The three basic forms of prize gaming are gambling, sweepstakes, and contests. Most states have a common approach to determining the legality of prize gaming. In general, states analyze if an activity includes three factors associated with gambling: (1) opportunity to win a prize, (2) winning based on chance, and (3) consideration paid to take that chance. If you take away any one of the three elements of gambling—consideration, prize, or chance—you have an activity that is lawful in most states. A contest, for example, differs from gambling because the winner is determined by skill. Determination of whether a (pay-for-play) skill game (with prizes) is a permitted game as opposed to a prohibited game (of chance) is based on the relative degrees of skill and chance present in the game. In most states, if skill is the predominant factor in determining a winner, the game is lawful. “[S]weepstakes always contain the elements of chance and prize, so the element of consideration must be eliminated to avoid violating” gambling or lottery prohibitions. Ascertaining what is consideration can prove, however, to be difficult. This Article addresses how the element of consideration is analyzed in the context of whether a particular activity is illegal gambling or a legal sweepstakes. For example, the ABA survey activity certainly has both prizes and a chance drawing that determines winners, but does the requirement that you must complete a survey for entry constitute consideration? What about the retail promotions through which you receive a game piece for buying products? What about an unlicensed slot machine that you can play by either inserting a coin or sending a self-addressed, stamped envelope to receive a code that permits you to play one game for free? These and other scenarios are addressed in this Article.
1 UNLV Gaming L.J. 1 (2010)
Cabot, Anthony N.; Light, Glenn J.; and Rutledge, Karl F.
"Economic Value, Equal Dignity and the Future of Sweepstakes,"
UNLV Gaming Law Journal: Vol. 1
, Article 7.
Available at: https://scholars.law.unlv.edu/glj/vol1/iss1/7