The Legality of Skill Gaming

Don’t Bet on Online Gambling; But Online Trivia for Prizes?

 

By Travis Crabtree

POSTED IN INTERNET AND THE GOVERNMENTPRIVACY & PUBLIC POLICYSTART UPS & DOING BUSINESS ONLINE

The Texas Attorney General issued an opinion yesterday concluding the mere payment of an entry fee to participate in a contest that tests skill or speed, and that does not involve an element of chance, could be found not to constitute a bet under subsection 47.01(1)(B) of the Texas Penal Code.

In other words, it may be legal to hold online trivia contests awarding prizes to the winner while the site (or “house” in gambling terms) takes a cut of all entry fees.

Specifically, the Texas Attorney General’s opinion stated:

Subsection 47.01(1) of the Penal Code defines “bet” to mean “an agreement to win or lose something of value solely or partially by chance. A bet does not include . . . (B) an offer of a prize, award, or compensation to the actual contestants in a bona fide contest for the determination of skill, speed, strength, or endurance . . . .” Tex. Penal Code Ann. § 47.01(1)(B) (West 2011). You describe the contest about which you inquire as one involving knowledge, skill, and speed. See Request Letter at 1. While we do not opine on the legality of any particular contest, we advise you generally that if the online contest is in actuality one of skill or speed, and does not involve an element of chance, a court could conclude that this arrangement falls within the scope of subsection (B) and is excluded from the definition of a bet.  . . .

You also raise the possibility that the online contest could implicate chapters 2001 and 2002 of the Occupations Code, which govern bingo and charitable raffles, respectively.  . . . . Under chapter 2001, “bingo” is defined as “a specific game of chance, commonly known as bingo or lotto, in which prizes are awarded on the basis of designated numbers or symbols conforming to randomly selected numbers or symbols.” Id. § 2001.002(4). Chapter 2002 defines a “raffle” to mean “the award of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize.” Id. § 2002.002(6). These definitions refer to specific types of games of chance that the Legislature has authorized under other circumstances and do not on their face appear to apply to the online contest that you describe.

The request came at the behest of HoleyKow.com that is currently offering a cell phone to the winner of a trivia contest.  Answering trivia questions requires skill rather than pure chance in poker.  As evidenced by my losing streak in friendly neighborhood and charitable games of Texas Hold ‘Em, an argument could be made that poker involves some skill or lack thereof in my case.

Before you set up your online trivia contest site, notice all of the bolded qualifiers.  The opinion should give you some comfort, but you need to consider the opinion and your state specific laws in light of what you are doing.

And one more thing, there are rumors the Federal Government may be getting into the act.  The Wall Street Journal reported a couple of weeks ago the Senate is working on legislation that would legalize certain forms of online poker, but outlaw others and pre-empt all individual state laws on the issues.  You can read more about the federal proposal here.

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