Second Life banned gambling this week in a preemptive move to avoid running up against American and international regulations. Casino owners were furious, as it was unclear what would happen to their virtual assets (many of which were acquired with the investment of real life dollars). But before you begin to pity them too much, consider the fact that Second Life gambling wasn't regulated by any internal or external organization, so there was no guarantee that the house would play fair. Here's a tale of woe from one unhappy former Second Life gambler. Lawyers who were interviewed on the subject of gambling in Second Life over the past couple of months seemed to agree that this form of unregulated gambling with money that could be translated into American dollars was illegal in the U.S. How many people will be affected by this development? It's unclear, but my guess is that the number is smaller than members of the media might imagine. Nevertheless, the larger concern amongst Second Life diehards is that Linden Labs will curtail more freedoms soon in order to please corporations who are building a Second Life presence. After the jump, outside commentary and some user views on the development.

"It feels like the beginning of the end of the 'wild west' that was Second Life's relatively hands-off policy, in terms of allowing users to build what they liked, and attempt to monetize it. With real-life laws being interpreted on the safe side…we can expect more blanket bans and top-down regulation." — Steve O'Hear, ZDNet

"I've been a member since November 2006. In all the time I've been a member, the world has been loaded with casinos and I recently decided to buy a poker table. I've had the table just over a month, which cost me L$25,000 (around £50), and overnight Linden Labs, without warning, has decided to ban gambling making my poker table useless." — Second Life resident in an interview at Webuser

"No gambling, more personal accountability, tons of virtual responsibility. Only last month the company stamped out bestiality. OK, so the Round-Up's not going to lose too much sleep over that last one but it's the principle. Is no liberty sacred?" — from the Weekly Roundup, Silicon.com

"While not everyone agrees that there's a financial crisis brewing, some of the economic statistics show that the Second Life economy has taken a hit…the number of U.S. dollars spent in Second Life per day [declined] from more than $2,000,000 on July 26, the day the gambling ban was announced, to about $800,000 on July 30." — Thomas Claburn, Information Week

"Today I needed only to look across the virtual street in world to find a casino still operating. When does the gambling ban really begin? How long before they start actually enforcing the ban? The Linden dollar hasn't yet been impacted, still hovering at an exchange rate of around L$265-270 - $1 USD." — Things that Make you go hmm…

"Uhoh, I hate to say it, but I think the feds are really starting to close in on SL. Next we will be reporting our SL income, and pay taxes on what we buy and sell here. I don't like it [Linden Labs], I think you should begin plans to move your servers to an island somewhere…where there are limited or no laws that would inflict SL freedoms." — Alex1Richardson, comment on Second Life Blog

"This action is ethically wrong. As stated residents are responsible for THEIR LOCAL laws. This blows that out the window. LL pretends the fault is with residents that have been legally operating under their local law and the terms of service while wiping out the value of their investments. Shameful." — Nikki Claymore, comment on Second Life Blog

"my issue is the "no reimbursement" factor. understood they couldnt possibly go through EVERYONE that has a gambling machine.. etc. BUT where does all this money go now that people have spent hard earned/bought linden on all these machines?? nowhere??" — Harwood Hax comment on

"why now? Unlike May's age verification announcement, which occurred after a rash of controversy, this move seems unexpected; indeed, a visit from the FBI in April set no clear legal prohibitions against wagering in SL." — Hamlet, New World Notes

"don't expect Linden to stand up for your privacy if they come after you - Linden's new Terms of Service states they will comply with all subpoenas from law enforcement to give away as much information about your as the Feds require." — Wiley Ferret, The Inquirer

— S.E. Kramer