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, 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.
Online Tournament game platforms advances this trend, enabling skill-based multiplayer tournaments on mobile devices while offering gamers the ability to compete for cash prizes. Games powered by Skill take the clear distinction as being games of skill -- and not games of chance -- a difference which makes cash 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 cash competition 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 or tactic, physical coordination or 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.
Which states offer cash competitions?
In the U.S., the legality of skill-based competitions is determined at a state level. As of today, Tournament games can offer cash competitions in roughly 80% of the world and 38 US states except in Arizona, Arkansas, Connecticut, Delaware, Florida, Illinois, Louisiana, Maryland, Montana, South Carolina, South Dakota, and Tennessee. Virtual currency tournaments are also available globally.
What happens if someone logs in from a place where cash gaming is not legal?
For states where skill-based cash gaming is not allowed, a player who logs in to online tournament game will still be able to compete in virtual currency tournaments. Platforms use the built-in GPS in a player’s smartphone in order to determine location and eligibility to play for cash.
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?
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