Decentralized grids and the law

Linden Labs has, throughout 2006 and 2007, taken a couple of controversial or unpopular measures to curb possibly illegal behaviour in Second Life. Illegal.. by what law?

As Linden Labs and their Second Life servers are located in the United States, the answer is: US law. Although Linden Labs, as a commercial enterprise, might be sensitive to legal issues arising from foreign law as well. For instance, Linden Labs banned ageplay (avatars posing as kids) mostly because it attracted a lot of negative publicity in Germany and other European countries, which caused governments to take a closer, and often unkind look at what's going on in Second Life. I don't know wether Linden Labs takes non US law into consideration when shaping their policies; perhaps that's a question Benjamin Duranske can answer, but I wouldn't be surprised if they did.

But, as open source simulator platforms like OpenSim mature, new grids emerge. Not owned by a commercial enterprise, not centrally managed, like Second Life. These are geographically dispersed grids, made up of simulators (computers) owned by different people or legal entities from all over the world, often controlled by a central user and grid registry.

I wonder who, if anyone, is legally responsible for such a grid? Who can assert jurisdiction over the grid as a whole? These questions can be of great interest, now that Casinos and banks, banned from Second Life, are contemplating a relocation to these open grids. An interesting but also worrying development, with possibly interesting legal aspects.

In the linked article, Reuters mentions that Casinos are welcome in CentralGrid, as long as they come from a legal entity, and ban American avatars. I wonder how CentralGrid plans on doing that? How are they going to determine from what country an avatar comes from? Is that even relevant in a virtual world? It's easy to choose a completely random country for your avatar (or an alt) if you want to, and even tracing IP traffic may not 100% reliably determine where the human, controlling the avatar, is located. In my opinion, statements like these from CentralGrid
are little more than window dressing, intended to fend off US law enforcement. But, even if it's little more than that, the statement still implies that CentralGrid considers itself subject to US law.

What if I, a citizen of the EU, rent a hosting server in a country with, uh, let's call it a less restrictive legal climate. I base my central user and grid registry on this hosted server, with a couple of sims. Subsequently, people from all over the world connect their sims to this grid, and soon casinos, shady night clubs, banks and an exquise assortiment of weird types of roleplay can be found there. Now what law applies to this grid? It could be EU law as I am a resident of the EU, or it could be the law of the country where my central user/grid server is located. Or, perhaps, each simulator falls under the jurisdiction of the country where it's hosted? If so, it's probably going to be very hard to enforce any law.

Any informed opinions out there?