Is gambling in Second Life online gambling?

The subject of today’s IRC tech chat hit on some recent legal issues surrounding online gambling. It wasn’t long before somebody mentioned gambling inside Second Life and asked: is this online gambling?

My response, essentially, was that Second Life players would probably be far down the list of prosecutions for online gambling because the Linden dollars used to play games might not have come from being real dollar purchase. Though I’m not an attorney, it seems to me that it would be difficult to prove that the player saw the gambling in Second Life as real gambling, especially if they were using Linden dollars they had never paid for (like the L$500 weekly stipend).Unlike online gambling sites where real money is purchased for the sole purpose of playing the gambling games, real money used to buy Linden dollars could be for paying land tier, attending shows, buying products/services.

As much I enjoyed making my dice game I’m seriously contemplating not building any more casino-type games inside Second Life. At least for the forseeable future. I already had some other programs I was working on that weren’t casino-oriented, so I’ll continue development with them and hopefully can carve out another niche. This doesn’t mean I won’t be making any more games that can award L$inden dollars as prizes. I like making games and think L$ prizes make them more exciting. I just have to figure out how far I want to go with making a game that is casino-oriented vs. one that is more entertainment based with a possible cash prize for high score. Making a casino game and slapping “FOR ENTERTAINMENT PURPOSES ONLY” may not be enough.

What do you think? Is gambling inside Second Life with $Linden the same as real online gambling? Are we just splitting hairs here or what?