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America's clampdown on online gambling has taken the FBI into cyberspace as part of an investigation into virtual-world casinos.
Second Life, the massively popular online world, has confirmed that FBI agents - presumably adopting virtual personas - have visited casinos being run inside its 3D digital universe. The move could extend America’s crackdown on internet gambling.
Hundreds of virtual venues in Second Life, which is run by San Francisco-based Linden Labs, offer the site’s 4.5 million users the opportunity to place bets on games such as poker and blackjack using the world's “virtual currency”, the Linden dollar.
Although the amount spent on gambling inside Second Life is thought to be relatively modest, the world is growing rapidly.
In January, Second Life Residents converted their Linden Dollars into approximately $5 million in “real money”. The game's virtual economy has increased nearly seven-fold in the past year. Premium membership to the site costs $10 a month.
SecondLife has said that it is aware of the FBI visit, and that it has sought guidance on virtual gaming activity in Second Life but had not yet received clear rules from US authorities.
Bobby Mamudi, of Gaming Intelligence Group, the market researcher, said that virtual worlds could become hugely lucrative platforms for gaming companies and that the legal situation in the US, which last year outlawed online gaming, has shown signs of shifting.
"It does sound like there's a softening attitude towards online gambling in the US," he said. "It is unlikely that we will see any decisive moves on virtual world gambling until the wider picture settles."
Last year, in the wake of the Unlawful Internet Gambling Enforcement Act (UIGEA), which devastated the US-facing businesses of a string of London-listed gaming companies, Ginsu Yoon, then Linden’s general counsel, wrote on the group’s website that it was unclear what impact the legislation would have on virtual world gambling.
He said: “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.”
He added: 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.”
However, experts said that Linden cannot be sure that it does not fall under the Act, which targets the banks and credit card companies that transfer funds in internet gambling.
Linden recently appointed NetSuite, a specialist Silicon Valley software company, to upgrade the back-office infrastructure that runs its virtual economy after the previous system became overwhelmed.
Gaming Intelligence Group recently picked virtual-world gambling as a potential growth area for gaming companies. It suggested that players could be invited to assume the personas of glamorous James Bond-like figures to game in swanky virtual surroundings.
However, it added: "With almost $2 billion [Linden dollars] in virtual circulation and a real world exchange rate of L$267 to the US dollar, the currency almost certainly qualifies as ‘something of value’, under the definition used in the UIGEA."
Scores of other businesses are also taking part in the virtual economy. Companies including adidas and Toyota have a presence in Second Life alongside politicians including Hillary Clinton, who are running virtual campaigns there. Reuters set up a Second Life news bureau last year and about 70 colleges and universities, including Harvard, now teach classes inside Second Life.
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