A Legal Guide to Skill Gaming

This Guide is intended to provide an overview of the various legal issues associated with Skill Gaming, and is not offered as a legal opinion on a particular business model or specific state laws. Contact reputable sports and entertainment law firms if you have additional questions.

What is Skill Gaming?

A game of skill is a game or contest in which the outcome is determined by mental or physical skill, rather than chance. It is paramount for gaming operators to understand the distinction between skill and chance in order to mitigate their exposure to significant legal repercussions. Jurisdictions vary on their interpretations of the distinction, so it is important to learn how these activities are defined in the marketplace. Sports and entertainment law firms can provide additional clarification.

The Element of Skill

Every state prohibits unlicensed gambling. However, gambling laws only apply to games that involve the elements of prize, chance, and consideration (i.e., payment or reward). In order to avoid being labeled as gambling, the outcome of a game must be governed by skill, not chance. 

The question is: How much skill? Courts across the nation differ in how to weigh the element of skill in comparison to chance. In evaluating whether the degree of skill involved in affecting the outcome of a game is sufficient to avoid violation of a state's gambling laws, courts typically use three approaches: (i) whether skill or chance is the dominant factor in the outcome ("Dominant Factor Test"); (ii) whether chance is a material element in the outcome ("Material Element Test"); or (iii) whether any chance at all is involved ("Any Chance Test"). The test used could determine whether your game is a legal game of skill, or illegal gambling.

A. Dominant Factor Test

The Dominant Factor test asks whether the outcome of the game is determined more by the participants' skill rather than by chance (i.e. events like dice rolls or random number generators should have little impact on the outcome of the game). The primary question is whether skill or chance is the dominant or controlling factor in determining the winner of the contest or game.

B. Material Element Test

The Material Element test focuses on whether chance plays any meaningful role in determining the outcome of the game. Under this test, it does not matter whether skill plays a significant, or even dominant, role in determining the outcome. The game will be deemed gambling if chance plays a meaningful role. 

C. Any Chance Test

The Any Chance test evaluates whether chance plays any role whatsoever in determining outcome. Under this test, if any element of chance affects the outcome, then the game is considered one of chance. For example, the game of blackjack involves chance card flips and the skill of the player in deciding whether to "hit" or "stand." Since this game involves at least some chance (the card flips), it likely would not pass the Any Chance test and would be considered gambling. The Any Chance test is the strictest test for classifying skill games, and can render wagering on most any game illegal gambling.

Entry Fees

It gets complicated when entry fees are charged to participate in a game of skill. Some courts have recognized that paying an entry fee to participate in a game of skill, in the hopes of winning a prize, is a traditional part of American social life. However, other courts have held that if the entry fees are linked to the prize amount, and used to pay the prizes, the game involves a "wager" which can be illegal. Federal law exempts certain fantasy sports and other contests, but only if the prize is announced in advance, and the amount of entry fees does not impact the prize. Therefore, the handling of entry fees can be a critical element of risk mitigation in skill gaming.

Regulation

Skill Gaming is essentially unregulated in most of the United States. Federal law does not prohibit skill gaming, but, as noted above, does provide a safe harbor exemption for certain contests of skill that meet the statutory criteria. Most states do not expressly prohibit skill games by statute, but instead, focus restrictions on traditional gambling. States like Florida represent the exception, where wagering on skill games is prohibited by statute, along with games of chance. Even there, the courts struggle to permit participation in some Skill Gaming activity, such as midway fair games or golf tournaments. Instead of imposing a blanket prohibition on Skill Gaming, the courts often distinguish between illegal wagering on games of skill, and legal participation in contests involving skill. This can lead to inconsistent and unpredictable results. Often the "look and feel" of the game can be an important factor if its legality is tested in court.                                                           

Certification

The actual functioning of a skill game can be tested and "certified" by various game testing laboratories. The lab will independently evaluate the functionality of the game, and render a report confirming its actual operation. Any operator looking to offer a skill game should consider obtaining a certification from a reputable lab, describing how the game works, and how the element of skill plays out during gameplay. Such certifications can be important evidence in the event of a court challenge.

If you are interested in offering legal skill games on the Internet, via mobile apps, or in retail locations, you would benefit from a consultation with our gaming attorneys. Working with experienced sports and entertainment law firms can help you avoid unintentionally violating gambling laws which can carry serious consequences.  

What are Business Lawyers and How Can They Help?

Business Lawyers focus their practice on assisting businesses, both large and small, with the various functions of operating a business, including compliance with the many laws and regulations governing your jurisdiction. In addition to these services, some Business Lawyers have additional knowledge and experience in Intellectual Property matters, which can help you protect your ideas and inventions.

Every year, countless Trademark applications are filed in the United States. Unfortunately, some of them are never registered or face many hurdles in the process to registration. The United States Patent and Trademark Office, which oversees Trademark applications, can be a minefield to navigate on your own. Business Lawyers with experience in the application process can assist you and help circumvent common problems like Office Actions and Refusals. Business Lawyers can also with help with branding and creating strong personality profiles.

In addition to Intellectual Property matters, Business Lawyers can assist you with affairs such as starting a new company, hiring employees, preparing vendor agreements and negotiating terms, and providing insight regarding Board decisions. They can also help prepare you in the event someone seeks legal action against your business, or should you need to seek legal action against another company or individual. In the unfortunate event your business needs to cease operations or you need to dissolve a partnership, experienced Business Lawyers can assist you in the process so you come out of the other side with as little harm as possible.

Finding the Right Business Lawyer for Your Business

Operating a legal and profitable business is no small feat. It is imperative to your success that you have an experienced legal team comprised of knowledgeable Business Lawyers you can trust. When searching for Business Lawyers, take the time to schedule a Consultation and ask important questions. How long have they been in practice? Do they have experience working with your type of business? If it is relative to your operations, do they have adequate Intellectual Property experience? Review their status with the Bar in your state to ensure their license is active and they do not have a history of disciplinary issues. Any reputable lawyer should be more than happy to provide you with answers to these questions.

Your business and ideas are invaluable. Make sure your legal team and the Business Lawyers you hire put your best interests first. For more information on how our firm can help your business thrive, please contact us today.

The COVID-19 Pandemic Shows Importance of Estate Planning

At the beginning of March, the coronavirus was perceived in the United States as an overseas problem. By the time the month ended, the country was in the midst of its worst health scare in a century. That’s how fast things can change, and many people who didn’t feel the urgent need to develop a comprehensive estate plan have reexamined their situations. Fortunately, even with stay-at-home orders and other restrictions on individuals and businesses, you can work with a qualified attorney and create the documents you need to protect yourself and the people you love.

A well-structured estate plan sets forth instructions on how healthcare and financial decisions should be made if you become incapacitated and how your assets should be distributed upon your death. A qualified lawyer can provide valuable assistance with:

• Wills— Even under quarantine orders and social distancing rules, you can draft and execute an enforceable will. Conversations with your attorney can conducted by phone or online. Even will execution and attestation can be done remotely. Florida introduced remote online notarization at the beginning of the year and New Jersey is allowing it for the duration of the public health crisis. 

• Living wills — If COVID-19 or some other medical condition leaves you unable to make decisions or to communicate, you still have the right to control the treatment you receive. A living will avoids leaving your doctors and family members to guess what life-sustaining measures you would want or not want to be taken in specified circumstances. 

• Powers of attorney — Granting a family member or close friend a power of attorney means that someone you trust will have the legal power to act on your behalf if you are incapacitated or even if you are not incapacitated if this is your wish. It allows the holder to take care of your financial obligations and make decisions regarding your real estate, vehicles and other assets. A power of attorney can be general or limited in its terms according to your needs and wishes.

As your family, finances and priorities change, so should your estate plan. A will or other document you created years ago might not reflect your current goals or situation, particularly during a time of economic turbulence. Whether you have immediate concerns about your health or not, it’s wise to review your testamentary documents on an occasional basis. 

Hopefully, you and your loved ones will not be harmed by the coronavirus, but whatever the future holds in store, you can benefit from the peace of mind that comes with knowing you’ve established a thorough will and other personalized estate planning instruments under the guidance of a knowledgeable attorney. 

Based in Orlando, Braslow Legal, P.L.L.C. handles a wide range of estate planning services for Florida and New Jersey clients. We also represent individuals and organizations in other legal matters. Please call 929-400-7844 or contact us online for a free consultation.

Why Your Nonprofit Organization Needs a Strong Legal Team in 2020

In recent years the number of nonprofit organizations in existence has skyrocketed. However, many of these organizations fail to succeed because they are not properly staffed with the right professionals. A nonprofit organization needs both strong leadership and a strong and competent legal team. 

When operating a nonprofit organization there are stringent regulations to abide by, as well as various registration and document requirements. Hiring a nonprofit lawyer well versed in organizational management can aid you in maintaining your nonprofit status. 

Still on the fence about hiring a nonprofit lawyer? Read below for some additional information about why it may be necessary.

An Outside Perspective 

Professionals involved in nonprofit operations understand the importance of having a strong and competent nonprofit lawyer as part of their team. There are many issues that may arise during the operation of a nonprofit organization – whether it be conflict among board members or problems with existing policies – and these issues might warrant the advice of a lawyer.

When you hire the services of a nonprofit lawyer they become an invaluable, outside source to your organization. Since the lawyer is not a member of your Board, they can provide fair resolutions and remain objective to the best interests of the organization. 

Skills and Experience

While most practicing lawyers are well-versed in legal affairs, not all of them are equipped with knowledge in nonprofit matters. Not even a general business lawyer may be able to provide reliable legal advice specific to nonprofit organizations.

It is important to hire a lawyer who has extensive experience and knowledge working with nonprofits. Nonprofit organizations have different operational requirements than a typical for-profit business, and the lawyer you hire should be able to navigate these matters confidently. 

Policies and Organization

The effectiveness and strength of any nonprofit organization lies not only in the leadership of its team, but in the policies it operates by. In a typical nonprofit organization, the Board is responsible for formulating many of the policies that are used for daily operation. By hiring an experienced nonprofit lawyer to assist with policy creation, you are taking steps to ensure an unbiased and equally favorable outcome for the entire Board and organization. 

A Strong Backing for your Organization

Nonprofit lawyers have the knowledge and experience to help your organization operate at its best. While many lawyers have a general understanding of the law, it is important to equip your organization with a competent nonprofit lawyer who fully understands the legal requirements and regulations that accompany the operation of a nonprofit organization.