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updated 8/1/2007 6:57:39 PM ET 2007-08-01T22:57:39

The virtual world "Second Life" has banned gambling, a cautious legal maneuver that could dent revenue and spark anger among fans.

Although "Second Life" is home to large corporations such as Toyota Motor Corp. and Intel Corp., which have virtual advertisements and marketing promotions, thousands of gambling shops dominate commerce. Virtual characters, known as "avatars," may compete at baccarat, poker, slots or other games.

San Francisco-based Linden Lab, which operates "Second Life," imposed the gambling ban last week, citing in a blog "conflicting gambling regulations around the world."

The company may remove violators' virtual equipment and may suspend or terminate accounts. Linden Labs also threatened to report user information to authorities.

"Second Life" executives refused to elaborate.

Numerous "Second Life" fans complained in message forums and on their blogs that the ban was a heavy-handed move to restrict freedom, and experts said the ban could crimp revenue.

"Second Life" has 8.5 million avatars, including 1.7 million logged on at least once in the past two months. Although creating an avatar is free, players may buy "Linden dollars," which can be cashed out for U.S. dollars at a variable rate. In the past 24 hours, players have spent $1.3 million on virtual clothes, real estate and other items.

Steve Nelson, chief strategy officer of Berkeley-based Clear Ink Inc., which provides virtual-world consulting services, said "Second Life" casino operators would be the hardest hit by the ban — but it could also result in an overall downturn in spending.

"It's a funny psychological thing, because even though for some people it's a small amount of real dollars, they are dollars that circulate in the SL economy," he said.

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