Legal Question in Entertainment Law in West Virginia
is this gambling?
i have an idea for a website and i'm not certain if it is legal. customers register at the site, they do something to earn points. they gamble the points in some sort of raffle, or play games and bet with them. at the end of the month i pay them based on the number of points they have.
important thing to note: they never give me any money, or buy points directly. what they do to earn points does obviously earn me money (as an example, suppose they clicked ads or something).
sites such as pogo(dot com), operated by gaming giant EA, have similar structures where people earn points from games and enter raffles for real money, but the points are earned purely through playing games (actually, they do have a subscription service at ~$50/year as well that unlocks more games/raffles).
am i in the clear here?
1 Answer from Attorneys
Re: is this gambling?
All federal and state jurisdictions prohibit games of chance that that contain the elements of prize, chance, and consideration. It would appear that in your website, a prize will be awarded and the winner will be determined solely on the basis of chance, and not skill. Under lottery laws followed at the federal level and at all states, the availability of a free, alternative method of entry eliminates the element of consideration.
In your situation, the subscription fee may be viewed as consideration for the lottery, and as such, could run afoul of applicable federal and state laws. Violation of these laws carry significant penalties.
Moreover, if you are offering your service to jurisdictions outside of the United States (i.e., allowing residents of other countries to participate), you would need to examine the laws of each other country and jurisdiction with respect to their gaming and lottery laws. Not an easy task.
In short, you should seek the counsel of a competent lawyer well versed in gaming laws.
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