H.r.4411.rh/h.r.4954.eas

It looks like Congress has passed the Unlawful Internet Gambling Enforcement Act of 2006. Should SL clubs that include gambling worry about this?

There's an analysis at http://forumserver.twoplustwo.com/showflat.php?Cat=0&Number=7508486 that looks pretty disturbing to me, because it includes mention of online games that award points, that they cannot be convertible to actual currency. I'm not a lawyer and can't have an opinion, but it's worrisome.

I have a friend building a new club and it's definitely something I'm sure he'd want to be careful about. Many thanks.

As this Act was only recently adopted into law, I do not think its complete interpretation can be known. Nevertheless, I can give some early thoughts from the perspective of Linden Lab. As always, you should note that I am Linden Lab's lawyer and I cannot provide legal advice to you or to any customer of Linden Lab.

A very brief, and therefore incomplete, description of the Act is that it prohibits *gambling businesses* from accepting *funds or credit* from *designated payment systems* for *unlawful Internet gambling*.

Linden Lab does not operate a gambling business. Linden Lab is an interactive computer service provider of a simulated 3D environment, upon which users engage in activities of their own creation.

Linden Dollars are not money, they are neither funds nor credit for funds. Linden Dollars represent a limited license right to use a feature of the simulated environment. Linden Lab does not offer any right of redemption for any sum of money, or any other guarantee of monetary value, for Linden Dollars. (I recently addressed this in detail here.)

Linden Lab does not operate a designated payment system under the Act. The movement of Linden Dollars, like that of any virtual world asset, is a use of license rights in intellectual property.

The Act does not specifically define whether the simulation of wagering in a virtual world environment is unlawful gambling - although to the extent it is, the Act supports the position that the unlawful gambling is conducted by the parties that place and accept the wager. Accordingly, the liability of the computer service provider is specifically limited under the Act.

The Act was not written specifically to address virtual world services like Second Life. It may be that the laws may continue to evolve to clarify some of these positions one way or the other. And again, it is certainly the case that users of Second Life must seek advice from their own qualified legal counsel for any questions about their own legal positions. Linden Lab cannot and does not provide legal advice to users of Second Life.

Most importantly, as we've stated previously, Linden Lab will cooperate with any law enforcement investigation having jurisdiction over these matters. We have invited and will continue to invite law enforcement authorities to review these issues. We are not in the business of playing coy with laws that apply to us. If any law enforcement authority issues a statement to us regarding their interpretation of the Act or any similar law with respect to Second Life, we will publish that statement to our users if permitted to do so under law.

Actual text of act:
http://thomas.loc.gov/cgi-bin/query/z?c109:h.r.4411: (click most recent version posted on that page)

[UPDATE] On Oct. 4, 2006, this Linden Answer was included in our Knowledge Base for future reference! Please have a look if you'd like to read about additional Linden policies, how-tos, FAQs, and more!