Our puzzle games payback 104%. Each game has a “wild symbol” that floats over the video board. If the player “clicks” on the floating symbol before time runs out, the player’s entry fee is refunded plus an additional $0.04. Player has 3 seconds to click "wild Symbol" to win wager and plus up to .04. if player click "wild Symbol" within 1 second player will win wager plus .04, within 2 second players win wager plus .03, within 3 second players win wager plus .02.
Each game has 4 progressives. All of our skill puzzle games have linked progressives. Player must wage $1 or more to win the progressives.
The Game involves a video screen divided into two sections: a 3x3 picture/symbol grid on the left side and a vertical row of pictures on the right side. A player must pay an entry fee and hit “spin” to start the game, after which both sides of the video screen generate a random array of pictures. The player‘s goal is to then pick a picture from the right side column to create a straight line on the left side 3x3 grid (similar to a tic-tac-toe). A player has only 7 seconds to pick the matching symbol (if there is one). Additionally, there is a “wild symbol” that floats over the video board. If the player “clicks” on the floating symbol before time runs out, the player’s entry fee is refunded plus an additional $0.02.
After every spin, the player must (1) evaluate whether there is a winning “straight line” combination; (2) if so, determine which symbol on the right-hand column would form the winning combination; (3) if so, determine whether there are multiple possible winning combinations and which picture forms the most valuable combination; (4) and, if there is not a winning combination, use their physical dexterity to catch and click on the moving, floating “wild” symbol before the timer runs out.
Thus, the game involves significant elements of skill that materially and predominantly determine the outcome. Specifically, the player must:
Additionally, the player can choose to forgo the line matching part of the game altogether and simply try to catch the “wild” floating symbol for the refund of their entry fee plus $0.02 every time. This component results in a pure game of dexterity – i.e. click on a moving symbol before the timer runs out to win a prize.
Like any game of skill – including traditional games like chess and sports like golf – the Game can certainly be played randomly. However, like chess or golf, a player is guaranteed to lose if they adopt a random strategy instead of applying their skills of logic and physical dexterity. Unlike a slot machine where the player is not required to exercise any skill whatsoever outside of making the wager and hitting a button (which could at any time result in a jackpot win, a smaller win, or no win at all), winning at the Game expressly depends on the player’s input, decision-making, and dexterity within a 7 second time limit.
Accordingly, the Game is properly classified as a real-money puzzle game of skill. This type of real-money puzzle game of skill complies with all legal requirements under federal law and the laws of 40 of the 50 states – Alabama, Alaska, California, Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.
The commonly accepted definition of gambling requires three elements: (1) payment of consideration; (2) for an opportunity to win a prize; (3) determined by chance. 38 Am. Jur. 2d Gambling 2; see also Sniezek v. Colorado Dept. of Revenue, 113 P.3d 1280 (Colo. App. 2005); Veterans of Foreign Wars Post 6477 v. Missouri Gaming Com'n, 260 S.W.3d 388 (Mo. Ct. App. W.D. 2008). There is no dispute that players of the Game pay money for the opportunity to win a real-money prize. Thus, the threshold inquiry focuses on the presence of “chance.” Simply put, if the activity involves risking money on a game of chance, it is illegal gambling. On the other hand, risking money on a game of skill is not gambling (in most states) and is not prohibited. Indeed, as detailed in the chart below, some states expressly exempt “bona fide contests of skill, speed, strength, or endurance” from “gambling.” See, e.g., Colo. Rev. Stat. § 18-10-102(2)(a) (2009) (exempting "contests of skill, speed, strength, or endurance" from gambling laws); Conn. Gen. Stat. § 53-278a(2) (2009) (same) ; Idaho Code Ann.§ 18-3801(1) (2010) (same); Indiana Code § 35-45-5-1(d)(1) (2008) (same); N.D. Code. § 12.1-28-01(1) (2009) (same); Wyo. Stat. Ann. § 6-7-101(a)(iii)(A) (2009) (same).
This memorandum provides an analysis of federal law, including the Federal Wire Act of 1961, 18 USC 1084 (the “Wire Act”); International Travel Act of 1961, 18 USC 1952 (the “Travel Act”); the Illegal Gambling Business Act, 18 USC 1955 (the “IGBA”); and the Unlawful Internet Gambling Enforcement Act of 2006, 31 USC 5363 (the “UIGEA”). In general, federal law does not prohibit, license, or otherwise regulate real-money games of skill. Federal law targets “gambling,” which requires an outcome determined on the basis of chance. Chance is not a material or predominant factor in the outcome of the Game.
1. Unlawful Internet Gambling Enforcement Act of 2006, 31 USC 5363 (the “UIGEA”) By its very name, the UIGEA applies only to "unlawful internet gambling." The Game is not unlawful because real-money skill play is offered only in the states where this Firm determined the game complies with all legal requirements. Further, the Game is not gambling and does not involve gambling because the outcome does not materially or predominantly depend on chance. Like many other skill games, the physical dexterity, speed, and logical decision-making of the players are the material and dominant factors that determine whether they win a prize. Additionally, the player is only paying an entry fee in consideration for their own participation in the game. There is no ability to wager or bet on the play of others, nor is there any opportunity to observe the play of other persons. Further, the player is always able to choose to get their entry fee back plus $0.02 by clicking on the floating and moving “wild” symbol before the 7-second timer runs out. Notwithstanding this common-sense analysis, the text of the UIGEA itself supports the conclusion that it neither prohibits or otherwise regulates real-money skill games like the Game. Generally, the UIGEA prohibits a “person engaged in the business of betting or wagering” from knowingly accepting financial transactions “in connection with the participation of another person in unlawful Internet gambling.” 31 USC 5363. Under the UIGEA, to “bet or wager” means “staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance...” 31 USC 5362(1)(A) (emphasis added). The Game does not involve betting or wagering because (1) there is no stake on a contest of others - the players only pay an entry fee to participate in a game themselves; (2) the Game is not a sporting event; and (3) the game is not subject to chance and is materially and predominantly determined by skill. As explained earlier, chance plays no role in the outcome. Therefore, there is no “bet or wager” and the UIGEA does not apply. However, even if the Game involved a “bet or wager,” the Game does not meet the second part of the prohibition in § 5363 because it does not involve the “participation of another person in unlawful Internet gambling.” The term “unlawful Internet gambling” means “to place, receive, or otherwise knowingly transmit a bet or wager...where such bet or wager is unlawful under any applicable Federal or State law in the State...in which the bet or wager is initiated, received, or otherwise made.” 31 USC 5362(10)(A). As explained in more detail below, real-money games of skill are not unlawful in a majority of states. Further, no Federal law prohibits real-money games of skill. The Firm was unable to find any case law or any other authority that supports the application of the UIGEA to real-money skill games like the Game.
2. Federal Wire Act of 1961, 18 U.S.C. § 1084 (the “Wire Act”) The Wire Act prohibits the use of a "wire communication facility" (which now includes the Internet) to transmit "bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest" 18 USC 1084(a). The Wire Act does not define "bets or wagers." In 2011, the Department of Justice issued an opinion concluding that the Wire Act's prohibition applied only to "sports gambling" and did not apply to state lotteries. See Whether Proposals by Illinois and New York to Use the Internet and Out-of-State Transaction Processors to Sell Lottery Tickets to In-State Adults Violate the Wire Act, 35 Op. O.L.C. __ (2011) (“2011 Opinion”). The 2011 Opinion did not address the meaning of "betting or wagering." In 2018, the Department of Justice revisited the interpretation of the Wire Act and reversed course, concluding that the Wire Act is not limited to sports gambling and applies to "non-sports related betting or wagering." Reconsidering Whether the Wire Act Applies to Non-Sports Gambling, slip op. at *11–*14, *23, 2018 WL 7080165, (Nov. 2, 2018) ("2018 Opinion"). The 2018 opinion did not address the meaning of "betting or wagering." Notwithstanding the 2018 opinion, states continue to offer intra-state online lotteries and have expanded online casino-style gambling. Recently, the 1st Circuit Court of Appeals affirmed the New Hampshire District Court's determination that despite the 2018 Opinion, the 2011 Opinion is correct and the Wire Act only applies to sports gambling. New Hampshire Lottery Comm'n v. Rosen, No. 19-1835, 2021 WL 191771, at *1 (1st Cir. Jan. 20, 2021). The Firm was unable to find any case law or any other authority that supports the application of the Wire Act to real-money skill games like the Game.
3. International Travel Act of 1961, 18 U.C 1952 (the “Travel Act”) The Travel Act is part of the federal anti-racketeering laws. It broadly criminalizes traveling, using interstate mail, or any facility in interstate or foreign commerce to carry on any "unlawful activity." 18 USC 1952(a). The term "unlawful activity" includes any "business enterprise involving gambling." 18 USC 1952(b). The term "gambling" is not defined in the Travel Act. The Firm was unable to find any case law or any other authority that supports the application of the Travel Act to real-money skill games like the Game.
4. The Illegal Gambling Business Act, 18 USC 1955 (the “IGBA”) Like the Travel Act, the IGBA is a part of the federal anti-racketeering laws. The IGBA specifically prohibits conducting, financing, or owning an "illegal gambling business." 18 USC 1955(a). The term "illegal gambling business" is defined as a "gambling business" that is "a violation of the law of a State...in which it is conducted." 18 USC 1955(b)(1)(i). The term "gambling includes but is not limited to pool-selling, bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein." 18 USC 1955(b)(4). A real-money game of skill where participants pay an entry fee for a chance to win a prize (the Game) does not fit the definition of "gambling" in the IGBA. Although the list is not exclusive, the outcomes of the activities listed in the definition are all decided predominantly or materially by chance or involve betting on the result of sporting events. Further, even if the Game was "gambling" under the federal definition in the IGBA, the states where the Developer offers real-money play do not prohibit those games. Where there is no "violation of the law of a State...in which it is conducted," there is no "illegal gambling business," and no violation of the IGBA. The Firm was unable to find any case law or any other authority that supports the application of the IGBA to real-money skill games like the Game. Additionally, the Firm concludes that no other federal laws regulate or prohibit real-money skill games like the Game in states where such games are not prohibited by law.
The Firm has conducted a 50-state survey to determine where the Game’s real-money puzzle play function complies with all legal requirements. For the purposes of this analysis, the Firm looked at whether real-money puzzle skill games fit within each state's definition of "gambling" and if not, whether there were other factors (such as case law) that restricted the Developer’s ability to offer real-money skill puzzle game play. To reiterate, the Developer only allows the actual participants in the skill game to win a prize. The mechanism is no different than a participant paying an entry fee to enter a bowling or tennis tournament where there is a cash prize. the Game does not offer the ability to bet on the play of others - in other words, it does not offer any sportsbook-like wagering. The Developer does not offer real-money play in the following jurisdictions: Arizona, Arkansas, Connecticut, Delaware, Louisiana, Michigan, Montana, South Carolina, South Dakota, and Tennessee. The Firm was unable at this time to determine whether the Game complies with all legal requirements in those states for real-money play.