Can I run a fantasy parimutuel?

February 7, 2010 7:04 AM

Under what conditions would online fantasy parimutuel be legal?

As a programming exercise, I'm writing a Web app that creates a parimutuel system of betting on cycling events. The intention is to have a fantasy bookmaking operation, where one can predict various outcomes for cycling races and score imaginary money (or points). You know, for fun. (Cycling book is common and sanctioned in Europe, but there's no such action here.)

I'm wondering, however, what I am allowed to do before this is considered "gambling." I'd really like to offer prizes, for example, to motivate people to play and play well. I'd also like to eventually have a nominal fee for creating an account ($1 or so) to discourage, umm, "gaming" the system by creating sham accounts, as well as to encourage players to behave as if their imaginary money had value.

Illinois' gaming statutes read, in part, that a person gambles when he "Plays a game of chance or skill for money or other thing of value ... Makes a wager upon the result of any game, contest, or any political nomination, appointment or election."

Consider the following scenarios:

1. Free to play, no prizes.
2. Free to play, prizes for top winners.
3. Nominal charge to play, no prizes.
4. Nominal charge to play, prizes.

IANAL, but I'm reasonably certain that (1.) is in the clear.

But would merely offering prizes run afoul of the law? Technically I'd be offering a "game of skill ... for a thing of value." But that seems to prohibit a wide range of common activities, from Rotisserie baseball to trivia contests to ring tosses at the carnival (not to mention commodity futures at CBOT).

And if I were to charge to use the service, would that make the predictions "wagers," even if no subsequent money changes hands? I'd sort of see it akin to a cardroom, where the house charges for admission but not necessarily for the actual gambling.

(I realize that if this becomes a reality I'll probably want to seek professional counsel. I'm just curious whether this is a hopeless vision from the outset.)

posted by luke to law & government (6 answers total)

"But that seems to prohibit a wide range of common activities, from Rotisserie baseball to trivia contests to ring tosses at the carnival"

I don't know about carnivals, but when my charity group does a 50/50 drawing or a church does a Bingo night (in Illinois), they have to get a special license allowing the one-time gaming for the purpose of charity.
posted by Eyebrows McGee at 7:12 AM on February 7, 2010

Yeah, the law makes allowance for "The game commonly known as 'bingo,' when conducted in accordance with the Bingo License and Tax Act."

Maybe I need to incorporate as a church?

A better analogy for Illinois may be the video poker terminals found in many taverns. As I understand it, players can pay to play, as if it merely a game of "Pac-Man," but the operator cannot pay out -- although tens of thousands do, under the table.
posted by luke at 7:21 AM on February 7, 2010

IANAL but I'm fairly certain that where you'll get into trouble is if you're taking a cut. If all the wagers in a betting situation are dispersed amongst the participants (i.e., there is no "house" taking a piece of the action), it's A-OK.

As for the nominal account creation fee, no idea.
posted by axiom at 1:45 PM on February 7, 2010

Unfortunately, I have more questions than answers:

How does this work with places like Chuck-E-Cheese? Is that gambling? A player pays tokens and gets back tickets which can be redeemed for prizes.

Also, it might make a difference if you are giving virtual prizes (e.g. a picture of a trophy) rather than real prizes. (Money.)
posted by 47triple2 at 2:17 PM on February 7, 2010

If you're trying to make money off of wagering, then there's a good chance it's pretty heavily regulated (not necessarily "legal / illegal" per se). This is even the case if the people who are doing the wagering aren't making any real money themselves.

By the way, there is probably a bigger legal difference between having terminals and a web-based system when it comes to virtual gambling than you think. Also, "for value" is probably intentionally vague so as to cover a lot of non-monetary things that you wouldn't think should be covered.
posted by jabberjaw at 2:44 PM on February 8, 2010

FWIW, I went ahead and created my game, but for now no money -- or prizes, will change hands: Rouleur Derby.
posted by luke at 3:43 PM on March 2, 2010