secondlife casino owners: you could get charged for rackeetering

I find this amusing also, given that all we have is the script creator's word that the payout odds are being fairly calculated. No government gaming oversite such as the Nevada Gaming Comission. This is the main reason why I could really care less if every casino in SL went the way of the dodo bird tomorrow and why I think that people who operate them make their own bed and should be willing to lie in it if the feds come knocking on their door.

This happens to be something I looked into. Please note the words "Public". Most DJ music streams in SL are "private" streams for a limited audiance, not unlike having people over at your house for a party. The large streams you do hear that have large public audiances, unlike DJ streams, do comply with RIAA regulations and there are several scemes available for internet radio station to comply with copyrights and for compensation to artists. Playing music for a group of friends is not an illegal activity.

You won't tell me about the others or you can't? Frankly, and please don't be offended, I don't count online game worlds getting a fair amount of recent press as evidence that they're getting FBI attention.

By the way, you do know that the FBI investigates any reported attack on a business' computer network, don't you? I'd hardly call that evidence that the FBI has their eye on Linden Labs for anything other than being the victim of a computer crime.

You're really stretching, Anna. Can't we please just agree that SL casino owner may indeed someday come under scrutiny but for now it's highly unlikely given the relative USD value of their operations when compared to sites like partypoker.com? Recent events do not spell the end of SL casinos, nor do they imply that SL casino owners should expect men in dark suits and sunglasses at their door within the week.

Superior Court of the State of California in and for the County of Humboldt Case No. DR0A30070 Filed 19jul2006

Fair enough, and of course you're welcome to believe as you like. One more small point, though:

The "bigger fish to fry" argument can also be applied to individual possession of illegal narcotics (the individual casual marijuana smoker is a lot less important than a major distributer), but you can still go to jail for it, and people have done.

Just something to consider.



No problem. Sorry I snapped back, too; I didn't realize you'd just misunderstood.

What happened to the poor dodo bird is a darn trajedy!
http://www.davidreilly.com/dodo/background.html

So you find it amusing that there may be a little trust left in the world without government regulation? I find it refreshing, but hey we can disagree. =)

It is against a casino operator's intrest to run anything but a fair game. Any smart casino operator knows this, that being said, there is no IQ test required for starting a SL casino.

There is a saying in the casino industry, not often repeated: "You can slaughter a sheep only once, but you can skin it many times." -- The meaning of this saying is you will make more off a person by running a fair game and having the customer come back then you would by cheating the customer and having them never return.

When I started this game most 'slot machines' in SL didn't even state their payout odds, and infact most still don't so what is there to lie about? Alot of the slots are just boxes you pay that give no indication of how odds are calculated.

The slots I made state the overall payback, the chances (ie 1 in 100) of winning each individual payout the slot has, as well as the overall odds of winning per play. I have people who play these slots all day long, and over the thousands of indivual plays they have tried they can judge that the slots do indeed calculate the odds as stated. How do you know they are accurate? You don't, but what reason would there be to lie when I can just say nothing like everyone else? If they pay back 90% I'll say 90% and people will play. If they pay back 80%, I'll say 80% and people will play. If they payback less, I'll say nothing, and people will still play....

I currently run a number of casinos in SL, my slots have a $60k jackpot, and I keep a daily bankroll of $180k. I'm not even slightly afraid of someone winning. In fact almost every jackpot winner I have becomes a repeat customer.

80% of my weekly play comes from 5 customers, repeat customers. If I lost those customers I would go out of business. Those customers only play because they feel they get a fair gamble, if at any point they didn't I would lose those customers and go out of business.

A casino needs to only do 4 things to be successful:

* Run fair games that have a house-edge.
* Get people to play those games.
* Make sure they have fun so they play some more.
* Make sure the players can't cheat.

*Any game with a house edge is a long-term money maker for the casino, it is against the long-term intrest of any casino to skew the odds in any way which would limit the ammount of play that game gets.*

So why do people trust casinos in SL? Because some people know the owner of the casino is smart enough to understand it is in his own self intrest to run a fair game.

Now I wouldn't play at every single newbie casino in SL, but there are a number of ways outside of government regulation that allow a player to pick a fair casino in SL to play in. I know for a fact that there are many casinos in SL that are extremely fair and I would have no second-thoughts about playing in.

Trusting every SL casino would be overly-naieve. But not trusting any SL casino is equally overly jaded..

Just to follow up a bit on Nevada's gaming regulations... What about those would make you feel more comfortable about playing in a casino? Gaming regulations are pretty shady when you get down to it..

Q: What is the lowest % payback a slot can have according to the Nevada State Gaming Regulations?

A: 75% -- And they don't have to tell you the slot your playing is only 75% payback.

---

Q: When you see "96% Payback" on a row of slots in a Las Vegas casino does that mean all the slots are 96% payback?

A: Nope! Only 1 single slot in that entire row has to be 96% payback for them to advertise as such. All the others can be set as low as the state minimum, 75%! -- If you see 96% payback on a building, only one slot in that entire building as to be 96% payback!

--

So let me ask you, do you know how the odds on the slot your playing in a real brick & mortar casino regulated by the Nevada state gaming commission are being calculated? The answer is no, and not only can you not verify their payback, they won't even tell you! Hows that for regulation? =)

you are absolutely right...playing music for a group of friends is fine...buti could list a plethora of clubs and casinos with their own dj's streaming..and the walls are lined with vendors...that is the illegal part..using the music to keep people at your establishmnet inhopes they do more then dance....and believe me they do more then dance...they shop....

Guido, I'm glad to know that you run a fair business and I know was overly harsh in my comment.

I guess my point was that persons, unless they know you personally, have no reason to trust or distrust you and given the nature of the business at hand they might be considered a bit naive to throw money into your machines based simply upon a posted sign's claim that the machine has a 90% payout. In the real word we have oversight, which happens to be provided by the government but it could be any type of body doing so, that gives the player that little extra reason to trust the machine owner.

I don't think it would be too difficult to operate a successful casino in SL claiming a 90% payout on machines but in reality have the script set for 85%. Perhaps I am underestimating the wherewithall of some gamblers, but it seems to me that even if I played such a machine for hours and hours straight I could not be sure that any payout rate I experience is a true reflection of the actual payout rate. Most patrons would be happy with an 85% payout and would therefore never question the unscrupulous machine owner about the 90% payout claim. With proper oversight by a "trusted" body such false payout claims be far less likely to occur.

P.S. Just saw your follow up post and no, I didn't know that, but as you also alluded to I don't trust gov't agencies to properly oversee a gambling operation. Guess that's why I am not a big gambler. For a great many people the gov't oversight does provide that element of trust though and my point is that we don't even have that in SL. All I have is the word of someone named Guido that he's honest. Sorry, I couldn't resist that one.

Absolutely. And your analogy speaks somewhat to my point also in that the casual pot smoker is highly unlikely to be the target of a federal sting operation. He or she is far more likely to be caught incidentally after having come under scrutiny for another unrelated infraction such as a traffic violation. I could sit in my house and smoke a bowl every night of the week and it would be very unlikely that I'd EVER get into any trouble with the law.

I understand that some SL casino operators likely make a comfortable sum of money each month for an individual but in the grand scheme of things these folks are casual pot smokers. Might the government sting one of them to flex their muscle? Sure. Is it likely? Not really, not when there are a TON of gambling sites out there running MILLIONS of dollars in transactions a month. THIS is why I contend that this whole thread is a tempest in a teapot.

Simple solution:

Open Asian and Euro SL servers to run concurrent with the US based ones. US law infringes on something in SL, move the offending data to a server overseas for safe keeping and let the game roll on...

You guys got it all wrong...
It's the newbies with the freebie slot machines that set the payout to "never" and label fake jackpots that we need to be worried about!
Give em the chair or a 90 year sleep-over with BUTCH!

I'm still amazed that this red herring that "Lindens are not money, therefore it cannot be gambling" is still being argued. Gambling is not defined based on exchange of money, it's defined based on exchange anything of VALUE, and it would take a prosocuter 30 seconds to prove that the Linden has value.

I thought it only applied to real currency.. not play chips of any kind

in that sense we buy lindens, a mock currency, and therefore it has no ruling over it.. or so I thought thats how the loophole worked anyways

Yes, it's a crazy argument. The best argument is that the tool in the DOJ toolbox is the Wire Fraud Act of 1961, however that only outlaws sports betting and the New Orleans supreme court over-ruled an attempt to apply that to other types of online casinos.

However, no one really bothers to look into this and argue their perspective intelligently, so sometimes I feel like I have to play tennis with myself.

Aren't you the one who started this tread entitled "SecondLife Casino Owners: You could get charged for rackeetering!".

So you just stated the basis for the DOJ claiming internet gambling is illegal is the Interstate Wire Act. You also stated that the Interstate Wire Act only applies to sports betting. These statements disagree with the conclusion used to start this thread.

Or atleast make the title read:

SecondLife Casino Owners, you could get charged for rackeetering if you accept sports bets over the internet.

Which would probally be the better topic to discuss. While I don't think any SL Casinos are in violation of any Federal Law, it would be intresting to hear opinions about what would happen if someone opened a sports book in SL (very doable).. I happen to feel that would probally be in violation of US Federal Law but still probally a very gray area.

I'm not making a blanket statement that something is or is not illegal. I'm just saying I haven't heard the DOJ, any court, or anyone else provide anything other than the Interstate Wire Act as their basis for for any Federal Law prohibiting internet gambling. And I feel that stating the Interstate Wire Act makes all internet gambling illegal is wishful thinking on part of the DOJ at best, or an out-right lie at worst. Any intellegent reading of the Act makes clear they are talking about sports betting only..



----

I love the quote in the article linked to in the 1st post in this thread, here is an exerpt:

"Illegal commercial gambling across state and international borders is a crime," U.S Attorney Catherine Hanaway of the Eastern District of Missouri said.

DUH! - Illegal anything is a crime, fill in the blank:

Illegal ______ across state and international borders is a crime..
Illegal ______ anywhere for any reason is a crime..

Here's another way to say that:

Legal commercial gambling across state and international borders is not a crime..
(Thanks DOJ for honestly stating the law, because after all your job is just enforcement not legislation RIGHT?)..

----

Me interviewing the DOJ:

Me: Is communicating a crime?
DOJ: Illegal communication across state or international lines is a crime..

(To the best of my knowledge, communicating is not a crime, but if the DOJ wanted you to think it was, this is how they would answer. They would not be lying, but they would not be telling the truth either..)

Taxes, The War on Drugs, Gambling, any issue in which the law conflicts with their desire they use these silly fill-in-the-blank statements and hope the general population doesn't catch it.. The sad part is, they usually don't..

One last time guys and let's say it all together, "Tax Evasion". That is the only case the Feds really have and that is all anyone should be worried about. Any other discussion is bulls*it and is drawing your attention from the real "crime": TAX EVASION.

Sit back, relax and enjoy the game of SL. Until either the Feds or Linden Labs makes a ruling, everything else is just conjecture. Quit trying to scare everyone and have a drink on me.

Umm, everyone, listen up. In the state of California, where I live, 2 miles from a card house, gambling is LEGAL. I didn't have the wherewithall to read this entire thread so forgive me if this is redundant.

As long as there is no "house", the gambling is between private parties, and the payouts are commensurate with the odds, it is perfectly legal to obtain a licence and open a poker house, or black jack house, or paigong, or whatever else suits your fancy.

The loophole comes in where the "card house" makes it's money. You pay the dealer for each hand that you play, but you never bet against the house. Another private party acts as the "bank" and as long as all player's have an opportunity to act as the bank, no law is broken.

Now, the federal law may challenge this, but then it becomes a state's rights issue.

Do any of you really think that the CA Supreme Court is going to lay down on a state's rights issue like this? Hell's no.

LL currently does not bank roll any gambling activity and are in violation of no state law, so please, every one just relax.

P.S., LL is incorporated and operates solely within the state of California. It does not maintain any sort of physical presence outside of California that I am aware of. Interstate commerce laws state that you must have a physical presence within a state to be bound by that state's laws.

No I don't have the legal documents handy, look it up, I know I'm right.

You're wrong.

The legal documents regarding operation of card rooms in the state of california (Gambling Control Act, Business & Professions Code sections 19800 through 19985) can be found here:
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=19001-20000&file=19800-19807

SL is not a card room. These laws do not apply here.

The laws that DO apply to SL can be found in the california state penal code sections 318 to 337. You can read those here:

http://www.gambling-law-us.com/State-Laws/California/

...and you'd have a very hard time justifying SL gambling as legal under those codes.

The law is pretty much exactly as I stated it when it comes to playing cards. Now when we're talking about slot machines or roulette, that's a different story, but I was specifically referring to cards.

My point was that California is very lax in it's laws regarding gambling, much more so than some other states.

But again, LL in no way promotes or distributes any sort of gambling game or system. They are safe from prosecution. The individual casino owners on the other hand need to read their local laws and understand what their liability is.

There is also some wording in these laws that would make it very difficult to prosecute a virtual casino in LL. Are the casino operators businesses? If so, where are their business licenses, or could it be just as easily argued that land owners and content providers are not operating businesses, just hosting a friendly game on private property?

Did the casino owner cash out Lindens directly won from operating casino's for actual currency? How are you going to prove they did? You can show they cashed out money but you can not prove how they obtained it. The machines themselves have no tracking mechanism for that, even if they did, it could be easily removed by the owner.

All LL has record of is Joe Blow giving $500L to Jack Casino Owner, they don't know why, or what mechanism caused the exchange of money.

It would be a tremendous amount of work for a DA with a small pay out at the end. I don't see it happening.

With all the hackers in SL and the stealing back and forth of intellectual property, the ability of a land owner to simply delete forever any evidence in the blink of an eye, no DA is going to try a case like this.

I can see it now "I didn't operate any slot machine for profit, prove that I did."

"We have a screen shot"

"So what, I have photoshop too, I can accuse anybody of anything and produce a screen shot to back it up"

"We see from LL's records that you cashed out $10,000 US last month alone."

"Right, I made that from tips djing."

"We don't beleive you"

"Prove otherwise."

"We'll supoena LL for the assett servers, our forensics experts will show that you made a profit from these machines."

"LL's assett servers don't record every line of code that gets run, they only store copies of the scripts. Proving that I posessed a slot machine is not the same as proving I operated it for profit. And I'm not in California, so even if I have a slot machine, I didn't violate any of your laws."

The plot thickens:



http://news.com.com/Frist+hopes+for+Web+gambling+vote+before+Senate+break/2100-1028_3-6096794.html

Interesting thread.

My two cents....

The DOJ does not want to get into defining whether the Linden dollar is a true currency and not some sort of virtual commodity. If you converted every Linden dollar to US dollar at this moment it would amount to a pimple on the ass of a third tier offshore sports book.

Does anyone really believe that DOJ wants the burden of proving that some virtual currency should be treated and regulated as currency. I really don't think they want to put forth the effort when they are using nearly all of their resources (along with IRS, FBI and other Treasury resources) to go after the companies that are syphoning billions of dollars out of the country through illegal acts.

Having written that I will also say that it is completely and totally illegal to operate these casinos online. Someone wrote earlier in this thread that LL has covered their butts (my word) by adding language to the TOS to not take any responsibility for what anyone does while in-world. If DOJ did decide to pursue this, that language would hold no weight in court.

The reason for this is that these casinos are ongoing enterprises. If I go online and commit fraud, yes, they cannot be held responsible for my stealing money (oops, Linden dollars) from someone. However, if a thousand people operate casinos in-world and advertise events and pay LL to post classified ads advertising events, then they clearly are in violation of the law by supporting (and possibly encouraging) an ongoing illegal enterprise.

For those of you outside of the U.S., the only issue for you will be whether or not LL is compelled either by the government or thier own counsel to shutdown online casinos. I don't see this happening anytime soon, but you never know.

As for me, I'm looking to open a sports book in-world by football season. If I do really well I may clear a couple thou U.S. I'm certain that will put me on DOJ's radar.

Ummm paying another person for sex is also illegal... I don't see the cops in here breaking the SL prostitution rings up.

Uhhhh...have your parents had "The Talk" with you yet?

Y'see when a mommy and daddy really love each other.....they don't spend hours typing at each other.

Ok, for those of you who have not kept up with the rest of the class or are just interested in fear mongering, let me make this real simple: IT IS THE TAXES, STUPID!

If you are profiting more than what is required to trigger a 1099 form in SecondLife, then you need to pay your taxes. Simple as that. Report your income on the minimum to trigger a 1099 and you will be fine.

The entire case against the BetOnSports group is evasion of taxes. The wire fraud and consumer fraud charges are icing on the cake. Its the allegation that they failed to pay taxes on over US$3 billion in revenue that has screwed the pooch.

So, stop fear mongering: The casinos in SL are most likely legal, its the non-payment of taxes on profits that is illegal and that is from all earnings from SL, not just a casino.

Now, if you don't cash out, like some do, then there is nothing to worry about.

*Steps off soap box, puts away ruler and leaves the classroom*