Friday, July 13, 2007

Tournament.com Opens Leaving Many Legal Questions Unanswered

Tournament.com has opened its doors, allowing players to wager real money on matches of Counter Strike and Half Life 2 Deathmatch, with Day of Defeat to follow soon. The site's FAQ points to what will be the issue for their viability going forward:


2. What are "games of skill"?
Games of skill, such as those we provide here, are games where the result and outcome are decided purely by the skill of the players involved and not by any element of chance or luck.
Unlike games of chance, skilled gaming is legal in most parts of the world and is determined by the skill of the participants.

While the statement is true, that many jurisdictions do not restrict games of skill, the US stands as a nebulous question in this regard in the wake of the Unlawful Internet Gambling Enforcement Act without the passage of the Skill Games Protection Act.

The questions facing Tournament.com are likely twofold.

1. Are the games they are allowing wagering on "subject to chance"?
2. Are the players "amateur athletes"?

Either of these could place the Tournament.com system well within the crosshairs of the UIGEA. Unfortunately, the answer to either question is convoluted at best.

Subject to Chance

The "subject to chance" language was most likely added to combat online poker, and as most people know, while there is a skill to playing poker, it is still subject to the luck of the draw. Anyone who's played has probably had a run of bad hands in a row, and that's just how the game can go. On the converse, you can also have a run of good hands in a row.

First person shooters can have the same effect. Everyone has had one of those rounds where you just spawn in the wrong place every single time. Or one of those rounds where you just seem to get every kill. Or in a game like Counter Strike, there's always the chance that you get stuck with a horrible team. Or you're the one dragging behind on an excellent team.

In the grand scheme of things, I would place most FPS games in about the same chance strata as online poker, and given that, they would fall in the UIGEA unless the SGPA passes.

Amateur Athletes

The classification of gamers as athletes is still widely debated. Dictionary.com defines an athlete as: a person trained or gifted in exercises or contests involving physical agility, stamina, or strength; a participant in a sport, exercise, or game requiring physical skill.

To me, a gamer is, by that definition, an athlete, even though it is not in the traditional vision of an athlete. For that matter, if you consider professional billiards players or archers or marksmen or curlers athletes, then a gamer is much the same. These are sports of precision rather than brute force or extended stamina.

Why does this matter? Well the UIGEA references "includes any scheme of a type described in section 3702 of title 28." This refers to the Professional and Amateur Sports Protection Act, which reads:

Sec. 3702. Unlawful sports gambling
It shall be unlawful for -
(1) a governmental entity to sponsor, operate, advertise,
promote, license, or authorize by law or compact, or
(2) a person to sponsor, operate, advertise, or promote,
pursuant to the law or compact of a governmental entity,

a lottery, sweepstakes, or other betting, gambling, or wagering
scheme based, directly or indirectly (through the use of
geographical references or otherwise), on one or more competitive
games in which amateur or professional athletes participate, or are
intended to participate, or on one or more performances of such
athletes in such games.

In short, it is illegal to bet on sports online. Therefore, if these games are considered "sports" online, and then it would be illegal to bet on them. Since Athlete is undefined in the act, it comes to the "common meaning" of the term, which arguably does include gamers.

These are just my humble estimations on the matter. Tournament.com or any similar site would need to retain counsel to examine their individual situation more closely. Of course, the Skill Games Protection Act may change the playing field, so to speak, of online gambling. We will have to wait and see.

5 comments:

TheHighFive said...

Tournament.com has adequate legal counsel. They are also strategically positioned outside of the USA; making it more difficult for the US government to prosecute them.

It is illegal to bet on sports (except at authorized terrestrial locations such as racetracks and casinos).

However, it is not illegal to particpate in a contest of skill.

Read the language more closely.

It only says it is illegal to bet on a sporting event (i.e. it is illegal to bet on the outcome of a Yankees vs. RedSox game). It does not say it is illegal to participate in a contest of skill, it does not say it is illegal to engage in prize-fighting (i.e. being a UFC fighter or boxer).

Tournament.com is currently operating within the law. If they make enough money and attract enough attention, the US government may decide to change the law. The US government will change the law citing moral reasons, however, the real reason they would move to outlaw online contests of skill would be because of the taxable revenue they would be losing to offshore operators.

As far as "luck" in an FPS goes. There is no random spawning in traditional games of CS, therefore, spawn kills are not an issue. In the course of playing the game there is hardly any luck involved. It is possible that a "newbie" sprays his machine gun and despite the recoil happens to get a head-shot, however, against a great player, that is as likely as me making a jump-shot over a defender such as Kobe Bryant. It is not likely to get such a shot.

Games like poker have definable odds and that is why they are considered gambling. Counterstrike has no definable odds. A great player can realistically win a million games in a row against a bad player. Just like Kobe Bryant can realistically dunk over me a million times in a row, I won't stop him a single time. However, in poker, a great player playing a poor player will still lose a definable number of times.

IMHO

-jordan a. brock
President/CEO
Hit the Sticks, LLC
www.GetGosu.com

Mark Methenitis said...

Let me preface by saying I am not against wagering on video games. In fact, I am not anti-gambling at all. I merely provide my analysis on the application of the US laws to potential issues for educational purposes.

With all due respect, you've left out the category in which Tournament.com falls. Both betting on and participating in games of skill at the same time. In your analogy, it would be illegal for a UFC fighter to place a wager on the outcome of his match. Tournament.com goes beyond merely facilitating matchmaking in that they integrate gambling.

And you further misunderstand the UIGEA in that if Tournament.com is designated a gambling site, it becomes illegal for any payment system to give money to or accept money from the site, which would eliminate any use of the gambling functions of the site in the US. The location of the site is irrelevant, and the penalties come down on the payment providers, not the service provider. As I stated in the article, however, this may change if the Skill Game Protection Act passes.

As far as luck goes, if Counter-Strike were the only game played through the site, then you may be correct (although I still believe team selection is luck, unless you have a clan providing all players on both sides of the game). Even the best of CS players have a hard time winning a round if their entire team is useless. However, other FPSs do utilize random spawning, and therefore there is a defined element of luck. While it may not be a simple odds calculation, it does impact the match in a manner that is not based on the skill of the player. As a comparison, in a game of football, you do not start on random yard lines.

I certainly hope that Tournament.com and any other, similar service has adequate counsel. However, until the UIEGA is applied, the classification of such sites will remain ambiguous at best.

TheHighFive said...

I am unclear why you think T.com is providing a gambling service. They are not taking bets on the outcome of the games played there. You make it sound as if I can go to their site and bet on the outcome of a particular game, or bet the "over/under" on the number of "frags" that a particular player will get. They are not offering a gambling service.

They are requiring that you enroll in the tournaments. To "enroll" or "register" or "buy-in" to the tournament you must give up some $$$, however, this is simply the cost of registering in the tournament. There are many tournaments that require such registration fees, such as NASCAR ( I believe that registering your racing team in the NEXTEL Cup costs something like 40,000 USD, and a variety of tennis and golf tournaments. I am unsure whether UFC requires fighters to pay a registration fee.

You just won't hear about these registration fees because no one is going to charge Tiger Woods to enroll in their golf tournament, they will waive the fee in his case because golf is popular enough that, in Tiger's case, it is more advantageous to the tournament host to waive the fee (because the host will make their money back if Tiger shows up to their tournament). Unfortunately, e-sports is not at the point that professional golf is, and therefore, we can not, as of yet, waive the registration fees.

As far as the UFC goes, I believe that "wagering" your health and well being (you are betting that your brains aren't going to get bashed in) is a far greater risk or "wager" than putting down a few dollars on a game of Counter-Strike.

When I spoke about T.com's strategic location in the U.K., I simply meant that their location would prevent them from being prosecuted (and thrown in jail). I understand that they won't be able to provide the service in the US if the US government deems online skill-game contests to be illegal.


Again, concerning luck in FPS and random spawning. It doesn't matter where you get spawned. The good player will destroy the un-skilled player regardless. The most that random spawning does is create momentum within the game, and again, only the skilled team will hold on to the advantage and maintain the momentum by controlling the map. So, in actuality, in games with random spawning, a lot of the skill and strategy of the game is based on the random spawning. This is not a negative, it is simply the nature of the game. The strong team will control the map / weapons / spawn points and eventually will win the game. This is not luck, it is skill.

Being put on a completly random team of strangers would be the greateset element of luck in these games. You could get put on either a very strong team or a very weak team. But, sites such as mine recognize that this problem needs to be addressed because being put on a random team creates a bad experience for the user. Therefore, we have a team-building feature in which friends or clans can form a team and then enter the tournament together. This way you can practice as a defined team and compete on a defined team.

The coin toss in footbal OT is most certainly luck.

Sasso's Amazing-Grace said...

Amen to you "highfive"
My exact setiments when trying to understand why "golf tournaments" and "fishing tournaments" etc, are allowed to pay with cash and prizes, for their "skill" which is absolute!
I have waterfront property in south carolina on deep water, that I wanted to "raffle" off and of which the "VFW" local chapter here, who are Non Profit, was to gain several hundreds of thousands of dollars. So then I thought, we will call it a "skill contest" but I am sure the State will try to stop us. It is unbelievable to me, that they can have the "lottery" and justify it being "legal" because, they are, who, God? Please read my blog http://d-bergman.blogspot.com I am, understandably, very upset. Glad I found your blog. regards, dee

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