Legal Question in Business Law in New York

I will be operating a business, as an S-Corporation based out of New York, where video game competitions or �tournaments� will be held online and available to players worldwide. These tournaments will require �points� to enter, not actual money, and will have prize pools issued in the form of �points�. The points are accumulated by activity within the website/service, and do not require real money to obtain. Once a player or team accumulates enough points, they may enter a tournament which has an entry fee of a specified amount of points. From this, a prize pool of �points� which will be awarded to the top finishing teams of the tournament. Each tournament will have the rules and regulations clearly defined for player to agree on before they enter the competition. Now here is the tricky part that I am unsure about; I want to allow players to convert their �points�, that were either accumulated or won from tournaments, into real money. I will also have prizes that can be redeemed instead of money. Obviously, I know the player must be at least 18 years old and provide a form of ID. Deposit will be preferably made via PayPal or direct deposit. However, I do not know the legal agreement or procedure on how to payout these players? Also will I be required to send them a 1099 (or another tax form) for money redeemed at the end of the year? What if the player is out of country, I�m sure there is different rules? Please let me know if you can help or have any questions, thanks!

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