The gambling rackets and the real estate biz was tied in so closely together that when LL banned gambling, it took down the other almost immediately. This had a chain reaction in a massive run on the SL virtual banks, forcing one of the four to immediately go under, nearly bringing SL as a whole to it's knees. The valuation on the Linden took nearly 75% off vs the Dollar. You were pretty much looking at a mirror event compared to the Panic of 1819, only the SL Panic was based on prohibition on gambling.
LL got their heads out of their collective asses and restored gambling to a certain point, so they would not crash out altogether.
They have yet to recover back to that level of prosperity, and that was over 10 years ago.