My reaction to Orin's interesting piece on keeping criminal law out of the virtual world(s) is largely pragmatic and positivist. Any area of activity that generates outcries (as will Second Life and other planets in the virtual world when they become more populated and when some inhabitants resort to hate speech, and other offenses to majoritarian sentiments) will generate regulation over libertarian objections. We can think of the virtual world as following on the heels of the securities markets, religions, and universities. In each of these domains a good case could have been (and often was) made that government-as-we-know-it ought to stay out and allow the internal rules of the domain to regulate its voluntary inhabitants. But in each of these areas, as more citizens opted in to these worlds, there was less of a sense that they had agreed to prevailing rules, more of a sense that those in control could misbehave and fail to regulate themselves appropriately and, eventually, occasional or (in the case of securities markets) frequent intervention and regulation by law, including criminal law, followed.
Religions have done best in keeping legal regulation to a minimum, but of course they have some structural First Amendment advantages so that law is disinclined to become involved. The virtual world enjoys no such special status. Universities are given a great deal of leeway in setting their own internal rules (for things like plagiarism), but the external world of law does find its way inside. The example is not a bad one, because the "better" universities do in constructing and enforcing internal rules, the more likely are courts to leave them alone. If game administrators in the virtual world prove "good" (which is to say they conform to the tastes of the first world), then legal regulation will be rare or nearly as absent as Orin wishes. Of course, if this self-regulation is motivated by the fear of legal regulation, then the virtual world is really being regulated in the shadow of law, and the wish fulfillment is a bit hollow.
Second Life, and other pieces of the virtual world, might improve its chances by offering choice. Just as Teen Life is a tame version of Second Life, it is possible that the game administrators could warn "If you want a world with rules closer to the First World's, where hate speech and virtual rapes, for example, are scorned and penalized, then play Second Life Protected; but if your sense of escapism is so powerful that you would like as little First World regulation and leakage as possible, then play Second Life Total. We will do our best to fight against criminal and tort law interventions, and we will make it difficult for intermeddling authorities to find you in the First World." This sort of disclaimer might convince regulators and outraged legislators to steer clear of a world with such willing participants. Still, much as law ocasionally and eventually goes inside Major League Baseball or the National Hockey League, we should expect after-the-fact regret by some players to bring about legal intervention, whether we like it or not. In all these cases, I do not think we should limit the question to criminal law, though Orin is careful to do so. Tort Law and other law are powerful tools and we ought to include them in the discussion, as they will influence game administrators and players.
Thus far, the cases that have received attention have not been ones of hate speech within the virtual world, but rather of incitement within the virtual world (if I can unfairly count social networking sites as part of this world) that leads to violence in the real world. If law intervenes, there is the question of enforcement - and then immediately the idea that game administrators might be held liable as intermediaries who appear to be the cheapest cost avoiders. In a sense the question is why these game administrators should be any different from storekeepers and employers, who also benefit us with their diverse offerings but who have come to be regulated by law if the rules they try to establish within their domains are too offensive to the citizenry outside these domains.
I will shy away in this first post from saying much about whether we "ought" to leave these games outside the law. My point thus far is that we should not expect law to do so - and that there are plenty of analogous areas in which one might have made Orin's argument for a safe haven from law, but where no such safety materialized. Nor is it fair to say that the easy difference is that the vrtual world does not threaten physical harm. First, it does so when there is leakage to behavior in the real world. More important, I can not imagine that we would exempt an employer who said "Come work here if you like, but in this workplace I can scream racial and other inflammatory remarks at you. No physical violence or bondage, mind you, but I run a good, if different kind of, workplace with high wages, because emotional manipulation has no limits here."