Is Gambling Legal in Second Life?

The Bush administration insists that Internet gambling violates U.S. law, to the point where last July federal agents arrested BetonSports.com CEO David Carruthers when he was changing flights at Dallas/Fort Worth Airport. If it’s illegal for U.S. residents to gamble online, what’s the legal status of an online casino in Second Life? The Second Life Herald has the story of how SL resident Magnus Rothlisberger recently lost 346,180 Linden dollars playing virtual blackjack and roulette - a sum which at current in-game exchange rates is valued at roughly $1,153 real U.S. dollars.

Valleywag quickly jumped on the issue of whether this might leave Second Life open to scrutiny from the feds:

Reality check: there’s only one reason to prefer the crude Benchmark-backed 3D environment over a purpose-built online casino. The Department of Justice, which tracks down online gambling in the US, and Paypal, through which many Second Life users fund their accounts, simply haven’t grokked yet what’s going on. If the online casino was ever busy, it would be shut down in a moment.

Terra Nova recently predicted a major Second Life backlash this year. Looks like Valleywag will continue to lead the charge.