Our gaming lawyers have unique experience and knowledge that sets us apart from our competitors in the interactive gaming space and help clients achieve their business goals. Our team has been on the forefront of this sector since the beginning when users first started challenging friends on the internet in friendly competitions to the latest developments in eSports, Daily Fantasy, and prizeless social gaming.
eSports contests are carefully designed to avoid the application of gambling prohibitions by removing the chance elements. The leading sectors of skill-based gaming include puzzle or strategy games, and “hardcore” games such as first‐person shooter and role-playing games. When evaluating a game on the basis of skill vs. chance, operators must recognize that several types of chance exist, fully understand the various tests used by states to analyze chance, or risk their services being found to constitute prohibited games of chance.
Fantasy contests are a type of contest where participants assemble imaginary or virtual teams, e.g., real athletes of a professional sport. These teams compete based on the statistical performance of those participants’ athletes in actual games. Daily Fantasy adds a twist to traditional fantasy contests—rather than waiting all season to determine which fantasy team wins, a winner is determined at the end of one day. Daily Fantasy has been a great way to encourage fan interest and participation in national sports leagues. With that interest, however, there is also increased scrutiny from regulators. Recently, Attorneys General across the nation have opined where Daily Fantasy stands in regard to their state’s gambling prohibitions and states are now introducing and enacting legislation governing such contests. It is extremely important to stay current with Attorney General opinions and legislation to regulate or prohibit DFS to minimize a company’s risk exposure.
Prizeless Social Gaming
With the rise in popularity of the Internet and social networking sites, numerous internet business models exist today where participants pay a fee to play games even though no “traditional” prizes are awarded. Instead participants receive non‐traditional items including free plays, avatars, the accumulation of points, or poker chips for bragging rights. While such items do not resemble prizes in the traditional sense, potential risks exist if certain precautions and safeguards are not implemented as evidenced by recent lawsuits in Washington State arising from the extension of play constituting a prize. Operators must be mindful of state restrictions as well as evolving interpretations of law that can affect the legality of prizeless social gaming.
In essence, the eSports, Daily Fantasy, and prizeless social gaming sectors are rapidly expanding the gaming sector beyond traditional constraints but with it comes legal perils as operators must ensure compliance with the gambling laws of each state where services are offered. Our gaming lawyers assess the feasibility and potential challenges of a client’s proposed model under federal and state gambling laws to help make sure their business is lawful so clients can focus on running their business without attracting unwanted attention from gaming regulators.
One way in which we do this is through a state by state analysis. Our 50 State Survey thoroughly examines the criminal gambling risks associated with each state, including the District of Columbia, and categorizes each state based on the risks posed. For example, an area of special concern for prizeless gaming models relates to the awarding of additional plays, which some states deem a prize for gambling purposes. Our survey allows clients to assess the risk posed by each state and determine the level of risk they are willing to accept and what states (if any) to block.
We also continually monitor developments to ensure our clients are current with the legislative and regulatory landscape in the interactive gaming sectors, including eSports and Daily Fantasy. Our lawyers are therefore able to efficiently and timely assist clients with the design, review, and implementation of interactive offerings, e.g., eSports, in order to successfully navigate around potential pitfalls while maximizing the offering’s availability.
Sweepstakes and Giveaways
Promotions are powerful and cost-effective marketing tools for increasing brand awareness, as well as promoting services and products. While the expansion of the internet and social media have made national sweepstakes more accessible, a myriad of legal pitfalls exist, regardless of the size of the business or economic interest involved. Given the patchwork quilt of state gambling laws, as well as Federal Trade Commission and state advertising guidelines, retaining knowledgeable legal counsel to navigate and provide advice to ensure compliance with applicable laws is a necessity.
We consistently work with our clients to:
- Analyze and help design sweepstakes and giveaway promotions to avoid or mitigate potential liability.
- Comply with policies and other requirements related to state bonding and registration, as well as third-party platforms.
- Drafting detailed, clear, and accurate rules for their promotions in order to mitigate potential liability from numerous sources.
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