August 3, 2008 by Ciaran Laval
Posted in
Amidst the VAT Town Hall feedback on the main forum, buried deep within is a response from Zee Linden that many people have ignored. Largely because too many people seem interested in "neener neener" politics.
VAT complaints by the way should be sent to European politicians, not Linden Lab, although there is the odd issue that Zee doesn't seem to think that charging tier inworld would be that much of an economic issue. Logistically I'd imagine it could be problematic but it would save me VAT at this current moment in time.
However back to the gambling point, here at post #196, Zee Linden:
"On another question, its also unfortunate that in some countries in the EU that gambling is allowed, but because our servers are all in the US these residents cannot gamble. This is something we can fix and we're working on it. In the meantime, unfortunately no gambling."
I hate to point out the obvious here, but generally to run gambling you need to be licensed. As far as I'm aware, gambling as it was in Second Life wasn't technically legal in Europe anyway. That however could be considered a moot point if Second Life can get a legalised gambling entity to run gambling games, and keep out the Americans. Unfortunately that's the way it would have to work.
This does suggest that the gambling ban has either hit Linden Lab's bottom line more than people thought, or that Linden Lab see the potential for growth from gambling. Generally I felt that the reason the economy as a whole wasn't badly hit by the gambling ban was because gambling money tended to stay in gambling circles. For example gamblers would buy Lindens to gamble and they'd spend their winnings on gambling some more.
Of course there were scripters and builders involved in the process but it was a specialised industry. There was a fair bit of gambling money in the economy, that can be seen from the economic statistics but gamblers often came to gamble, rather than immerse themselves in other areas of the virtual world. This isn't unusual, plenty of people come to Second life to enjoy a certain aspect of it.
Now if Linden Lab were to ban say sex, then I think we'd see a big economic meltdown because sex sells and goes across many differernt areas of Second Life.
So how can Linden Lab "fix it" so that gambling can be engaged in by some residents and not by others? IDV? It's interesting that this is on the VAT thread because part of the reason that VAT needs to be charged is because Linden Lab have a presence in Europe. If Linden Lab didn't have a presence in Europe they could stick two fingers up at the request to collect VAT.
I'll be watching how this unfolds with interest, but if Linden Lab think they can allow the sort of unlicensed gambling we had before and not be treading on rocky ground, they could very well be in for a rude awakening.
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Here one of those gaming sites
Looks like most are games of skill: http://slurl.com/secondlife/Bastiat/89/89/28 . Several other throughout SL
Probably Right
I think you're right. Gambling is a great replacement for honest-to-god content and it keeps people buying lindens. I have a hunch that many US citizens were attracted to SL solely for the gambling. That's probably true across-the-board where banking is concerned. Where SL users are concerned, I think LL being limited by US laws is less-than-appealing for users abroad.
While I don't put much stock in those soundbytes I see on the news where "x country feels y way about z country," I do not think I would want to visit a virtual environment touting "limitless freedom" only to find that that environment couldn't even afford me the freedoms I'm accustomed to in my home country.
How would they 'fix' it? Beyond me. I've several theories of how it could be done to address legislative restrictions, but none of these seem particularly viable given how resource intensive they'd be. Then again, I'm not particularly tech savvy. Any guesses out there(legally informed or otherwise)?
VISA/MASTERCARD
As pointed out by in this interview http://www.cfo.com/article.cfm/9858165/2/c_9891771?f=related "we specifically called out gambling, primarily because our credit-card processors were very concerned about us processing payments for gambling activities", it's a simple Consumer Credit Code issue, (that's what they call it in Aus, but will be similar elsewhere) you cannot gamble OR pay for credit on any credit product. For example, I cannot pay my homeloan repayment on my credit card, nor can I pay one credit card payment with another credit card.
If you can do this in your country, I would like to hear from you...
:) Hopefully I am not being too presumptuous, apologies if I am.
Logansan Oh
.I'm all for it coming back.
Europe
This ties in somewhat with the whole Europe issue on a broader scale. VAT is collected because Linden Lab have a presence in Europe, the European Union cannot force a foreign firm to collect VAT.
However if Linden Lab want to pursue a European angle, such as online gambling, then they may setup Linden Lab Europe and it's therefore in their best interests to be model citizens.
Visa and Mastercard do not block payments to online gambling sites in Europe for European citizens.
The UK, where Linden Lab have an office, is considered to be online gambling friendly.
There's also the identity verification partner in the shape and form of Integrity Aristotle whom would provide the service for such a venture.
Philip Linden said some time ago that he didn't want Second Life to be governed by the lowest common denominator.
Suddenly lots of disparate strands start to make some sense.
SLNN did an article about "legal gambling"
My thoughts are that it would be insanely difficult for the Lindens to allow gambling, because the laws that they were affected by in the US apply (normally) to credit card companies and Paypal like services based in the United States. Basically, Linden Labs was informed that if they continued to allow gambling on their platform Paypal and the credit card companies would have nothing to do with them. However, residents are forever looking for loopholes an example of one is here http://slnn.com/article/gambling-returns-to-sl/ .
Odd comment. It seems
Odd comment. It seems insanely simple to me. Just set up a server farm in Europe and then block people from the US from entering the sims that are housed there using IP addresses. It won't be perfect against proxies and whatever but it will be quite sufficient to satisfy law makers and I suppose credit cards.
Yeah
That's one of the theories I came up with. But I'm not sure if a US company setting something like that up abroad would remedy the legal issues LL is trying to stave off. The fact that it's "not perfect" is what made me think it to be inviable. A US-based company providing gambling services to customers abroad, even using a foreign server, wouldn't they have to show that US citizens were being vetted? And wouldn't that be incredibly resource intensive to do the way it needs to be done?
When I said that I wasn't armed to back up my suspected theories, it's simply because my interests in Safe Port is only to the extent in which it violates civil rights. I haven't spent much time considering how one might circumvent the ULIGEA. Ben lurks around here, so he might have thoughts to share - not really sure. I subscribe to the popular belief that Safe Port will be targeted for some serious revisions in 2009. So where that itself is concerned, LL will probably wait.
As I mentioned above, LL's focus probably extends beyond gambling to attracting customers from abroad that don't want to be limited by US laws. I'm interested to see if I'm right, but creating servers for specific subgroups probably would cause them more trouble than they want in the end.
Grid to Grid = Gambling Back
This was the first comment in my Metanomics op-ed (Benjamin Duranske on the Law and the Grid) yesterday: "The biggest legal impact of 'the grid' is that local laws will govern. Want to run a casino? Drop a server in Antigua."
Re: the UIGEA (it's the "Unlawful Internet Gambling Enforcement Act") my view is that no matter how much the representatives from Nevada posture about it, it's not going to get revised unless a court or three finds it unconstitutional. Too many people in the rest of the puritanical country don't like them-thar cardplayers overmuch.
Linden Lab would still be on the hook for payment processing for other installations of "Second Life" in other countries (e.g. mainland and islands) -- but not for, say, third-party "Gambling Life" hosted on an OpenSim server. The key is getting a payment system into OpenSim, and they've left that to the market. I suspect that's on the sooner-rather-than-later horizon, and if whoever is thinking about implementing it needs a General Counsel, give me a call, because I think that an unaffiliated dispersed micropayment solution for "the grid" is the #1 moneymaker in this space over the next five years.
Actually...
The US applied laws to payment processing facilities. That is how they pressured out gambling - when credit card processing stopped for gambling, people switched to PayPal. Then PayPal got a few letters, and presto magico... tada.
And so it was with Second Life, where payment processing was contingent on a lack of gambling. There you are. That's how it was done. People in the cheap seats should read 'Who Controls The Internet'. It all becomes a little more clear.
Second Life Consultant
Amusingly
I read your (Ben's) comment after reading this CNN article.
Taken from the above link:
"Gonzalez and the others used anonymous Internet-based currencies to conceal and launder their proceeds, as well as channeling funds through bank accounts in Eastern Europe..."
Anonymous Internet-based currencies like, say, Linden$? WICS? So on and so forth? I do believe this was also one of the claims the committee which UIGEA was based made in favor of the prohibiting online gambling, that is, that online casinos were a haven for laundering. To be honest, it made me think more of your previous comment concerning the exchanges, but since it seems to apply to both, I'm just going to post it here. Thoughts?
Could be. The current VW
Could be. The current VW currencies are probably too small-scale, even Linden Dollars, but long term, money laundering in VWs is the bogeyman that a lot of people are worried about.