Internet gambling law

Here is a link to the basics of the internet gambling/gaming law
http://www.gambling-law-us.com/Federal-Laws/internet-gambling-ban.htm

Basically it refers to US Dollars. Since Lindens are not US Dollars and the exchange rate is no where near being equal it shouldnt effect Second Life. I am by no means a lawyer or claim to understand all the double talk and other BS but from what I read it seems that Second Life should be able to allow "casino, gaming or gambling".

Some of the statements are confusing such as:
1) being engaged in the business of betting or wagering: wouldnt this be a "bookie" or even the lotteries.
4) in connection with with the participation of a bettor: repeat of the above.

excluded from the coverage of "unlawful Internet gambling" are

waypoints along the World Wide Web that are only incidental to the places where the electronic transmission of the bet or wager is initiated and finally received.

online bets made solely within a single state under an enabling statute passed by that state. [Note: there are no such enabling laws at this time.]

online bets made solely on or among Indian tribal lands under enabling laws adopted by the affected tribes and approved by the National Indian Gaming Commission. [Note: no such laws have been adopted or approved at this time.]

online bets made under the Interstate Horseracing Act. [Note: online interstate bets on horse races where such bets are legal at both ends of the online connection have been permitted under that law since 2000.]


This is just getting more and more confusing just as all laws are.....
Anyway, we have Pres Bush to thank for another useless law and waste of govt time and tax money. I personally dont need anyone telling me how I spend my money whether it be linden dollars or us dollars.

Until an unregulated On line Gambling site doesn't pay you off,or worse drains your bank account unknowingly. Then the howls of "Where is the Government?" begin......

I would be calling a lawyer if I was cheated by someone....not the US Govt.....If I waited for the govt to take care of the problem I'd be long gone and my grandkids would be having grandkids....lol!

The site says:



(1) being engaged in the business of betting or wagering
(2) knowingly accept

(3) proceeds from credit cards, electronic fund transfers and checks
(4) in connection with with the participation of a bettor

(5) in unlawful Internet gambling, which is the sponsorship of online gambling that violates any other federal or state anti-gambling law..



This means that if SL is engaged in gambling, and you try to cash out lindens, LL is liable, I think.

The problem is, LL could say, "No we don't think it applies to us" at which point the feds say, "well, one way to find out -- see you in court! Oh, and while this is in dispute, shut down SL."

Yuh.

So, this would make Robin Linden's comment in the Reuter's story make sense -- it is a business decision -- a decision to duck being the test case in court.

No SL? No gambling? If you saw it as a choice, which would you take?

Yrs,

well, actually, I am a lawyer and an online poker player as well. You don't have Pres. Bush to thank for this, you have Sen. Bill Frist and his ilk to thank for this. Frist snuck this bill in, literally in the dead of night, by attaching it to the SAFE Port Act, an appropriation bill for national defense, that Frist knew had to pass regardless of what was attached to it. He also knew that Bush had no choice but to sign it, and that the timing of his attachment meant that there would be no way to debate his addition to the bill. Technically it's legal, but morally and ethically, it stinks.

At any rate, the Unlawful Internet Gambling Enforcement Act attacks the intsitutions which facilitate transactions involving internet gaming. The drafters of the bill knew that they wouldn't be able to go after the gaming sites, which are entirely off shore. You can indict BoDog or Absolute Poker, but what are you going to do, ask them nicely to fly in from Costa Rica or wherever they are? Good luck. On the other hand, if you make it illegal to transfer cash to those sites, then you can go after US banks, Western Union, etc. In fact, the UIGEA puts the burden on the banks to come up with a way to monitor transfers and ensure they don't go to online gaming sites.

LL fits into the picture not because they ran a gaming site, which they didn't, but because the platform they ran allowed for gaming to occur on it, and because they allowed US dollars to transfer onto the site and they knew some of those dollars were going to be used for gambling. Call them Lindens, Dollars, EU's, credits, casino chips, whatever, if they can be converted into currency, the UIGEA applies. LL had no choice in this case but to at least make an attempt to shut down gambling in SL. The heads of the company were in jeapordy. Google "Neteller founders" if you don't believe me. The two guys who founded the company are currently entering guilty pleas in federal court.

As far as location goes, the fact that LL is located in the US is enough. However, there is plenty of case law that indicates that the location of both the person placing the bet and the location of the servers/corporation receiving it are relevant. If LL is located in San Francisco, California, but I place a bet in Washington State, no matter how small, I have committed a felony under Washington law and, I believe, a misdemeanor under CA law. LL may be guilty of both as well, the casino operator in LL is probably guilty of both, even if he or she lives in another country altogether. Jurisdiction is a mess when it comes to online issues.

The bottom line is that as much as I hate it, and as much as it is a completely improper imposition on our personal lives, gambling on SL was illegal and LL faced prosecution if it continued. For a more in depth analysis, check out the politics and law forum at www.twoplustwo.com. Those guys were on top of this from day one, mainly because a lot of them made their entire living playing online poker. They are also on the front line of trying to get the laws repealed. There are several bills in congress which would have varying effects on the UIGEA. Please support them.

Really, IMHO, the larger issue here is one of personal choice. Even if you hate gambling, why make it illegal? If I want to play .05/.10 poker in the comfort of my own home, with my own money, when I'm not hurting anyone or abandoning my family or anything, just leave me alone and let me do it. If someone doesn't like it, they don't have to play. I don't like knitting, but I couldn't care less if someone else wants to do it. If it's addictive, tax it and provide treatment. Outlawing internet poker isn't going to stop gambling addicts any more than outlawing beer would stop alcoholics.

Anyway, that's just my .02

Lindens are play money. Yes it can be changed to US dollars but so can anything...look at E-bay and all the crap people buy.
I don't have to pay taxes on Lindens just like I don't have to pay taxes on poker chips. It's when I change them to US dollars that the taxes play a part. So if I don't pay taxes then the Lindens are not a source of income until it's changed, just like poker chips or my old garage crap I want to sell on E-bay.
Now if the Lindens are not a source of income then how is gambling in SL wrong?
I just don't get it I guess.

Lindens are treated like currency because they are traded like currency. You do have to pay taxes on any form of gambling winning, regardless of whether you have converted back into US currency. For example, say you buy $1,000 worth of chips at Ceasar's Palace in Las Vegas, then you go enter a poker tournament and win $40,000. They will pay you in chips if you want. You can then have them hold the chips in a safe deposit box, so you can just grab them whenever you go there to play. When April 15 rolls around and you pay your taxes, you have to claim a $39,000 gambling win, assuming you have otherwise broken even with the money or have not gambled any more with it. It doesn't matter whether you have converted the chips to currency - you still have to pay taxes on the win, because they are the equivalent of currency. It's no different than if you won a bunch of Japanese Yen or EU's or whatever.

Technically, if you won money gaming in SL, you would have to pay taxes on that money, just like you have to pay taxes if you turn any sort of profit on SL from anything else, like building, scripting, escorting, or whatever. Most people don't make enough for it to matter in a practical sense. You aren't going to claim on your taxes that you made $1.38 by camping for a week straight because it just doesn't matter.

In your eBay example, if you sell something on ebay for a profit, you pay taxes on the net capital gain. If you are just selling crap out of your garage, you are probably selling it for a discount off of what you paid for it new, so there is no gain and therefore no tax due.

Henry David Thoreau said it best...I heartily accept the motto, "That government is best which governs least"; and I should like to see it acted up to more rapidly and systematically. Civil Disobedience

Trout Recreant i just put this in other post but like you are a lawyer i wish ask you...

If i have a machine that allow bet and give money to the winner and wish play it with friends at my private home with security orb that only allow come inside some friends. Is it illegal? Of course the machine don't get a % of the money , give all to the winner. It's for have fun not for make money. I can understand if someone put a casino or game area with 100 machines etc for make money etc well i understand it.

But i don't see the police (in real life) coming inside your house because you are playing cards with friends and bet some cents of dollar. This is....

Can't i have a machine for play at home with my friends and bet some cents if we wish?

Is illegal sell a game machine that have the bet function deactivated but allow you active it if you wish? Hahaha this remember me the knife example. Is legal sell knifes? People can use it for kill others instead of use it in the kitchen...

Regards

Pure: Thanks for posting a link to an informative site about the actual law.

Trout: Thanks for a good summary of the reality, and I tend to agree with your position at least as regards gambling (I'm not a Libertarian in general).

Max: If you withdraw $L as $US, then you *do* have to pay income taxes on any earnings. Your point is often raised in this context, and it never holds water, based on existing tax precedents and a wide variety of similar situations (e.g., poker chips in a casino). In theory, it doesn't hold water, and in practice, it drains like a seive.

Juan: Your question has been answered on the other thread, and it doesn't take a lawer to answer it. As it turns out, LL's text about what constitutes gambling (posted only on their blog and missing from the TOS) is NOT what quite they mean and NOT quite what they enforce. But as mentioned in the other thread, exchange of $L based on chance is what they say they're banning and what they actually do ban. It doesn't take a lawer to answer this question.

Thanks Lear Cale.

Well my game is a skill game like Tringo is cosidered i think. All are equal in each round and only the intelligence and strategy of each one decide the winner. In all case i'll invite a Linden to test it when i finish it. I think the best is give the buyer the posibility of set up the game like he want with or without pot.

LL doesn't want to get involved.

Question to trout. I'm from europe and I wonder how it is possible I pay VAT in EU and still get US laws punched in to my stomach. If I pay VAT on something this means I imported it into the EU right? I don't get it why my land would be located in san francisco when I pay VAT for it overhere.

Hello All,

Im new to SL and was going to build a casino searching games tables and all knds of things, until I came across someone in SL that said Gambling is banned and if you get caught you get banned!

This person said I know where you can play black jack, not my cup of tea because I like Texas hold'em and I play small with niclkes and dimes because I enjoy the art of the game its not about the money when playing, for me its the game! but anyway he gives me a note card which can teleport you there to baja, cool lets go.

When I get there, I found one black jack table which was no fun no dealer and decided to tour the club.

What I found was an escort I asked how do you get hired in SL, no answer then the owners of the club showed up and I asked them too "how do you Hire people?" just incase this gambling thing does become legal in SL I can hire managers for the casino Id like to build. The owners only concern because they didnt speak much english was only to pimp out thier escorts and I decided to get out of thier hapily married.

This was the part of SL that really blew my mind Your Not aloud to Gamble in SL but its ok to Pay for Virtual Sex!

Wouldn't that be a form of prostatution?

If you can Buy Prostatutes im sorry Escorts for Virtual Sex than why cant I go and play a simple game of poker? SL is slanted

Is there anything we poker players can do to get poker back into the mainstream of SL?

Sincerely,
Michael

Set the poker game up to play for points only, with no reward. Then it's legal, as long as nobody's converting points to money somehow.

Which kinda takes the meaning out of poker.

Texas Hold'em would be an interesting game to script, frankly. And you could set up a number of tables to play a tournament, which would be cool. Only, no prize of value would be allowed for the winner.

As the posts above point out, the reason for the ban is that LL wants to be able to be paid by major credit card companies. If they don't ban gambling, the credit card companies won't make payments to LL (to avoid legal liabilities). All this has nothing to do with VAT tax.

It's a bitch, but that's how it is.

I understand that but the EU can also forbid CC companies to operate in europe. I know this won't just happen for a casino ban but slowly we europeans evolve to a world where EU laws are undermined by US laws. At a certain point EU regulators will also start to notice this as the US laws are pushed upon the rest of the world. In the latest news about the US and their internet casino bans the WTO has decided that a few countries now are allowed to infringe copyrights from the US as damage control for the loss of income of internet gambling. As you can see the last word ain't said yet.

The EU are also forcing their laws on LL. (Effectively forcing their laws on America)

LL were paying the EU members VAT for years. They even admitted as such in a blog posting.

It's down to a silly EU law and conservative lawyers at LL who don't see a way out that countless other American firms do.

An eternal truth! At least, as long as the last lawyer or politician still breathes ...