$655,000 Spent in 24 hours, but is it 80% (illegal) Gambling?

by Urizenus Sklar on 12/12/06 at 11:18 pm

A few weeks ago, we reported an experiment by Anonymous, in which he wrote a script that allowed him to pass money back and forth between two avatars for an hour and a half. In that amount of time he was able to move the equivalent of $1 million US between his two avatars, and sure enough, the Linden stats for US Dollars “spent” in game spiked up $1 million for the next 24 hours. Linden lab essentially conceded that what this number measures is not dollars spent per se, but money changing hands. But changing hands for what?

I did a little experiment and you can do it too. On the “password request page” (and no doubt elsewhere) there is a graphic that lists the “last 10 transactions in world.” I randomly refreshed this 20 times and took screenshots (10 samples on two consecutive days) at times when there were over 16,000 people in world. Then I broke things down into two categories: (1) clearly identifiable as gambling (including sploders, although those were minimal if frequent – blackjack is what accounts for most of the money), and (2) everything else. Here is what I found for the 200 transactions I randomly selected:

Clearly Gambling: $29,854 L (about 110.57 US)
Everything Else: $ 7465 L (about 27.65 US)
That is, 80% of the money trading hands in those 200 transactions was gambling.

Now, I caution that this is not a scientific sampling; it could be way way off, and I’m hoping someone can write a script that would collect and analyze the data in a systematic way. In the meantime, I’d be interested in the results that the rest of you get when you try this informal experiment.

Factoid: Of the $7465 L non-gambling payments, 12% went to dancers’ tip jars!

9 Responses to “$655,000 Spent in 24 hours, but is it 80% (illegal) Gambling?”

  1. Prokofy Neva

    Dec 13th, 2006

    This is one of those mysteries of Second Life I’ve asked about many times and have been met with stony silence.

    Remember in the old days, a year ago or so, the Lindens used to run on the front page, “Last 10 transactions inworld” — it was a big featured deal then, over on the right hand side. I used to refresh the page, and see how it worked. If I took my rental boxes and paid $1000 into them, which was a payment to myself, sure enough, there it would be, “Ravenglass Rentals in Alston $1000″ appearing as a transaction — which was merely paying myself. If I sold land to myself for $1 to move it out of a group, that would show up, too.

    This column reflected objects/things purchased but not payments to avatars. If I took money from one avatar and sent it to my alt, then put it back to the main, that might show up in the overall transaction numbers, but not those ones showing purchases.

    More to the point, as you could witness from long observation, most of the payments were in gambling, and what wasn’t gambling was “tip jars for dancers” *cough*.

    I don’t know why the Lindens took that stream down; it went down as the same time they removed the “leader boards” (remember those?). And for some wierd reason, they parked that code on the newbies’ password page — a place where it would not really be seen and understood, but just kind of “parked”.

    I can’t even be sure that code is still hooked up right and recording current live transactions.

    The question also to ask is about these 58 richest avatars and in general, the top businesses. Land businesses are removed completely (as I ranted over in the thread about first land). So…now…what’s left? What are people selling? And the answer is, most of it is sex and gambling.

  2. Hiro Pendragon

    Dec 13th, 2006

    Not surprising at all. That would very much help explain why there is about an 80% disparity between the US$ spent statistic and the US$ sold on Lindex statistic. (Albeit, this doesn’t account for SLEX or other 3rd party L$ < -> US$ transactions.)

  3. Urizenus

    Dec 13th, 2006

    Interesting point Hiro. Gambing involves a lot of money passing back and forth between the gambler and the house before it eventually ends up in the hands of the house. So a dollar spent on Lindex nets you 250 L, but if you take that to the casino that skims 5%, you might eventually see aound $5,000L, or $20 total passed back and forth and reported in the “US Dollars spent” column. If people just bought clothes and the clothing merchants cashed out, then you would have close to a 1:1 ratio of money spent on Lindens to money “spent” in world.

  4. mktgemail

    Dec 14th, 2006


    Topic 420 – Bartering Income

    Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services exchanged must be included in the income of both parties.

    Income from bartering is taxable in the year in which you receive the goods or services. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business. If you failed to report bartering income on returns you have already filed, you should correct this by filing an amended return, Form 1040X (PDF), for each year involved. For information on amended returns, refer to Topic 308.

    A barter exchange is any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis.

    The Internet has provided a medium for new growth in the bartering exchange industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099–B for all transactions unless certain exceptions are met. Refer to Barter Exchanges for additional information on this subject.

    If you are in a business or trade, you may deduct any costs you incurred to perform the work that was bartered. If you exchanged property or services through a barter exchange, you should receive a Form 1099-B (PDF), Proceeds from Broker and Barter Exchange Transactions. The Form 1099–B or other statement generally will show the value of any cash, property, services, credits, or scrip you received from the exchange during the year. The IRS will also receive the same information.

    If you receive income from bartering, you may be required to make estimated tax payments. Refer to Topic 355 for additional information.

    Additional examples of bartering, and information on how to report the income, are described in Publication 525, Taxable and Nontaxable Income.

  5. Tone Nari

    Dec 15th, 2006

    a href=”http://www.my-sl.com/modules.php?name=News&file=article&sid=28″ rel=”nofollow”>Graphs showing that those numbers are not real.

  6. G

    Jul 10th, 2007

    “I’m hoping someone can write a script that would collect and analyze the data in a systematic way.”

    I did just that last year and logged several months of info. However, Linden Lab no longer puts the info online, so I can no longer use the program. According to data from January 2007, about US$500,000 was spent on item purchases per week, and about US$1,000,000 was spent on gambling per week. It’s true that most transactions are gambling, but they are usually small transactions. And some amount of that goes back to the players as winnings, of course. Apparently, both Xcite and Naughty Designs were each making US$10,000 per week. Other big names like Made Men, X2, Blaze, Hoffman Designs, Nyte’N'Day, BareRose, Shiny Things, and Mischief Designs were making between US$1,000 and US$4,000 per week (profits per store did not vary between weeks). Casinos couldn’t be tracked so easily since their machines have generic names, but I estimated that a top-notch casino could make US$1,000,000 per year (twice as much as Xcite or Naughty Designs) in profit. That estimate may have been off, but the other numbers are dead-on according to what Linden Labs had on that page.

  7. urizenus

    Jul 10th, 2007

    wowzers G, thanks for that! Can you write up a more detailed report of your analysis? We’ll run it in the main thread. Send it to me: urizenussklar@gmail.com or to pixeleen mistral inworld.

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