"Are tournament fees legal?" Topic

I am correct that thinking in some jurisdictions, charging an entry fee for a tournament in which prizes are awarded could be considered a form of gambling?

I'm not an attorney, but have worked on commercial gaming and my understanding is that skill based outcomes fall under different regulations than gambling.

Of course whether or not some rules are skill or luckbased I'll leave for another arguement.

I think it depends largely on the state. States regulate gambling, promotions and sweepstakes laws. Most entities follow the laws of the strictest state in case the material/event crosses state lines. If I have an opportunity, I'll ask our specialist. Whether there's a difference in skill/gambling, I'm not sure. Arguably, card playing requires skill, but I know plenty of amateur sports leagues that offer prizes for first place.

Most places will leave you alone as long as the prizes awarded are equal to the entry fees. Once someone skims into the entry fees to pay for overhead you enter into the realm of racketeering.
It makes about as much sense as other "blue" laws.

Of course they are legal. Folks have sports tournaments and competitions all of the time and there are entry fees for those. Winners get trophies and/or prizes for that. Why would pushing around little soldiers be any different.

Sigh . . . seems to be a hot topic these days.

Here's my take -- which is my own opinion and is not a legal opinion upon which you or anyone else can rely:

No matter how you slice the mustard, if the amount of money taken in (or in the pot as it were) bears a direct relationship to the value of the prize, that is considered wagering. Now it doesn't matter if it is a random drawing, a horse race or the outcome of a game (poker, wargame, etc.) that determines the winner.

If the prize offered has no relationship whatsoever to the amount charged to attend AND the event offers value unrelated to the prize, we have a slightly different kettle of fish. We could offer to give away my car as a FOW prize at a convention. Attending the convention costs $35.00 USD whether or not you play FOW. So there is no pro quid pro. Just because you attend does not mean you even have a chance to win the prize. The value of the prize is set before we sell ticket one. This is a promotional item offered to induce attendance and specifically to induce play at our FOW tournament.

Technically, the winner would gain something of value and technically the value of that item won would be reportable as income on your Federal return and is probably subject to Use Tax in Washington State. The organization offering the prize would be subject to B&O tax in Washington State on the money made from door receipts but could probably deduct the cost of promotional items. Of course if you are a non-profit organization, your tax liability would be nil.

Of course if you failed to obtain a license from the Gambling Commission in Washington you could be subject to administrative fines because you are conducting a gambling operation in the State of Washington without first registering and licensing your gambling activity with the State of Washington. Doesn't matter that you are a non-profit organization and your subsequent tax liability is nil. (This situation actually came up in Spokane in the past 2-3 years).

Well that's how I see things. Just my opinion. Not a legal opinion. Not something you can rely upon. I'm not a tax lawyer.

mjc

The boom in poker playing in the last 5 years or so has caused many states to put information on their web sites related to what is legal and what is not in games of chance.

In Ohio, poker is a game of chance and NOT a game of skill. That's a complete BS stance but that's a different discussion.

So, you can charge an entrance fee for an event but you must pay out the entire entrance fee collected as prizes. If any money is retained as profit by the organization putting it on, that is illegal. There seems to be some different opinions as to whether an organizer can legally retain money from the entrance fee to help pay for the expenses of the event. Most people I know, call it a donation and make it voluntary.

So, the question would be – is the event considered a game of chance or skill? My guess is if they consider poker a game of chance, they would consider a game using dice as chance also.

Non-profits have different rules and restrictions when running these events.

Maybe.

Here in NC I have been involved (doing caricatures) at Casino Night parties where they had blackjack tables, roulette wheels, craps tables, and the like. No money was involved, just fake cash. At the end of the night the players could "spend" the fake money on prizes. These were all company affairs, and cost the attendees nothing to be there. It was just another way of giving away raffle prizes. The NC Gaming Commission has taken to swooping in and closing down the parties because the people were illegally gambling. So who knows if miniature gaming tournies are "legal" or not? It all depends on how much time the local commission has on it's hands, and more importantly, IF SOMEBODY COMPLAINS.