Online tournament legality?

[h4h4]

I've tried to read up on it. I've only seen mention of heavy regulations on games of chance, usually involving cards, dice etc. This is an online video game and it exists in esports form, and to my knowledge, it is not considered as a game of chance anywhere.

That being said, I want to start online tournament for the particular game. There would be an entry fee and then a a payout to the winner(s) minus a ~5% provision to the site.
Since I know next to nothing about law, I want to ask some basic questions. If I want to keep the site global, do I need to comply to my country's laws, or do I need to comply with the laws of each of the countries of the site's members?

In other words, can I keep it open without much thought or do I need to thoroughly look up laws?

Also, does anyone know of any video-game or online tournament related laws which I should know about? Thanks.

 

[quincy]

I've tried to read up on it. I've only seen mention of heavy regulations on games of chance, usually involving cards, dice etc. This is an online video game and it exists in esports form, and to my knowledge, it is not considered as a game of chance anywhere.

That being said, I want to start online tournament for the particular game. There would be an entry fee and then a a payout to the winner(s) minus a ~5% provision to the site.
Since I know next to nothing about law, I want to ask some basic questions. If I want to keep the site global, do I need to comply to my country's laws, or do I need to comply with the laws of each of the countries of the site's members?

In other words, can I keep it open without much thought or do I need to thoroughly look up laws?

Also, does anyone know of any video-game or online tournament related laws which I should know about? Thanks.

What is the name of your state or, if not in the US, what is the name of your country?

 

[xylene]

As constructed, what you are talking about is a vigorish on winnings.

I would strcuture the price model and the winnings payout very differently.

People pay plenty to play esport, so I'm like not even sure winner payout are required.

Do some homework on all of this, there are lots of examples (successes and failures) that are very similar to what you propose.

 

[quincy]

Country and state laws vary, and whether a game is one of chance or skill often requires careful analysis.

 

[Taxing Matters]

I've tried to read up on it. I've only seen mention of heavy regulations on games of chance, usually involving cards, dice etc. This is an online video game and it exists in esports form, and to my knowledge, it is not considered as a game of chance anywhere.

That being said, I want to start online tournament for the particular game. There would be an entry fee and then a a payout to the winner(s) minus a ~5% provision to the site.

Whether that is gambling will depend very much on what the specific game is and how you structure the winnings, etc. To give an obvious example, video poker is a video game but in the U.S. and many other countries is clearly gambling when the players are putting up something of value to play with the chance to win a payout. In general in the U.S., whether a particular video game (or feature of a game) is considered gambling depends on the degree to which the outcome is determined by chance versus the skill of the players. Hosting a blackjack tournament and paying the winner a large prize is likely to be considered gambling but hosting a chess tournament and paying the winner of that a large prize likely is not; the former involves a large degree of chance in the outcome but the latter does not.

And the laws are evolving to catch up with the online world. The practice that has been much more common in recent years of using loot boxes in video games has started to become controversial (and not just because some players hate them) because they look very much like gambling and some countries are moving towards regulating them as gambling.

Since I know next to nothing about law, I want to ask some basic questions. If I want to keep the site global, do I need to comply to my country's laws, or do I need to comply with the laws of each of the countries of the site's members?

If you open up the site for participation to anyone in the world, you potentially need to be concerned about the laws of each nation in the world.

You also have other issues to consider. You will need to consider copyright and trademark issues unless this is a video game that you yourself designed and created in its entirety. There are also contract considerations since the games are provided to you and others to use pursuant to a license that sets out how you may use the game. Using a popular video game like, say, Fortnite or Overwatch, and hosting an esports tournament around that would in the U.S. and many other nations very quickly lead to infringement claims by the holders of the rights to the game. Esports is becoming a big money maker and game publishers are keen to develop their own esports events for their games. They will not want others using their games and trademarks to steal a share of that business.

You'd really want to discuss this idea with an intellectual property/contract lawyer in each country from which you would allow players to participate, and in the U.S., Canada and some other countries that would mean also taking into account state/provincial laws too.

 

[quincy]

In other words, country and state laws vary, and whether a game is one of chance or skill often requires careful analysis.

Good point on IP infringement.

 

[Taxing Matters]

In other words, country and state laws vary, and whether a game is one of chance or skill often requires careful analysis.

Yes, but I thought he might like to have a little info on what sorts of things are in play here. There's a lot more to it than the OP may realize. It's like that PSA series that ends "The More You Know...." As a result, that careful analysis by a lawyer isn't going to be cheap for what he/she wants do, especially if he/she wants to open it to players around the world.

 

[quincy]

Yes, but I thought he might like to have a little info on what sorts of things are in play here. There's a lot more to it than the OP may realize. It's like that PSA series that ends "The More You Know...." As a result, that careful analysis by a lawyer isn't going to be cheap for what he/she wants do, especially if he/she wants to open it to players around the world.

But if the poster is not in the U.S., the picture can change significantly, including the costs of legal assistance.

Although I (too often) respond to threads before knowing a state name or country name, with gambling laws there is so much variation between countries that offering what we know of U.S. laws to someone not in the U.S. might not be all that helpful.

h4h4 needs to consider the laws of his country first and foremost because it will be under those laws in his courts that he is most likely to be sued/prosecuted.

 

[h4h4]

Thanks you all for the replies. I did not expect so many responses so shortly.

I live in Croatia. I have found regulations and laws regarding games of luck, and as far as I can tell, a game like PUBG (similar to fortnite) does not into that category. I expect the laws on all this might change in the future but online gaming on a large scale is still a new thing and countries are adapting.

As constructed, what you are talking about is a vigorish on winnings.

I would strcuture the price model and the winnings payout very differently.

People pay plenty to play esport, so I'm like not even sure winner payout are required.

Do some homework on all of this, there are lots of examples (successes and failures) that are very similar to what you propose.

I'm not sure I understand this. How would you structure it?

You also have other issues to consider. You will need to consider copyright and trademark issues unless this is a video game that you yourself designed and created in its entirety.

Actually I was thinking the opposite. In fact, I had something a bit original in mind. I want to host daily open tournaments with small entry fees and small prizes. Kind of like esports but for regular, everyday gamers. Makes the games 100 times more intense and satisfying when a win is achieved.

I think this would help the game, rather than hurt it. It's in no way comparable to genuine esports and it might help the community stay alive if a large enough scale is hit. The game is declining in popularity and so will all the ''battle royale'' games I suspect, but this might help some of the community thrive because the price/payout model makes much more sense.

No one wants to play a 1v1 game and have a chance of winning almost double his money back. 100 times his money back sounds a lot better. I am concerned that eventually this may ruled out to be a form of gambling as there is certainly more luck in PUBG/fortnite/whatever than in chess.
On the other hand, it is considered a valid esport. Hmm...

 

[quincy]

Thanks you all for the replies. I did not expect so many responses so shortly.

I live in Croatia. I have found regulations and laws regarding games of luck, and as far as I can tell, a game like PUBG (similar to fortnite) does not into that category. I expect the laws on all this might change in the future but online gaming on a large scale is still a new thing and countries are adapting.



I'm not sure I understand this. How would you structure it?



Actually I was thinking the opposite. In fact, I had something a bit original in mind. I want to host daily open tournaments with small entry fees and small prizes. Kind of like esports but for regular, everyday gamers. Makes the games 100 times more intense and satisfying when a win is achieved.

I think this would help the game, rather than hurt it. It's in no way comparable to genuine esports and it might help the community stay alive if a large enough scale is hit. The game is declining in popularity and so will all the ''battle royale'' games I suspect, but this might help some of the community thrive because the price/payout model makes much more sense.

No one wants to play a 1v1 game and have a chance of winning almost double his money back. 100 times his money back sounds a lot better. I am concerned that eventually this may ruled out to be a form of gambling as there is certainly more luck in PUBG/fortnite/whatever than in chess.
On the other hand, it is considered a valid esport. Hmm...

Thank you for providing the name of your country.

You will want to sit down with an attorney in your area for a personal review of your game plans. While the laws of other countries need to be considered, the laws of your country are the ones most important to you.

If you create a game original to you without copying or borrowing the rights-protected material of others, you can avoid most problems you otherwise would face with infringement.

Good luck.

 

[h4h4]

If you create a game original to you without copying or borrowing the rights-protected material of others, you can avoid most problems you otherwise would face with infringement.

Come on, of course that's not an option.

While the laws of other countries need to be considered, the laws of your country are the ones most important to you.

Well, what exactly does that mean? In what way are the most important if laws of all countries need to be considered? Why do US laws need less consideration?

 

[LdiJ]

Come on, of course that's not an option.



Well, what exactly does that mean? In what way are the most important if laws of all countries need to be considered? Why do US laws need less consideration?

That is the kind of thing that you need to ask the attorney that you consult.

 

[quincy]

Come on, of course that's not an option.



Well, what exactly does that mean? In what way are the most important if laws of all countries need to be considered? Why do US laws need less consideration?

Of course it's an option. It is not only possible to avoid infringing on others' rights, it is vital that you avoid infringing on others' rights.

You can either create your own original works, obtain licensing, or use others' material with risk of a legal action - in the US.

Croatia has legalized gambling (although it is regulated) and games of skill generally are not a problem. In the US, however, gambling is not legal in all states and unlicensed gambling is allowed nowhere in the US.

There are several factors that are weighed when determining if a game is chance, skill, or a combination of both. Courts in different states have weighed these factors differently.

Speak with an attorney in Croatia to discuss your online game plans.

FreeAdvice handles US legal questions only.

Good luck.

 

[Taxing Matters]

Actually I was thinking the opposite. In fact, I had something a bit original in mind. I want to host daily open tournaments with small entry fees and small prizes. Kind of like esports but for regular, everyday gamers. Makes the games 100 times more intense and satisfying when a win is achieved.

In the U.S. and in at least some other countries if you are organizing any kind of event, whether this daily tournament, or whatever, using a game someone else created you are likely to run into trademark, copyright, and contract problems as I mentioned before. Your view that it might help boost the popularity of the game doesn't allow you to use other people's intellectual property. The holder of the rights to the game and the trademarks are the ones that have the right to exploit those properties and to exclude others from using them. It is my understanding that you'd have to deal with these same kinds of issues in the EU, too, though you'd want to check on that as I'm not an expert on EU law.

Come on, of course that's not an option.

It could be an option, though of course that would cost you money and time to develop a game. But small independent game developers do exist out there, proving that you don't need tens of millions of dollars and a large staff of developers to do it. I understand, though, that you may not have the expertise, access to resources and/or the desire to pursue that. What you could do, though, is secure a license from the holder of the intellectual property rights to allow you to do what you want to do, if they are willing to do it, of course.

Your best path forward here is to meet with a lawyer familiar with intellectual property laws and gambling laws in the country or countries in which you'd like to offer this tournament. To keep costs low, start with just your country and see what you might be able to do. Then test out the concept and see if players react favorably to your idea before trying to roll it out to other countries.

 

[h4h4]

Not to quote everyone individually, but yeah, you're right of course. My view that it would help the game's community is my view and they still have the right not to allow me.

Creating my own game is 100% not an option. If I was able to create a game of such a calibre (even if I had nearly enough money for it), then I wouldn't need tournaments as I'd have billions of dollars in turnover from the game itself.

I understand that I'd need to obtain rights for this. I'll see what can be done about that.

So, in essence, I'd need to be familiar with the laws of every state which I want to offer the service in?