Aryes (MD of Bodog) to take on the goverment - he can afford it. It is quite another for LL - who essentially are poor. If an auhtority gets to know about the gambling side of SL. SL, will stop it within hours. - I saw this happen with poker rooms.

I have toyed with opening up a full blown Poker room from within SL - I could do it. But to my mind it's chances of survival will be small unles the appeal goes through.

If I was a casino owner on SL - I'd be selling....

I find it to be a matter of perspective. LL does not promote casinos, the casinos do. You don't pay LL to gamble, you pay to play a MMOG. LL promotes a world where you can do anything that you can do IRL. Second Life really goes beyond being a grey area when you look at it as it was intended -a GAME- and not a way to make money as some people think.
Poker rooms, online casinos, etc. are directly linked to your credit card or other money transactions. A casino in Second Life has no such affiliation, unless they have something set up outside of Second Life, such as with a website, to go beyond the boundaries of the game world. An example would be a paypal site set up where they sell you chips to use in their SL casino instead of using the in-game system.

I think this is one way they slip through the cracks. See $L is considered monopoly money (play stuff), even though it can be exchanged (bought and sold) for real money. As long as they gamble with fake money their ok. >.>

No, it does not. Please re-read that wiki entry again. It clearly says that the Dollar has not been pegged to gold since 1975.

Quite right. LL have added a line in the TOS that states that L$ are not currency and users have no legal right to recieve any real-world monetary value in exchange for L$. Keep in mind though, this works both ways - stand by for LL to withdraw the ability to convert L$ into US$ and pay them out to your Rl acc. Maybe not - but it's worth keeping in mind just in case.

I don't understand the this thread, can someone explain?

Is gambling illegal in the USA? That would come as a suprise to me if it's true - I thought you lot were all about freedom etc.

I stand corrected as far as that article is concerned. It wasn't my main source of information, I simply linked it for ease of use.


I can reword myself to state that the US dollar was previously based on gold. Now that the value of the US dollar is used internationally, that apparently isn't seen as necessary. Thank you for pointing that out to me.

LL do promote it - through their search ...More importantly - the gambling occurs on their servers which I guess are USA based.

The most popular form of poker (Tournaments and SnG's) rely on the players buying "playchips" which are NOT redemable after purchase (unlike L$). If I buy into a cash game in SL (NOT A a 4% rake I wouldn't together with the rather low limits) I could cash-out as soon as I left the game.

I sincerely hope that Bodogs stand is fruitful (I want my fish back!) - this is a grey area - in which case LL will be OK. BUT the majority of established poker networks (all of which make money -bigtime) did not think it was worth the fight. I can't see LL doing anything but "folding" and PDQ - if a minor civil servent pays them a visit..

If you make a profit in $L I believe in the USA- when you transfer back - you have to declare and pay tax on that profit. I understand that this also happens in OZ..

Looks guys.. I was in the run up to this in the poker rooms.. nobody said it would happen - it did!

Only reason Im even jumping on this bandwagon is because, the *porn* side of sl would fall under the same laws as the phone sex companies and such. Real sex is not being sold on sl just pixel sex, and well thats not in any form illegal. the only legal issue with the *porn* side of sl would be underage exposure.

Okay I'm off my soapbox

Holy Necropost. This has to be a record.

Not even close to the record.

Wow - over 2 years even.

lol..well for some reason this popped up as a new posts.. was reading thru not even looking at the dates. haha.. jokes on me..

*note to self: check date of post*