Sweepstakes & Contest Laws
A Legal Guide for Operators and Game Hosts
Together with a new set of games of skill landing in casinos worldwide lawyers are working overtime. All with one question in their mind; “How can we add paid games of skill legally in casinos?“. Meanwhile thinking; “Players need a chance, the Random Number Generator needs to part and player-skills can influence the game…”
Skill based games are fundamentally different than the traditional casino games of chance. The definition of games of chance consist of three elements;
participants can win cash money or a prize;
to be able to participate and win the player needs to pay an ‘entrance/participation’ fee;
the outcome of the game is always determined on the basis of chance
Traditional casino games are for 99% based on chance. There are strict regulations for gambling since the early 1900’s. New type of games require new legislation. When combining skill and chance a whole new concept is born. Legal specialist all over the world are writing new skill gaming legislation together with Gaming Authorities.
The USA, United Kingdom and common gambling jurisdictions like Alderney, Gibraltar and the Canadian Kahnawake were leading and since early 2016 skill based gaming law is in place in many countries, So you can enjoy skill based gambling too!
October 03, 2020 09:59
Skill-based gaming has a well-established legal, social and commercial history. From classic board games to major sports tournaments, games of skill have long offered participants a chance to compete based on one’s ability. Today, games of skill are available on most major media sites like AOL, MSN, and Yahoo, and are complemented by an emerging electronic sports (eSports) industry that lets professional gamers compete in popular video games with real money at stake.
Skillz is a platform that advances this trend, enabling skill-based multiplayer tournaments on mobile devices while offering gamers the ability to compete for real prizes. Games powered by Skillz take the clear distinction as being games of skill — and not games of chance — a difference which makes Skillz tournaments legal in the majority of the United States.
Are Skill-based Tournaments Gambling?
Cash-based tournaments in games of skill are not considered gambling because the generally accepted definition of gambling involves three specific things: (1) the award of a prize, (2) paid-in consideration (meaning entrants pay to compete) and (3) an outcome determined on the basis of chance. Without all three of these elements, a competition that reward real prizes is not gambling. In the case of Skillz tournaments, outcomes are not determined by chance, but are rather achieved through a player’s skill or ability, making these tournaments legal in most U.S. states.
How are skill-based games different from chance-based games?
Games of skill require a physical or mental ability and a learned capacity to carry out a result. These games commonly include the use of strategy, tactic, physical coordination, strength, technical expertise, or knowledge.
Games of chance are games with an outcome strongly influenced by random chance or uncertainty. Common randomization devices include dice, playing cards, or numbered balls drawn from a container.
Games of chance may have some skill, and games of skill may have some chance, however, most U.S. courts use either the predominance test or the material element test to look at the role that skill and chance each take in determining the outcome of the game.
The Predominance Test
The predominance test is the most commonly used indicator of whether a game is skill- or chance-based. Under this test, one must envision a continuum with pure skill on one end and pure chance on the other. On the continuum, games such as chess would be almost at the pure skill end, while traditional slot machines would be at the pure chance end. Between these ends of the spectrum lie many activities containing both elements of skill and chance. A game is classified as a game of skill if the game falls predominantly closer to the skill end of the continuum.
The Material Element Test
The material element test is the second most commonly used test in the U.S. and is relied upon by 8 states to evaluate whether a game is skill or chance based. The test asks the question of whether chance plays a material role in determining a game’s outcome. As an example, in games like Minesweeper, a great deal of skill is generally exercised by players, but there are moments when players are forced to guess at random, with the results of that guess determining the winner and loser of the game. Skill predominates but chance plays the material role in determining the game’s outcome.
Where does Skillz offer real prize competitions?
In the U.S., the legality of skill-based competitions is determined at a state level and Skillz has taken extensive measures to ensure that its products are in full compliance with all the applicable laws. As of today, Skillz powers real prize competitions in roughly 80% of the world and 41 US states – the exceptions being Arizona, Arkansas, Connecticut, Delaware, Louisiana, Montana, South Carolina, South Dakota, and Tennessee. Additionally, real prize gameplay is currently not available in Maine and Indiana if playing cards are involved. Our virtual currency tournaments are available globally.
How does Skillz determine which games are skill-based?
Skillz has developed an advanced statistical model to evaluate whether a game is a game of skill. The model was developed by one of the world’s leading statisticians and can be used to analyze game results from almost any game, outputting the fractional importance of chance in determining a game’s outcome. The model has been validated and reviewed by the preeminent legal experts in the field of gaming and has been granted a U.S. patent.
To further remove randomness from games, Skillz has developed a sophisticated randomness replacement engine which can help “skillify” games that have some degree of chance embedded in them.
What happens if someone logs in from a place where real prize gaming is not legal?
For states where skill-based real prize gaming is not allowed, a player who logs in to Skillz will still be able to compete in virtual currency tournaments. Skillz uses the built-in GPS in a player’s smartphone in order to determine location and eligibility to play for real prizes.
Is your game a game of skill?
Is skill the determining factor in the outcome of the game?
Are tiebreakers handled based on skill?
Does the game’s format allow a skilled player to have a consistent advantage over a non-skilled competitor?
Is the game free of important decisions that can be made only by guessing?
Are there defined rules without predetermined odds of success?
Are random events removed as much as possible?
Skillz Compliance
Skillz provides a forum for safe, friendly, and competitive entertainment with monetary stakes tied to the competition of players at all levels. Skillz operates in full compliance with U.S. Federal and State laws, verifying the residency of anyone seeking to open an account and using IP address as well as other location-based services to determine a player’s eligibility for real prize competition.
All gamers must be at least 18 years old and their device location settings must be enabled to ensure Skillz eligibility.
Skill based gaming law – Games that depend on skill are socially accepted and completely legal in most of the countries. Hence they are commercially interesting for many companies worldwide. Card Games, Board Games and for a few decades Computer Games are widely available both off- and online. Since there is no money involved (except on first purchase) skill based gaming law is hardly necessary.
Popularity of skill based gaming comes with the ability for anybody to improve their skills and get better at the game one is playing. Multiplayer games (which most of the traditional skill-game are) have the element of competition that attracts players. Whilst with the ‘newer’ computer games one mainly competes against the software. Unless it is a multiplayer game like the best selling computer game Minecraft. Or the popular football games like the entire FIFA series and Car race simulation games.
But time and games change, hence skill based gaming law is changing to.
New generations demand new games. Hence the casino industry is developing ‘skill based casino games‘. Opposed to traditional Games of Chance the player can actually influence the outcome of games by applying skills. A combination of luck, chance and skill make these games very interesting and for sure the coming years we will see most of the traditional casino games replaced by skill based casino games.
The player is no longer depending of pure luck and the outcome of the Random Number Generator to be able to win a game. Like with all skill games performance can improve by playing more often en thus sharpen your skills.
Do you think you got the skills required to win with these brand new and exciting games? Why not give it a try and click on the picture below and show your skills!
*As the outcome of these games are a combination of luck, chance and skills new skill based gaming law was required. Several countries have developed (or are developing) new legislation and regulations for these type of games.
Follow Federal & State Legal Requirements and Regulations. Please always consult with a real legal advisor and/or licensed attorney. This is simply a guideline to get you started in the right direction.