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No Purchase Necessary? Fine Line Between in Game Contest and Gambling?

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(if this is in the incorrect forum please move to appropriate) I was reading the following article on shacknews about Microsoft's 1 vs 100 game based on the tv gameshow http://www.shacknews.com/onearticle.x/60021 "1 vs. 100 sees one Xbox Live Gold member competing against a 'mob' of one hundred others--all in avatar form--answering trivia questions in the hope of winning up to 10,000 Microsoft Points ($125)." So this got me wondering where the line is drawn between gambling(subject to gaming commission regulations) and an unregulated contest (assuming it is unregulated) where you win MS Points that can be used to purchase things. My hunch is that the "no purchase necessary" requirement followed by companies like McDonald's during their Monopoly game piece contests are so they can avoid regulation by some state gaming commission. If you're paying an xbox live subscription, then how are prizes offered for competing in \ playing various games not a form of gaming? One could argue that these prizes are an enticement to spend money in the hopes of winning more in cash or prize equivalence than you put in. IANAL but I thought, if it's ok to offer prizes on Xbox live, would it be ok to make a subscription based game where players could win credits by competing against other players in tournaments and 1v1 games and that they could use these credits to pay their subscription fee or buy in game items? Anyone care to shed some light on what I find to be a very murky area?

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Unfortunately you will likely need an experienced gaming (gambling) lawyer to answer your question. Microsoft's lawyers obviously think it is OK but for all I know they may actually have got some form of gaming license before proceeding.

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I thought the distinction was between "skill" based and "luck" based activities, and that if there was no skill involved in the activity it is classed as gambling? I would think that the nature of 1v100 would mean that it wasn't gambling.

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It's an interesting question, and generally speaking one that is usually resolved via contest terms (the contract you agree to by participating in the game)/EULA. Same with sweepstakes.

The problem usually comes down to the differences and breadth in international laws. U.S. laws vary from state to state, which has an impact on how federal regulations apply, and international laws also vary. "Games of chance" is sometimes interpreted very broadly (or narrowly) either by congressional mandate/regulation or court decision. The other consideration is whether something of value is given in exchange for the chance to win. Coincidentally, I wrote a bit on this in connection with online gambling here.

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The line between gambling and contests depends a lot on whether the winner is determined by skill or by chance and if there is any consideration paid by the entrants. A trivia game theoretically requires more skill than chance (theoretically because contest sponsors have been known to use obvious answers to skirt the rules), but any element of chance involved in selecting the winner can impact whether the contest is gambling under the applicable law of the jurisdiction the contest being held. This is why poker is generally considered gambling, despite the amount of skill necessary to win a tournament. As Mona pointed out, in the US there are 50 state laws governing lotteries and gambling which makes answering the question of chance v. skill a hard one to boil down to one rule of thumb. Some states only require skill to predominate chance, while others will find the contest is gambling if any luck is involved in determining the winner. Arguably, the subscription is consideration if you only use XBLA to play games for prizes. Some states have found requiring internet access or a stamp to send in a post-card to be sufficient to find a contest was illegal(NH did if I recall correctly). I assume MS will argue that it is a game of skill and not illegal gambling or simply deny access to the contest to residents of states with more restrictive laws.

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Quote:
Original post by kdog77I assume MS will argue that it is a game of skill and not illegal gambling or simply deny access to the contest to residents of states with more restrictive laws.
I don't assume that.

Many companies create nationwide contests. This is nothing new.

These contests all have contracts which you implicitly agree to when you enter. The contest rules are usually several pages of fine print that few people actually read. Go read a few of them, since they contain interesting details.

There are armies of lawyers who are experienced enough to craft the contest rules properly to satisfy the law of all the states, and to also absolve the company of any legal issues if you participate where it is unlawful.

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Hi Frob, I have drafted these types of rules before and qualifying in all 50 states can be difficult depending on the nature of the contest. There are differences between entering a free sweepstakes where everyone is given the same relative chance of winning is a bit and an online contests where entrants compete against each other for prizes. Sweepstakes are a bit easier as the boilerplate rarely changes and only a few states have real requirements (NY, AZ and RI have bonding requirements for contests of certain size). For contests on the otherhand, there are about 13 states with particular laws that make avoiding them all together a bit more cost efficient for the contest sponsor. IF Ms has opened this contest to all 50 states then it is not illogical to assume they have checked the applicable laws and prepared arguments of skill v. chance for those 13 jurisdictions where it might be called into question. And no agreeing to enter a contest does not in fact relieve the sponsor of liability for breaking the law.

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