Why Microsoft can hold cash game, but poker room aren't legal

[joker1976]

There are plenty cash games on zone.com, why are they legal? It's a U.S. company, shouldn't the government ban them?

[GrannyMae]

do they charge a rake?

front page suggests it is free. i did not want to go too deep into site or download anything. however, if there is no rake it might explain things.

[Lazymeatball]

It looks like this site allows you to play puzzle games in a tournament setting, just competing for the high score, to win cash prizes. The website doesn't do a good job of explaining how the cash is deposited, withdrawn or awarded.


* Note: Cash Games is operated by SkillJam Technologies Corporation, and is not managed or owned by Microsoft. SkillJam Technologies Corporation is solely responsible for all activities on the Cash Games website. When you create an account above, you will register your e-mail address directly with SkillJam Technologies Corporation. You must be 18 or older to play the games offered by Cash Games. You may not play the games outside the United States or the United Kingdom, or in any of the following states: AR, AZ, CT, DE, FL, IL, IA, LA, MD, SD, TN, and VT. Additional eligibility and other restrictions apply. For more information, see the SkillJam Terms & Conditions and Privacy Policy available from Cash Games.

[GrannyMae]

AR, AZ, CT, DE, FL, IL, IA, LA, MD, SD, TN, and VT.

glad i did not try it. although i'm not sure what they could have done.

maybe this is the skillpoker group fronting through zone?

[MicroBob]

I posted an article on 'other' internet games about a zillion months ago I think. My Dad had sent it to me and I think it was from the NYT online edition if I recall correctly (maybe USA-Today...but probably NYTimes).

It didn't get into poker....just all the puzzles and other crap (that I don't even remember) where you actually can win money although the stakes aren't terribly high.
I do believe that the site took out a percentage of the entry-fee.

I don't really remember correctly but perhaps it wasn't viewed as 'gambling' because they were games of skill or some other such nonsense like that.


I bet I posted it 4-6 months ago and it was here in the internet forum if you want to try to look it up.
Maybe under 'other internet games' or something like that.

I'm terrible with the search function but if I find it I'll post it here.

[Lori]

I used to play these things, in fact before they changed the ranking system on one of them, I did very well out of it ($1000 or so winnings)

I believe they stick to word games and the suchlike because they can easily be seen as games as skill.

It seems that random letters are fine, but random cards.... That's another thing.

Magic the Gathering online has to have a ticket system where one ticket is equal to one dollar to get around the gambling rules, so it seems cards are bad.

Lori

[MicroBob]

Found it. I posted it on May 24

edited to remove an insanely long link that made the article posted very difficult to read.



E-COMMERCE REPORT
Internet Companies Turn to Games of Skill
By BOB TEDESCHI

Published: May 24, 2004


OR United States companies locked out of the lucrative global industry in Internet gambling, there is still money to be made - as long as they don't call it gambling.

So-called games of skill like Spades, 8-ball, and Solitaire are attracting more players online than ever, thanks partly to the growing pool of prize money available to winners and the tightening noose of federal regulation around online games of chance. Although revenues are small compared to those reaped by pure gambling sites, some in the industry believe that could change.

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"This will continue to be a larger part of the online gambling market, although since there's skill involved you can't really call it gambling," said Sebastian Sinclair, president of Christiansen Capital Advisors, a gambling industry consultancy. "These games are better suited to the medium than casino games, because they're more entertaining, and money is secondary."

Secondary to some, perhaps, but for others, the money is everything.

"We refer to this as competitive entertainment," said Stephen J. Killeen, chief executive of WorldWinner, which runs a game site that charges tournament players and head-to-head challengers about $1.50 for every game they play, while awarding winners roughly $3.20. "The idea behind this is 'Loser buys drinks.'

"And because these are games of skill, as opposed to games of chance, there's an added dimension of, 'O.K., I have to concentrate on this,' " Mr. Killeen added. "It's not, 'What's this random roll going to show me?' "

The generally accepted standard for legal gaming is that it must involve a contest where skill is the predominant factor in winning or losing; if a game is too easy or too hard for the participants, skill is less a factor in the outcome than luck.

Mr. Killeen's site offers about 30 games, and provides game services to Yahoo, Lycos and Electronic Arts' Pogo.com. He compares his company's role to that of the United States Tennis Association, which organizes the U.S. Open tournament. "We provide the setting, award the prizes and create the draws," he said. "We take a management fee and award the prize to the winners. The difference is, we do it for millions of people."

WorldWinner has more than 10 million registered users, which places the site near the top of its category.

Sixty-five percent of WorldWinner's registrants are women over age 40. "It turns out they really like to play games online," Mr. Killeen said. "Mostly, they like the traditional games they're used to playing off-line."

The company, which is privately held, does not disclose revenues, but Mr. Killeen says it is "at break-even level" after nearly four years in operation. It raised $23 million from investors during that time.

No one in the industry is making a lot of money from this yet: Mr. Sinclair, the industry consultant, estimates that these kind of skill-based games account for less than 5 percent of the $7.5 billion online gambling industry. But the crackdown on illegal gambling, Mr. Killeen said, has turned the market in a more favorable direction. Under pressure from the Justice Department, Yahoo, Google and MSN last month stopped accepting advertisements from online casino operators, because such advertisements could be deemed by courts as aiding and abetting illegal gambling.

As a result, WorldWinner and its competitors no longer must bid against some of the Web's more aggressive marketers to get top placement for advertisements. Nor are their sites lumped in with casino gambling.

"There's a greater understanding of what we do now," Mr. Killeen said.

WorldWinner requires players to download game software, a process that requires a fair amount of trust on the part of consumers. "We're not as scary a download anymore, now that you don't have all the Casino-On-Net pop-ups all over the place," Mr. Killeen said, referring to a widely advertised gambling site.

Still, purveyors of skill-based Internet games have not emerged unscathed from online gambling's legal hassles. Companies like WorldWinner and others continue to lobby Congress, lest they be included in legislation barring all types of games with cash or prize awards. A bill that would forbid the use of credit cards and fund transfers to pay for unlawful gambling passed the House last year and is now in the Senate.

Internet Companies Turn to Games of Skill
(Page 2 of 2)

Indeed, some states have laws that bar such contests or discourage them because their statutes blur the distinction between games of skill and games of chance. As a result, WorldWinner, for instance, turns away prospective customers in Arizona, Arkansas, Delaware, Florida, Iowa, Louisiana, Maryland and Tennessee.

If games of skill finally win market share in the states where they are deemed legal, it will be a vindication of sorts for a business that is intrinsically more difficult to run than casino games, analysts said.


I. Nelson Rose, a law professor at Whittier Law School in Costa Mesa, Calif., and a consultant to gambling companies and gambling regulators, said that creating legal skill-based games is "very difficult, because they can't be too easy or too hard." For example, if the contest is a game of knowledge asking participants to say how many varieties of roses there are, Mr. Rose said, only a lucky guess would determine the outcome. "And if the question is 'How much is two plus two,' then it's luck as to whether you're the first one to answer," he said.

Beyond that is the challenge of managing games played for cash. To evenly match players, companies must establish rankings based on past contests. And they must maintain elaborate security systems to prevent hackers from manipulating the games.

The difficulty of running cash-based games of skill is one reason companies like Electronic Arts simply buy the service from businesses like WorldWinner. According to Erick Hachenburg, general manager of EA Online, the company regards its skill-based games as a complementary service, rather than a primary one.

Of the roughly 60 games available on Pogo.com, about 25 percent are skill-based, in which winners are rewarded with points that can be redeemed for tickets in prize drawings. "There's a core audience that really enjoys skill-based games," Mr. Hachenburg said, "but in the end, the games that aren't skill-based tend to be more popular."

On a per-player basis, however, skill-based games could be more lucrative, according to some industry executives.

While sites like Yahoo or Pogo generate revenues from subscription fees or advertising, those that charge entry fees and distribute cash or prizes to winners tend to attract more serious players who spend more time and money on a site.

According to Adeo Ressi, chief executive of Game Trust, which conducts online game tournaments for eight Web sites, the average player of his company's games spends $21.25 a month on games. "And there's very low churn among those who play in tournaments," he said.

Mr. Ressi said his business, which is privately held, collected about half of that revenue as commission. Game Trust's revenues are "in the millions," he said, with monthly sale growing "more than 300 percent" this spring.

One of Game Trust's biggest clients, Miniclip.com, which is based in Britain, has in recent months added more skill-based cash games to its Web site for games, Miniclip-tournaments.com.

Miniclip's chief executive, Robert Small, said the site had in its first few months attracted two million registered users who, he said, would help Miniclip "more than double" its overall profit this year.

"There's been much talk over the last year about how online gaming is the next big thing," Mr. Small said. "The reality is that online games are big now."

[Your Mom]

I heard that video game companies, mainly Electronic Arts, wants to have online games and tournaments that pay money to the winners. Currently, you can play online against other people for free. I heard they wanted to make it a pay service where prizes were awarded for being good at games like Madden, NBA Live, Tiger Woods Golf, Nascar, etc.

[Sundevils21]

I remember there being a huge "Age of Empires"(or expantion) tournament. I thought that the winner won like $1 million or so.

[MrDannimal]

Are you sure it was to get around gambling rules?

There are numerous "live" Magic tournaments and leagues, and I believe that the online MT:G equivalents charge the same fees (much like you pay the same $$ for the equivalent booster or starter) so as not to undercut the live market (which would infuriate the dealers who sell the cards).

I haven't played any M:TG-O since the free beta, but I didn't think the tickets were $1=1 ticket, but that you could buy event tickets that cost more than $1.

I could be a big fool, though.