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As you may already know, there are plenty of legal categories to choose from, however we havebroke down what isactually needed to legally operate within the US!
In the United States, promotions are controlled by the Federal Trade Commission, the Federal Communications Commission, the United States Postal Service, and the United States Department of Justice. These organizations regulate the nation-wide rules relating to sweepstakes and contests, like:
Registration and bonding will be determined by the prize value and is handled on a per-state basis.Additionally, the United States has strict laws barring private lotteries, so in order to be legal, sweepstakes and contents need to differentiate themselves from lotteries. A lottery is defined by law as a promotion that has all three of the following elements:
(1) To supply to any contestant in a purportedly bona fide contest of
intellectual knowledge or intellectual skill any special and secret assistance whereby the outcome of such
contest will be in whole or in part prearranged or predetermined.
(2) By means of persuasion, bribery, intimidation, or otherwise, to induce or cause any contestant in a purportedly bona fide contest of intellectual knowledge or intellectual skill to refrain in any manner from using or displaying his knowledge or skill in such contest, whereby the outcome thereof will be in whole or in part prearranged or predetermined.
(3) To engage in any artifice or scheme for the purpose of prearranging or predetermining in whole or in part
the outcome of a purportedly bona fide contest of
intellectual knowledge, intellectual skill, or chance.
(4) To produce or participate in the production for of,
to broadcast or participate in the broadcasting of,
to offer to a licensee for broadcasting,
or to sponsor, any radio program, knowing or having reasonable ground for believing that, in connection with a
purportedly bona fidecontest of
intellectual knowledge, intellectual skill, or chance constituting any part of such program, any
person has done or is going to do any act or thing referred to in paragraph (1), (2), or (3) of this
subsection.
(5) To conspire with any other any person or persons to do any act or thing prohibited by paragraph (1), (2),
(3), or (4) of this subsection, if one or more of such any
person do any act to effect the object of such conspiracy.
The Bank Secrecy Act (BSA) requires many financial institutions, including
money services businesses (MSB), to keep records and file reports on certain transactions to the U.S. Department of the
Treasury’s Financial Crimes Enforcement Network (FinCEN).
An MSB is generally any person offering check cashing; foreign currency exchange services; or selling money orders, travelers’
checks or pre-paid access (formerly stored value) products; for an amount greater than $1,000 per person, per day, in
one or more transactions. A person who engages as a business in the transfer of funds is an MSB as a money transmitter,
regardless of the amount of money transmission activity.
Every MSB must register with FinCEN by electronically filing FinCEN Form
107, Registration of Money Services Business, unless a person or business is only an MSB because they serve as
an agent of another MSB. The MSB’s owner or controlling person must register by the end of a 180-day period, which
begins the day after the date they established the MSB. They are also required to renew their MSB registration each
two-calendar-year period following the initial registration by filing another Form 107.
All MSBs are required to develop and implement an anti-money laundering (AML) compliance program. The program should
reasonably prevent individuals from using the MSB to facilitate money laundering or to finance terrorist activities.
Each program must be written and take into account the inherent risks, as well as:
MSBs must electronically file FinCEN Form 112, Currency Transaction Report, when they have a cash-in
or cash-out currency transaction, or multiple transactions, totaling more than $10,000 during one business day for any
one person, or on behalf of any one person.
Generally, MSBs that know, suspect or have reason to suspect that the transaction or pattern of transactions is
suspicious and involves $2,000 or more, must electronically file a FinCEN Form
111, Suspicious Activity Report on the activity.
The BSA E-Filing System supports the electronic filing of BSA forms (either individually
or in batches) through a FinCEN secure network. Financial institutions, including MSBs, must electronically file all
required BSA reports using FinCEN’s BSA E-Filing System. FinCEN may reject any required reports filed in paper format.
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.
OverviewRulesNoticesGuidanceNews ReleasesInvestor Education Firms must comply with the Bank Secrecy Act and its
implementing regulations (“AML rules”). The purpose of the AML rules is to help detect and report suspicious activity
including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market
manipulation.
FINRA reviews a firm’s compliance with AML rules under FINRA Rule 3310 , which sets forth minimum standards for a firm’s written AML
compliance program. The basic tenets of an AML compliance program under FINRA 3310 include the following.
FINRA provides an Anti-Money Laundering Template to assist Small Firms in establishing the AML compliance program
required by the Bank Secrecy Act, its implementing regulations, and FINRA Rule 3310.LEARN MORE
Find answers to frequently asked questions regarding FINRA Rule 3310 and AML program requirements.LEARN MORE
FINRA’s Anti-Money Laundering (AML) e-learning courses cover concepts and strategies for detecting and
preventing money-laundering activity. Each course presents unique scenarios that illustrate typical money-laundering
situations. LEARN MORE
FINRA’s Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors
and other interested parties with interpretative guidance relating to FINRA’s rules. Please see Interpreting FINRA Rules for more information.
Victoria Crane
FINRA, OGC
1735 K Street, NW
Washington, DC 20006
(202) 728-8000
FinCEN:Financial Crimes Enforcement Network (FinCEN) is the primary AML/CFT regulator in the
United States and operates under the authority of the United States Treasury Department. FinCEN is responsible for
combating money laundering, the financing of terrorism and other financial crimes by monitoring banks, financial
institutions and individuals and analyzing suspicious transactions and payments. FinCEN works with state and federal law
enforcement agencies, sharing information to assist in the fight against financial crime.
FAC: In a similar AML/CFT capacity to FinCEN, and under the authority of the US Treasury Department, the Office of Foreign Assets Control (OFAC) is responsible for administering and enforcing
the United States economic and trade sanctions. OFAC works to prevent sanctions-targeted countries, regimes and
individuals from perpetrating financial crimes, such as money laundering or terrorism, and peripheral crimes, such as
drug trafficking and weapons proliferation.
The Bank Secrecy Act: Introduced in 1970, the Bank Secrecy Act (BSA) is the United States’ most important anti-money laundering law.
The BSA is intended to combat money laundering and ensure that banks and financial institutions do not facilitate or
become complicit in it. The BSA imposes a range of compliance obligations on firms operating within US jurisdiction,
including a requirement to implement a risk-based AML program with appropriate customer due diligence (CDD) and
screening measures and to perform a range of reporting and record-keeping tasks when dealing with suspicious
transactions and customers.
USA Patriot Act: The USA Patriot Act was passed in 2001 in the wake of the September 11
terror attacks. This legislation targets financial crimes associated with terrorism and expands the scope of the BSA by
giving law enforcement agencies additional surveillance and investigatory powers, introducing new screening and customer
due diligence measures and imposing increased penalties on firms or individuals found to be involved in terrorism
financing. The USA Patriot Act includes specific provisions and controls for cross-border transactions in order to
combat international terrorism and financial crime.
In addition to the BSA and the USA Patriot Act, firms should be familiar with other important US AML/CFT regulations . These include:
The potential impact of noncompliance with AML laws and
regulations in the US depends on a variety of factors, but in the most serious cases, breaches can result in
both criminal and civil penalties, fines and prison terms. Under the BSA, penalties may be imposed on each branch or
location found to be violation of AML regulations and for each day that the violation occurs. BSA fines may range from
$10,000 per day (for failures to report foreign financial agency transactions) to $100,000 per day (for failures in
customer due diligence). Breaches in AML law are also likely to result in the forfeit of assets and funds involved in
the criminal activity.
The consequences of noncompliance with AML regulations are not restricted to financial penalties and prison terms. Firms
that are found to have broken AML/CFT laws often suffer reputational damage and may have to operate under restrictions
imposed by the US Treasury Department.
Under the Bank Secrecy Act and the USA Patriot Act, banks and financial institutions must take a risk-based approach to
AML/CFT and implement the following compliance measures:
AML program: Firms must develop and implement an internal AML/CFT program designed to match the risk profile of their
customers and business sectors. The program should consist of written policies and procedures detailing the firm’s
approach to:
Reporting and Record-Keeping: In compliance with the BSA, firms must maintain detailed records on their customers and
submit reports to the BSA when their customers engage in certain transactions or financial activities. Amongst these
responsibilities is the submission of suspicious activity reports (SARs) for transactions over $5,000 or for
transactions that are suspected to be in violation of the BSA.
Compliance Officer: An individual employee should be appointed as chief compliance officer to oversee their firm’s AML
program and be responsible for arranging audits. The designated AML officer must have sufficient authority (ideally
management level) and professional experience to carry out their duties effectively.
BSA Training: Firms should ensure their employees receive the training they need to fulfill their compliance
responsibilities. Firms must also ensure a schedule is in place to deliver ongoing training to employees in line with
changes to AML laws.
For firms operating in the US, BSA-AML compliance presents a significant administrative challenge. Performing manual CDD
and screening checks requires time and resources and carries the ongoing possibility of costly human error. To overcome
that problem, many firms choose to automate their AML program with a range of smart
technology tools designed to complement the expertise of their employees. By adding efficiency and accuracy to
the process, AML automation not only represents a way to reduce friction for customers but to help US firms continue to
deliver the standards of regulatory compliance that FinCEN expects.
The Know Your Client or Know Your Customer is a standard in the investment industry that ensures investment advisors
know detailed information about their client’s risk
tolerance, investment knowledge, and financial position. KYC protects both clients and investment advisors.
Clients are protected by having their investment advisor know what investments best suit their personal situations.
Investment advisors are protected by knowing what they can and cannot include in their client’s portfolio. KYC
compliance typically involves requirements and policies such as risk management, customer acceptance policies, and
transaction monitoring.
The Know Your Client (KYC) rule is an ethical requirement for those in the securities industry who are dealing with
customers during the opening and maintaining of accounts. There are two rules which were implemented in July 2012 that
cover this topic together: Financial Industry Regulatory Authority (FINRA) Rule 2090 (Know Your Customer) and
FINRA Rule 2111 (Suitability). These rules are in place to protect both the broker-dealer and the customer and so that
brokers and firms deal fairly with clients.
The Know Your Customer Rule 2090 essentially states that every broker-dealer should use reasonable effort when opening
and maintaining client accounts. It is a requirement to know and keep records on the essential facts of each customer,
as well as identify each person who has authority to act on the customer’s behalf.
The KYC rule is important at the beginning of a customer-broker relationship to establish the essential facts of each
customer before any recommendations are made. The essential facts are those required to service the customer’s account
effectively and to be aware of any special handling instructions for the account. Also, the broker-dealer needs to be familiar with each person who has authority to act on behalf
of the customer and needs to comply with all the laws, regulations, and rules of the securities industry.
As found in the FINRA Rules of Fair Practices, Rule 2111 goes in tandem with the KYC rule and covers the topic of making
recommendations. The suitability Rule 2111 notes that a broker-dealer must have reasonable grounds when making a
recommendation that is suitable for a customer based on the client’s financial situation and needs. This responsibility
means that the broker-dealer has done a complete review of the current facts and profile of the customer, including the
customer’s other securities before making any purchase, sale, or exchange of a security.
Investment advisors and firms are responsible for knowing each customer’s financial situation by exploring and gathering
the client’s age, other investments, tax status, financial needs, investment experience, investment time horizon,
liquidity needs, and risk tolerance. The SEC requires that a new customer provide detailed financial information that
includes name, date of birth, address, employment status, annual income, net worth, investment objectives, and
identification numbers before opening an account.
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.
No Purchase Necessary Laws essentially prevent chance-based prize promotions from asking people to provide payment to
enter, unless a free entry alternative is readily available.
While this is key information, it is important to remember that No Purchase Necessary Laws don’t apply in every country,
and what is actually considered ‘payment’ can vary quite substantially.
To help you find the No Purchase Necessary Laws that apply to your promotion, we’re going to take you through some
country-specific laws.
If you’re running an international promotion it’s generally a good idea to comply with the laws and regulations of each
country your promotion can be entered from.
The No Purchase Necessary laws in the U.S.A. are fairly straightforward. If you are running a promotion where winners
are chosen randomly you cannot ask for a purchase or other forms of consideration as an entry unless you also offer a free entry alternative.
If you run a skill-based contest where winners are selected based on merit, you are free to ask for purchases or any
other form of consideration.
However, there are some exceptions to this rule. Colorado, Maryland, Nebraska, North Dakota and Vermont all prohibit
purchase requirements, even in contests where winners are chosen on their merit.
Promotions run by private businesses are governed by different laws depending on which state you operate in, so checking
out your local laws or consulting a lawyer is always a good idea.
Running a contest or giveaway is a brilliant (and surprisingly cost-effective) way to engage your audience, generate
fresh leads and drive a ton of meaningful actions.
Any time you run a contest or giveaway it’s important to exercise a degree of caution and ensure you’re complying with
any relevant laws that may apply. One of the most important laws you should be aware of when running a prize promotion
are No Purchase Necessary Laws.
In this guide we’ll walk you through everything you need to know about No Purchase Necessary Laws and answer all the
questions you might have.
No Purchase Necessary Laws are laws in some countries that prohibit chance-based prize promotions from incentivising entrants to make a payment, complete
a purchase, or provide other forms of consideration.
These laws exist in the U.S. and several other countries around the world, and while they differ
from country to country, they generally state that if you a running a giveaway, sweepstakes, contest or any
other type of prize promotion where winners are determined by chance, you cannot:
In several countries, including the U.S., No Purchase Necessary Laws operate around the idea of “Consideration”. As we
mentioned above, you may be at risk of violating No Purchase Necessary Laws if you are running a chance-based prize promotion that requires entrants to make a purchase or otherwise
provide consideration.
Consideration refers to ways people can “buy” entries through monetary, and occasionally non-monetary actions.
If you’re running a chance-based prize promotion in a country with No Purchase Necessary
Laws it doesn’t necessarily mean you can’t ask users to make a purchase, it just means that you can’t:
Basically, you can still ask users to enter your giveaway by making a purchase as long as you offer a Free Alternate
Method of Entry.
Alternate Methods of Entry (AMOE) are free and easy ways that users can enter promotions instead of making a purchase.
So if you’re running a chance-based promotion that lets people enter by buying your product you should make sure you
also offer a free way for people to enter instead of making a purchase that awards them the same number of entries.
When you offer a free entry alternative the purchase is no longer mandatory and no longer gives people increased odds of
winning your prize, which means that your promotion is no longer in violation of No Purchase Necessary Laws.
You just need to make sure people can’t get entries for making a purchase and completing your AMOE, as that would still
give people who make a purchase a distinct advantage and put you back to square one.
Some common types of AMOE are entering via email, mail, or completing an online form. If you run your giveaway with
Gleam’s easy-to-use Competition’s app we can automatically add an Alternate Method of Entry to any campaign that can be entered by
making a purchase.
The AMOE will be automatically added to your campaign’s Terms and Conditions in any country where No Purchase Necessary
Laws apply, completely taking the hassle out of having to create and manage your own free entry alternative. Have a play
with our demo below to see our free entry alternative in action:
Running a contest or sweepstakes is an effective way to drive your business goals. Digital promotions are a strong
strategy for engaging with your audience. They help drive actions, grow your brand, and accelerate your marketing.
However, there are a lot of legal considerations to be made with running a contest or sweepstakes. In many countries,
contests, sweepstakes or giveaways, lotteries, and raffle promotions that include a prize create a confusing landscape
for marketers.
Without the right legal administration, your promotion could mistakenly violate the law
or be considered an illegal lottery.
Sweepstakes (also commonly referred to as “Giveaways”) are one type of promotion that can keep your business in
compliance of No Purchase Necessary laws. Sweepstakes promotions consist of three key features:
As you may have noticed, these types of promotions are very similar to lotteries. With the exception of the third
requirement (entry without purchase or consideration).
Contest promotions typically require a skill or criteria to be fulfilled by entrants. For a promotion to be deemed a
contest, entries must pertain to skills and winners chosen on merit. There’s a difference between Sweepstakes and Contests – Unlike sweepstakes, contests
winners are NOT chosen randomly.
Typically, contests are judged by either the host, community voting, or selected by a third party (such as a contest
administration company or prize fulfillment service). Contests by nature remove the random drawing of winners, which is
one of the three key traits of a lottery. By doing this, contests do not conflict with No Purchase Necessary laws.
We’ve got some examples of contests within our case studies, including an LG and Netflix
sponsored “B&Binge” contest. Other examples of contests include:
Contest campaigns are excellent for generating user-generated content for your brand, expanding your reach to new audiences, and
curating content for future marketing efforts.
Commonly referred to as the FTC, the Federal Trade Commission is a government body that serves and protects American
consumers. They conduct investigations on consumer complaints, including those involving illegal lotteries.
For any sweepstakes or contests scams, fraud, and lottery-like activity investigated and
uncovered by the FTC, perpetrators can be prosecuted, charged, and penalized by local and federal governments.
The Federal Communications Commission (FCC) regulates the media in the United States. In
relevance to promotions, they have the authority to cease any advertising that promotes illegal lotteries or scams. In
addition, they will take action against deceptive marketing (such as misleading prizes).
The FCC operates much like the FTC, following consumer complaints and stepping in with an investigation and taking legal
action against any foul-play.
Promotions can be governed different depending on the state they are operating in. We recommend consulting a legal administrator for sweepstakes and contests to ensure compliance in the states,
regions, or countries you wish to execute your promotion in.
Digital promotions are excellent for supporting many different business goals. Before introducing one into your
marketing, it’s important to understand topics such as sweepstakes laws, promotion laws, and other legal barriers that
could land your business in hot water.
No Purchase Necessary Laws are intended to protect consumers, however, Alternate Means of Entry (or AMOE) clauses can
help keep your promotion compliant while strengthening your goals. There’s a very thin line separating sweepstakes and
contests from becoming illegal lotteries. Consulting a legal administration partner is the best course of action to
ensure your promotion does not violate any federal or state laws.
At Realtime Media, we facilitate all aspects of running contests and sweepstakes from initial development to prize
fulfillment services. Our expert legal team can draft official
rules for your promotion and is bundled with our all-in-one PromoPick solution. PromoPick is trusted by
some of America’s largest brands looking for a fast and cost-effective way to launch a contest or sweepstakes.
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.
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;
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
Follow
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?
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?
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.
Skill based gaming law and regulation
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;
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
Follow
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?
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?
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.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.
First, it helps to understand the difference between a sweepstakes, contest and lottery. In a sweepstakes, winners are chosen randomly from all participants. In a contest, the winners entries are usually judged and are based on a skill or criteria. In a lottery, winners are chosen at random, but in order to enter, the participant must pay. A payment is called a consideration. Only states can hold lotteries, so all private lotteries are illegal.
To avoid being classified as an illegal lottery in any state, your promotion can only have 2 of these 3 elements: prize, chance and consideration. Keep in mind, consideration can mean anything of value, including a fee or even a significant effort (i.e., time spent shooting/submitting a photo, etc.)
Besides federal considerations, every state has its own specifics laws regarding sweepstakes and contests.
Disclaimer: The purpose of this information is to educate readers about this subject. Although we have made every attempt to ensure that the text and its contents are accurate and up to date, we do not advise readers to act on the basis of this information. Please use appropriate legal assistance or your own discretion before utilizing any of the information in this article. The company disclaims all liability for any acts or damages that readers may suffer as a result of using the material on this website.