You may have seen the name ‘Gisland’ associated with 888 and Dragonfish. I mentioned it on Massively, about a year ago. Apparently, Gisland is a subdivision or subsidiary formed by 888 as a part of their payments processing arrangements for Second Life with Linden Lab.

The word doesn’t seem to mean a whole terrible lot, but you could read it as “G-Island”. If that “G” looks like it might stand for “Gambling”, well … actually that might be a really good guess, as it turns out.

The word is that – from sometime in 2008 – Linden Lab’s board has been considering relaxing the ban on gambling in Second Life, which was originally triggered in response to the then-pending UIGEA (Unlawful Internet Gambling Act). Many companies, including credit-card companies and Linden Lab itself, scrambled to meet compliance with the draft act with the expectation that it would pass into law.

The UIGEA actually, never quite did. One critical part of the legislation that would actually make Internet gambling … well unlawful has now been dead in committee for over a year with no sign of return. Nobody’s really relaxed all that much as that last piece of legislation that makes the Act function could re-emerge suddenly – so it has continued to have what is called a ‘chilling effect’ on Internet gambling operations to and through the USA, as well as any payments processing taking place in the USA that might relate to Internet gambling (or to anything that might be mistaken for it in bad lighting conditions).

With the possible spectre of the UIGEA still floating around, it wouldn’t be wise to just reverse the original ban. However, there are ways – partially or wholly – to evade most of that risk, and a European [Apparently 888 is an Israeli company – I’m not sure where I got the impression that it was European –Tat] Internet gambling business with a strong payments processing division is just the ticket.

Just 24 hours ago, did I believe that Linden Lab might be planning to relent on its gambling bans? No. I absolutely did not. However, I have now been convinced by persons who were involved in the steps towards that.

Multiple sources who were close to the deal with Linden Lab and 888 through the last two years confirmed that:

“Since 2009, the expectation in Linden Lab has been that the board will allow gambling again in 2011. The seeds of that expectation, apparently, began as early as sometime in 2008. When the board makes that decision, assuming a number of preconditions are met, there is the additional expectation that Gisland/888 will be the party to help Linden Lab make that come to pass. A key advantage of working with Gisland is their gambling business, and that was one (among several) key factors that tipped the choice towards them over a number of other competing possibilities. A significant part of the current strategy appears to be to assess how well Gisland/888 performs in other, more conventional areas before moving on towards the gambling area.”

Certainly the expectation that Linden Lab’s board will change its stance on its current gambling strictures seems to be strong among those in the know.

Thus the irony of Linden Lab teaming up with an online gambling firm is clarified. There’s a plan, and it explains the seeming-contradiction.

That’s no guarantee that – when push comes to shove – that Linden Lab will definitely make the choice to relax its strictures on gambling operations in Second Life next year. There are no absolute guarantees in any business – and having plans is not quite the same thing as bringing them successfully to fruition – but this appears to be the trajectory and a goal which the Lab has been aiming for since 2008.

Hang on to your hats, folks. 2011 looks like it’s going to be an interesting time.

Update: Linden Lab has asked me to add a statement from them to this story:

In 2007, we enacted a ban on gambling in Second Life to ensure our platform remained in compliance with applicable US laws. Those laws remain in place, and we will of course continue to follow all applicable state and federal laws.

Of course, nobody doubted that the Lab would comply with all of the applicable laws throughout. Which has nothing to do with whether the Lab intends to relent on the blanket gambling ban, and should not be mistaken for a denial.

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