Gambling, by definition, involves risking something of value on an uncertainevent. This can be a roll of the dice, a turn of a playing card, or the outcomeof a sporting event.
In that respect, gambling always involves a certain degree of luck.
When it comes to the legality of skill games, some reports indicate that 36 states throughout the US consider skill-based gambling over the internet legal. The problem with skill gaming is that many states do not have a clear regulatory scheme, which may be because the. In fact, if there were no skill involved in gambling, the casinos wouldn't be able to make consistent profits. So is gambling a skill or based on luck and random chance? This post examines the role of both skill and luck in various types of gambling. In November, Commonwealth Court Judge Patricia McCullough said skill-based gaming machines constitute unlicensed gambling devices. However, she added that POM products are 'not subject to the.
But when you start examining the role of probability and decision-making ingambling, you can see that skill becomes an important aspect of gambling, too.
In fact, if there were no skill involved in gambling, the casinos wouldn't beable to make consistent profits.
So is gambling a skill or based on luck and random chance? This post examinesthe role of both skill and luck in various types of gambling.
Everyone knows that the winner of the World Series of Poker or the WorldPoker Tour wins because he outplayed the other rounders. In fact, everyone knowsthat poker is a game of skill.
But poker is also a game of chance.
What's the difference?
Short-term versus long-term thinking is the difference between luck and skillwhen it comes to gambling of all kinds.
/https://static.texastribune.org/media/files/c6541a82ad6b92d11c492b1392dec24e/Fan_Duel_Draft_Kings_Split.jpg "Legal")
Let's say you're playing at a table with nine players, and you have pocketaces. In a no-limit hold'em game, you'd want to go all-in and hope that all theother players also went all-in.
You'll win this hand only 1/3 of the time. Most of the time — 2/3 of thetime, in fact — the other players are going to draw out on you.
But look who's going to win the most money in this situation.
Assume that every time you do this, you have $100 in front of you.
With nine players at the table, you'll win $800 on three out of nineoccasions, or $2,400.
You'll lose $100 on six of those hands, or $600.
That's a profit of $1,800 over nine hands, or an average of $200 per hand.
Most situations in poker aren't that cut and dried, but it's a perfectillustration of how skilled play means you'll profit in the long run.
But in the short term, some of the time — even most of the time — someoneelse will win.
It's all about long-term expectation.
Casino Games Are an Example of the Casino Having More Skill Than the Player
All casino games pay out bets at odds lower than the odds of winning. Theclassic example is roulette, where you get paid off even-money on a red or blackbet.
If the probability of winning that bet were 50%, you'd break even in the longrun.
But the real probability of winning that bet is 47.37%. That's because only18 of the 38 numbers on the wheel are red. (18 of them are black, too, but twoof them are green.)
All casino games have a gimmick that gives them this edge over the long run.
In the short run, say half an hour or an hour, it's relatively easy to walkaway from a game like roulette as a winner.
But if you keep playing long enough, eventually, thehouse edge will win out.
In this example, the skill doesn't involve being good at predicting whichnumber will come up. THAT is a matter of pure chance or luck.
It also doesn't involve changing the size of your bet based on what happenedon previous spins of the wheel.
And it doesn't involve the casino having any means of controlling where theball lands.
The skill is simply in recognizing the mathematical inequity.
Games like roulette are strictly chance and luck-based, but they have along-term edge for the house.
You'll often see gamblers or gambling experts quoted as saying that blackjackis the one game in the casino where a skilled player can get an edge over thehouse.
This is not entirely true.
If you play PERFECT blackjack, making the mathematically perfect move onevery single hand, you'll reduce the house edge to a low percentage — less than1%.
But the house STILL has an edge.
In a low-volatility game like blackjack, a low house edge means that you havea closer to 50% probability of having a winning session than you would inhigher-volatility games or in games with a higher house edge.
That probability, though, is still less than 50%.
Famous roulette scenes videos. There's an exception, though.
If you count cards in addition to playing with perfect basic strategy, youcan get an edge over the house.
Here's the thing about that edge, though. It's a long-term edge.
In the short run, even a skilled card counter can lose lots of money. And byshort run, I'm talking about a single session, several short sessions, or asingle casino trip.
The long run doesn't really kick in until 1,000 hands, and even then, yourresults can be off by 1% or more in either direction.
To be confident that you're looking at your actual long-term results, youneed to get in at least 10,000 bets.
Even if you're playing heads-up against the dealer and getting in 200 handsper hour, you're looking at 50 hours of play before you can be confident thatyour results are truly long-term.
If you're playing at average tables, where you're getting 50 to 100 hands perhour, you're looking at between 100 and 200 hours of play.
What About Gambling on Your Own Performance?
Everyone knows that you canbet on sports,but it's tough to pick winners the 53% or more of the time needed to generate aprofit.
But what if you're the athlete?
Some people participate in darts tournaments, for example. If you've everplayed darts with someone who's good at it, you'll understand that it's a gameof skill.
But no one throws a bullseye every time he throws a dart, either.
The outcome is uncertain, especially if you're dealing with someone of thesame skill level. Often, handicaps will be involved when playing darts in atournament.
This same line of thought applies to games like billiards and shuffleboard,or even in more sporty endeavors like touch football or soccer.
Yeah, you can shoot pool in a bar with someone for money, and yes, it's agame of skill.
Some of the skills involved might be more involved than just putting theballs in the pockets, too. Some psychology might be involved.
Watch a couple of movies like The Hustler or The Color of Moneyto get a clearer idea of how that works.
Purely Random Games Like Slot Machines and the Lottery
You can gamble on some games where luck is the sole factor. Slot machines andthe lottery are both examples of these kinds of games.
When you play a slot machine, not only are you unable to use skill to improveyour probability, but you can't even choose one game over another. Identicalslot machine games might be programmed with entirely different probabilities.
For example, you might play a game where you have a 1 in 2000 probability ofwinning the top jackpot of 1000 coins, but the identical machine right next toit might only give you a 1 in 2200 probability of winning that same amount.
Modern slot machines use a random number generator (RNG), which is a computerprogram that generates the results on gambling machines. This random numbergenerator can be set to provide whatever kind of payback percentage the gamedesigner and the casino prefer.
It's entirely random, still, but the house gets an edge because of thediscrepancy between the payout odds and the odds of winning.
The lottery, on the other hand, is a game where you can calculate the odds ofwinning. In fact, if the jackpot gets big enough, you could be playing a gamewhere your mathematical expectation is positive.
With Mega Millions, for example, the odds of winning are based (at least inpart) on the number of tickets sold. If the jackpot gets between $220 millionand $260 million, you're looking at a game with a break-even expected value.
The bigger the jackpot gets beyond that point, the higher the expected valuebecomes.
The problem is that the odds of winning are so small that expected valuebecomes irrelevant.
If you bought $150 million worth of tickets, you might have a 50% probabilityof winning the jackpot and showing a profit. But who really has that kind ofmoney to wager?
But if you wager just $1,000, you're still looking at odds of winning thatare comparable to being struck by lightning.
That's not skilled gambling.
That's plain insanity.
I could list examples of the roles played by skill versus luck in the lotteryall day, but I know you've got to get back to work. And so do I.
I'll leave you with this, though. Gambling is almost always a negativeexpectation bet, so you should never bet money you can't afford to lose.
Even the most skilled gamblers are only pressing the smallest of edges, andthey can go broke even when the odds are in their favor.
SWEEPSTAKES AND SKILL CONTESTS — THE BASICS
Julia C. Archer
Let's say you're playing at a table with nine players, and you have pocketaces. In a no-limit hold'em game, you'd want to go all-in and hope that all theother players also went all-in.
You'll win this hand only 1/3 of the time. Most of the time — 2/3 of thetime, in fact — the other players are going to draw out on you.
But look who's going to win the most money in this situation.
Assume that every time you do this, you have $100 in front of you.
With nine players at the table, you'll win $800 on three out of nineoccasions, or $2,400.
You'll lose $100 on six of those hands, or $600.
That's a profit of $1,800 over nine hands, or an average of $200 per hand.
Most situations in poker aren't that cut and dried, but it's a perfectillustration of how skilled play means you'll profit in the long run.
But in the short term, some of the time — even most of the time — someoneelse will win.
It's all about long-term expectation.
Casino Games Are an Example of the Casino Having More Skill Than the Player
All casino games pay out bets at odds lower than the odds of winning. Theclassic example is roulette, where you get paid off even-money on a red or blackbet.
If the probability of winning that bet were 50%, you'd break even in the longrun.
But the real probability of winning that bet is 47.37%. That's because only18 of the 38 numbers on the wheel are red. (18 of them are black, too, but twoof them are green.)
All casino games have a gimmick that gives them this edge over the long run.
In the short run, say half an hour or an hour, it's relatively easy to walkaway from a game like roulette as a winner.
But if you keep playing long enough, eventually, thehouse edge will win out.
In this example, the skill doesn't involve being good at predicting whichnumber will come up. THAT is a matter of pure chance or luck.
It also doesn't involve changing the size of your bet based on what happenedon previous spins of the wheel.
And it doesn't involve the casino having any means of controlling where theball lands.
The skill is simply in recognizing the mathematical inequity.
Games like roulette are strictly chance and luck-based, but they have along-term edge for the house.
You'll often see gamblers or gambling experts quoted as saying that blackjackis the one game in the casino where a skilled player can get an edge over thehouse.
This is not entirely true.
If you play PERFECT blackjack, making the mathematically perfect move onevery single hand, you'll reduce the house edge to a low percentage — less than1%.
But the house STILL has an edge.
In a low-volatility game like blackjack, a low house edge means that you havea closer to 50% probability of having a winning session than you would inhigher-volatility games or in games with a higher house edge.
That probability, though, is still less than 50%.
Famous roulette scenes videos. There's an exception, though.
If you count cards in addition to playing with perfect basic strategy, youcan get an edge over the house.
Here's the thing about that edge, though. It's a long-term edge.
In the short run, even a skilled card counter can lose lots of money. And byshort run, I'm talking about a single session, several short sessions, or asingle casino trip.
The long run doesn't really kick in until 1,000 hands, and even then, yourresults can be off by 1% or more in either direction.
To be confident that you're looking at your actual long-term results, youneed to get in at least 10,000 bets.
Even if you're playing heads-up against the dealer and getting in 200 handsper hour, you're looking at 50 hours of play before you can be confident thatyour results are truly long-term.
If you're playing at average tables, where you're getting 50 to 100 hands perhour, you're looking at between 100 and 200 hours of play.
What About Gambling on Your Own Performance?
Everyone knows that you canbet on sports,but it's tough to pick winners the 53% or more of the time needed to generate aprofit.
But what if you're the athlete?
Some people participate in darts tournaments, for example. If you've everplayed darts with someone who's good at it, you'll understand that it's a gameof skill.
But no one throws a bullseye every time he throws a dart, either.
The outcome is uncertain, especially if you're dealing with someone of thesame skill level. Often, handicaps will be involved when playing darts in atournament.
This same line of thought applies to games like billiards and shuffleboard,or even in more sporty endeavors like touch football or soccer.
Yeah, you can shoot pool in a bar with someone for money, and yes, it's agame of skill.
Some of the skills involved might be more involved than just putting theballs in the pockets, too. Some psychology might be involved.
Watch a couple of movies like The Hustler or The Color of Moneyto get a clearer idea of how that works.
Purely Random Games Like Slot Machines and the Lottery
You can gamble on some games where luck is the sole factor. Slot machines andthe lottery are both examples of these kinds of games.
When you play a slot machine, not only are you unable to use skill to improveyour probability, but you can't even choose one game over another. Identicalslot machine games might be programmed with entirely different probabilities.
For example, you might play a game where you have a 1 in 2000 probability ofwinning the top jackpot of 1000 coins, but the identical machine right next toit might only give you a 1 in 2200 probability of winning that same amount.
Modern slot machines use a random number generator (RNG), which is a computerprogram that generates the results on gambling machines. This random numbergenerator can be set to provide whatever kind of payback percentage the gamedesigner and the casino prefer.
It's entirely random, still, but the house gets an edge because of thediscrepancy between the payout odds and the odds of winning.
The lottery, on the other hand, is a game where you can calculate the odds ofwinning. In fact, if the jackpot gets big enough, you could be playing a gamewhere your mathematical expectation is positive.
With Mega Millions, for example, the odds of winning are based (at least inpart) on the number of tickets sold. If the jackpot gets between $220 millionand $260 million, you're looking at a game with a break-even expected value.
The bigger the jackpot gets beyond that point, the higher the expected valuebecomes.
The problem is that the odds of winning are so small that expected valuebecomes irrelevant.
If you bought $150 million worth of tickets, you might have a 50% probabilityof winning the jackpot and showing a profit. But who really has that kind ofmoney to wager?
But if you wager just $1,000, you're still looking at odds of winning thatare comparable to being struck by lightning.
That's not skilled gambling.
That's plain insanity.
I could list examples of the roles played by skill versus luck in the lotteryall day, but I know you've got to get back to work. And so do I.
I'll leave you with this, though. Gambling is almost always a negativeexpectation bet, so you should never bet money you can't afford to lose.
Even the most skilled gamblers are only pressing the smallest of edges, andthey can go broke even when the odds are in their favor.
SWEEPSTAKES AND SKILL CONTESTS — THE BASICS
Julia C. Archer
Enns & Archer LLP
This paper provides a brief overview of federal and state regulation of prize promotions, that is, promotional programs which invite members of the public to submit an entry and which award prizes to fewer than all of the entrants. These promotions fall into two basic categories: sweepstakes and contests of skill.
The descriptions below cover only basic concepts and general rules. There are many other details and nuances surrounding this area of law, and it is always recommended that the official rules and any related advertising for any prize promotions be reviewed by counsel familiar with the field.
SWEEPSTAKES
A sweepstakes is a promotional device in which prizes are offered to participants selected on a random basis.
Legal Gambling States
Casino near stevenage. The primary issue in structuring and executing a sweepstakes or other chance promotion is to avoid becoming an illegal lottery. A lottery consists of the elements of prize, chance, and consideration.
The prize is the primary reason for having the sweepstakes and elimination of this element would defeat the purpose of the promotion.
The element of chance comes into play whenever the winner is determined by random drawing, or some other method dependent on variables outside the control of the participants in the promotion. Elimination of the chance element transforms the promotion into a skill contest, discussed below.
Thus, the primary means of preventing a sweepstakes promotion from being considered an illegal lottery is the elimination of the element of consideration.
Consideration may be found in a requirement for a purchase of goods or services or other monetary payment, or can be found in burdensome performance requirements, such as multiple store visits, or a lengthy survey. Consideration is typically eliminated by allowing a mail entry or other free method of entry without proof of purchase. The promotion must be structured in such a way that the free method of entry has equal dignity with the purchase method of entry and all entrants have an equal chance of winning the same prizes.
All sweepstakes and chance promotions must have a set of official rules. The official rules constitute the contract between the sponsor and the consumers participating in the promotion. For a national sweepstakes, the official rules must contain at least the following disclosures:
- No purchase necessary.
- The alternative method of free participation.
- Complete name and address of the sponsor and promoter of the contest.
- Number of prizes, the accurate description of each prize, the retail value of each prize, and the odds of winning each type of prize. (In many cases the odds will depend on the number of eligible entries received, however, if a particular number of entry forms, direct mail pieces, or similar items will be distributed, the odds should be stated according to that number.)
- Geographic area of the sweepstakes and/or who is eligible to participate in the sweepstakes.
- Opening date and scheduled termination date of the sweepstakes.
- Whether all prizes offered will be awarded, and how the prizes will be awarded.
- Manner of selection of winners, and when a determination of winners will be made.
- Where and when a list of winners can be obtained.
There are many other aspects of the sweepstakes that should be described in the official rules as well, including any special eligibility requirements, restrictions on use or scope of a prize such as for a trip, methods of claiming a prize (usually by signing and returning a declaration of eligibility and liability release by a certain date), and other issues. Obviously, the official rules cannot be misleading and cannot attempt to hide the free method of entry. You will also want to include disclaimer language for lost mail, lost connections in internet contests, liability and publicity releases.
Once the official rules are published and posted, they must be followed exactly and cannot be changed during the course of the promotion, except under extreme and unusual circumstances. In addition to the official rules, any advertisement or promotional mention of the sweepstakes should be reviewed for consistency with the rules and to avoid consumer misimpressions about any aspect of the promotion.
If the total amount of all prizes being awarded in the sweepstakes exceeds $5,000, the promotion must be registered (with either a surety bond or certificate of deposit in the total amount of all prizes) in both Florida and New York. If the promotion will be advertised through retail outlets in Rhode Island, Rhode Island also has a registration requirement if the total value of all prizes exceeds $500. The New York registration and bond forms must be filed at least thirty (30) days prior to the start date of the promotion. Florida requires seven (7) days advance registration. Florida has taken the position that any promotion in the United States that does not explicitly exclude Florida residents could allow a Florida resident to win and subjects the promotion to Florida's jurisdiction, including the filing requirements. Therefore, if you have a promotion running in another part of the country where the total value of the prizes exceeds $5,000, you will want to consider including in the official rules the provision that Florida residents are not eligible. Florida also requires that any mention of the promotion in a print advertising must contain the complete official rules. This requirement does not apply to television and radio advertising, but would apply to any magazine with national circulation, any direct mail sent into Florida, or similar print advertisement circulated within that state.
For television and radio advertising, a shorter version of the official rules can either be printed on the screen in the case of television, or read aloud. The short form disclosure must include at least the following disclosures:
- No purchase necessary.
- Void where prohibited.
- Any special eligibility restrictions.
- The scheduled termination date of the promotion.
- If the advertising will occur before the start date of promotion, the short form advertising must also include the opening date.
- Instructions for how consumers can obtain a copy of the official rules.
If the television or radio advertising explains or makes reference to a purchase method of entry, the rules should also disclose the free method of entry.
Several other states have specific requirements or provisions to keep in mind. For example, Tennessee requires a separate agreement regarding granting of publicity rights by the winner; Michigan may consider multiple store visits to be consideration. If the promotion will have an online aspect, there are also additional considerations and disclosures that should be made.
Congress has also passed a federal sweepstakes law that requires certain affirmative disclosures in rules and related sweepstakes materials and requires sponsors to establish a name removal notification system that allows individuals to request removal of their names from mailing lists used for sweepstakes and contests. The affirmative disclosures apply to any solicitation containing sweepstakes entry materials, with the exception of advertisements in newspapers, magazines and similar periodicals. Sponsors of contests involving direct mail solicitations must establish the name removal notification system regardless of whether or not entry materials are included.
SKILL CONTESTS
Skill contests are a promotional marketing tool requiring participants to use specific skills to solve or complete a specified objective in order to qualify for an award. As with sweepstakes or games of chance, many states have their own sets of statutes and regulations governing skill contests. In addition, there is relatively little guidance from the courts to help interpret the provisions. Therefore, when setting up a skill contest it is important to consult with legal counsel familiar with the area to avoid violating state gambling laws.
Legal Gambling In Usa
As noted above, a sweepstakes or other chance promotion can avoid being considered an illegal lottery by eliminating the element of consideration. In a bona fide skill contest, it is the element of chance that is eliminated. Therefore, it is often possible to require consideration, such as an entry fee for participation. However, note that the states of Colorado, Maryland, Nebraska, North Dakota and Vermont do not allow consideration in a skill contest. Additional states, such as New Jersey and Tennessee, have Attorney General opinions in which the AG has opined that consideration in a skill contest is unlawful. So if your contest is on the internet or is otherwise a national contest, no entry fee or other consideration may be charged, or else these states should be specifically excluded from participation. Because state laws in this area are always subject to change, this list may not be complete.
If there will be consideration or payment involved, it is important to be sure that the contest is a bona fide skill contest and that chance is not injected into the process, affecting either the selection of the winner or the amount of the prize the winner will receive. The following are some basic guidelines to eliminate the element of chance:
- Questions cannot be too hard or too easy;
- Ties must be broken on the basis of skill (not a drawing);
- Judging criteria must be objective and clearly disclosed (for example, an essay might be judged based on 'originality,' 'grammar,' 'humor,' or 'relationship to product attribute,' but 'best' would be inadequate);
- Judges must be qualified to apply the judging criteria;
- All entrants must be competing on the same playing field / all entries must be judged (can't have employees weed out entries and only send certain ones to the judges).
Some examples of contests that are typically held to be skill contests include the following:
- Essay contests
- Photography contests
- Athletic contests
- Cooking or recipe contests
- Math contests
- Art contests
- Trivia contests (depending on how structured)
- Spelling bees
Some examples of contests where skill has been held absent, injecting chance into the contest include the following:
- First 100 to respond
- Guessing number of beans in a jar
- Predicting the results of an athletic event
- Spotting a mystery shopper
- Accumulating the most proofs of purchase
As with sweepstakes and chance promotions, there are a number of states that require certain disclosures for a skill contest. Therefore, all skill contests must have a set of official rules. Indeed, failure to disclose the rules may be considered the equivalent of injecting chance into the contest resulting in an illegal lottery. In addition to the general rules, for a national contest, the official rules must contain at least the following disclosures:
- Complete name and address of the sponsor and promoter of the contest.
- If applicable, that subsequent rounds are more difficult.
- The number of rounds or levels.
- The maximum cost to the participant, if any.
- The identity or description of judges and their qualifications.
- How winners will be determined and when.
- Number of prizes, the accurate description of each prize, the retail value of each prize.
- Geographic area of the contest.
- Opening date and scheduled termination date of the contest.
- Where and when a list of winners can be obtained.
Other items that should be included in the rules include any special eligibility requirements, an exclusion of employees of the sponsor from participation, a general release of liability, agreement with the rules and acknowledgement that the decisions of the judges are final, etc. Once the official rules are published and posted, they must be followed exactly and cannot be changed during the course of the contest, except under extreme and unusual circumstances.
