Which States Allow Skill Gaming?
By: Lawrence G. Walters
August 14, 2020
The legality of skill gaming activity varies from state to state in America. The activity remains unregulated in many states, while other states specifically prohibit skill gaming. Even in the states with a specific prohibition, the answers are far from clear.
For example, Florida law prohibits wagering on any game of skill. But courts have found that the restriction does not apply to participating in a contest based on skill, so long as the prize is not made up of entry fees and the prize is announced in advance of the contest. In such instances, the player is not “wagering” on the outcome. Other states similarly restrict wagering on games of skill but make room for skill-based competitions. In those states, a head to head bet on the outcome of a game is generally prohibited, whereas paying to enter a tournament with pre-announced prizes may be lawful.
II. Legal Tests for the Element of Skill
To further complicate the issues, courts across the country use different tests to determine whether a particular game is one of skill or chance. The “Dominant Factor” test inquires whether the outcome of the game is determined more by the participants’ relative skill rather than by chance. The primary question is whether chance or skill is the dominant or controlling factor in determining the winner of the contest or game. The “Material Element” test focuses on whether chance plays any significant role in determining the outcome of the game. Under this variation, 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. The most restrictive test is known as the “Any Chance” test which evaluates whether chance plays any role whatsoever in determining the winner. Under this test, if any element of chance affects the outcome, then the game is considered one of chance.
Given the different tests outlined above, a skill game can be deemed illegal gambling in one state but legal and unregulated in another. This, along with the differing interpretations of what activity constitutes “wagering,” makes it difficult to readily identify which states allow or prohibit games of skill.
III. The Importance of Certification
Skill gaming operators often seek certification of their game from a gaming laboratory which evaluates the skill and chance elements in light of the applicable tests. Such a certification is helpful in determining how a court might rule on whether a specific game may qualify as one of skill rather than chance. Given the substantial criminal penalties that are associated with operating an illegal gambling enterprise, it is essential to fully evaluate this critical gaming element.
IV. Statutory Prohibitions
States vary in their treatment of certain types of skill games. Some games of skill may be prohibited even if skill gaming is otherwise generally allowed. For example, some states specifically prohibit wagering on “fantasy sports” teams. In other locations, land-based skill gaming machines must be licensed by a state’s gaming authorities. The specific game of skill must be evaluated based on the applicable statutes in each state.
As is evident from the above, any specific list of states where skill gaming is legal is elusive. State laws are constantly being passed, amended, or repealed. Courts render new opinions on these issues at an unpredictable pace. Ask 3 lawyers for such a list and you may get 3 different lists. The only reliable way to evaluate the legality of a particular skill game in the United States is to engage experienced gaming counsel to render a legal opinion. With that information in hand, operators can confidently identify jurisdictions where their games can be safely offered.
Lawrence G. Walters heads up Walters Law Group and represents clients involved in the skill gaming industry. Nothing in this article is intended as legal advice. Mr. Walters can be reached at the firm’s website, www.firstamendment.com, or on social media @walterslawgroup.