Are pay to win "prizes" leagues actually legal? (1 Viewer)

[LawFitz]

Guys,

I've been doing some research to determine whether it is actually legal to play these games and I can't seem to find a definitive answer. There is specific language in the internet gaming laws that exempts fantasy sports from the laws but in the language it states that

"All prizes and awards offered to winning participants are

a) established and made known to the participants in advance of the game or contest

b) and their value is not determined by the number or participants or the amount of any fees paid by those participants"

Yet if you look at the Quest and Fanball sites, they clearly offer increasing prizes for increasing entry fees. How is this possible? Are these sites clearly in violation of the law or am I missing something here. Despite my username, I am a finance guy, not a lawyer (just a huge fan of Sir Lawerence Fitzgerald).

I'm curious to hear your take, especially from the legal experts out there.

I think the dynasty format of the Quest leagues looks especially interesting, but I don't want to play if it is a violation of the law.

TIA!

http://www.questfantasyfootballleagues.com/payouts.html

http://www.fanball.com/draftandplay/?ArenaID=1

 

[LawFitz]

My guess is that the law is referring to total fees collected in aggregate, not the fees collected from one individual for an individual game where higher entry fee = higher potential payout.An example would be a contest saying they will pay a $50K grand prize if they collect over $100K in entry fees.

Thanks for the response.Interesting take. But how about the fact that with the higher priced fee leagues, the total aggregate collected is still higher than the aggregate for the lower priced leagues?(not trying to argue, just hoping to further the discussion)

 

[BucFan40]

In a nutshell, what the law (UIGEA Title VIII) is stating that contests cannot change a prize dependent on the number of participants. So if a contest has a $50,000 payout with a $100 entry fee, they need 5,000 people to play for them to cover the cost. If they only get 1000 people signed up they can't cut the prize payout to $10,000. They have to either run the contest and take the loss or they just cancel it. In other words, they can't lure you in with a big prize payout then change it once you signed up under the pretense of a large payout.

It is legal to have different buy ins and payouts as long as they are set in stone when the contest first starts, ie. 10 people playing, $10 a piece, $90 payout or 10 people playing, $100 a piece, $900 payout. Just as long as things don't change after people enter the contest.

I'm not a lawyer either, but I'm building a similar game therefor I'd done a lot of research, or I should say my lawyer has done a lot of research. I hope this helps.

 

[LawFitz]

I'm not a lawyer either, but I'm building a similar game therefor I'd done a lot of research, or I should say my lawyer has done a lot of research. I hope this helps.

That's awesome. Thank you BucFan! When is your game coming out? Is it going to be similar to Quest/Fanball? How are you going to differentiate? I'd much rather sign up with you since you are a member of these boards.

 

[BucFan40]

I'm not a lawyer either, but I'm building a similar game therefor I'd done a lot of research, or I should say my lawyer has done a lot of research. I hope this helps.

That's awesome. Thank you BucFan! When is your game coming out? Is it going to be similar to Quest/Fanball? How are you going to differentiate? I'd much rather sign up with you since you are a member of these boards.

The site we're working on will focus on weekly contests, both live and instant draft games. Being fantasy fans ourselves, we're trying to put all of the features that we want in a site including multiple game formats and a community feel so you're not just playing against blank faces. Our goal is to launch for the 2010 football season. Feel free to sign up on the site to get notified once we start rolling. www.weeklydraft.com

 

[LawFitz]

I'm not a lawyer either, but I'm building a similar game therefor I'd done a lot of research, or I should say my lawyer has done a lot of research. I hope this helps.

That's awesome. Thank you BucFan! When is your game coming out? Is it going to be similar to Quest/Fanball? How are you going to differentiate? I'd much rather sign up with you since you are a member of these boards.

The site we're working on will focus on weekly contests, both live and instant draft games. Being fantasy fans ourselves, we're trying to put all of the features that we want in a site including multiple game formats and a community feel so you're not just playing against blank faces. Our goal is to launch for the 2010 football season. Feel free to sign up on the site to get notified once we start rolling. www.weeklydraft.com

Awesome. Will do!

 

[the real smitty]

Hey I know I'm well past answering this question, but I noticed that someone said the payout can increase if more entrants enter than participate. Just a little FYI, this is actually wrong, and if the prize increases once a threshold is hit, then it is no longer deemed a "fantasy game/contest" but rather considered gambling by federal law.

Also, my buddy just started an eliminator/survivor league website with top prize of over $5,000 so check it out. the website is www.eliminatorfb.com. Once again I know it is long overdue, but hopefully it clears a few question marks.

THE REAL SMITTY

 

[gandalas]

Let me at least comment on this part and hopefully save you some time and money:

I think the dynasty format of the Quest leagues looks especially interesting, but I don't want to play if it is a violation of the law.

TIA!

http://www.questfantasyfootballleagues.com/payouts.html

I would STRONGLY recommend against participating in any mass-dynasty leagues like this one. You are simply giving up way too much of the entry fees to someone for the simple task of commissionering the league.In the case of this site:

$90 Entry fee X 12 teams = $1,080.00 total entry pool.

-$360 to Winning team = $720 remaining pool.

-$90 to Runner-up = $630 remaining pool.

-$20 per week (1-13) to high scorer ($260 total) = $370 remaining pool.

So you are basically giving up 34% of the league fees to some entity for the simple task of managing your league (not that hard to do...).

Look in the "Looking for Leagues" section, and you will find leagues that have 100% (after MFL fees) payout, and are completely safe with League-safe holding all the league fees.

That is how my league works that I run, and paying someone 1/3 the entry fees for the minimal amount of work involved is simply not smart/efficient. I am stuck in one of these same types of leagues myself, and would leave except my team is Championship ready. But if I do not win this season, I am gone.

 

[cheatsheetwarroom]

It has always been my understanding that these types of leagues are allowed because they 'aren't based purely on chance'. If you plan an online game that is based purely on chance (i.e. slot machines) then it is illegal. However, because we have input to fantasy football they are considered games of skill and thus are contests and not gambling. I could be wrong but this is how I undestood it.