The Legality of Skill Gaming

Skill-based gaming has a well-established legal, social and commercial history. From classic board games to major sports tournaments, games of skill have long offered participants a chance to compete based on one’s ability. Today, games of skill are available on most major media sites like AOL, MSN, and Yahoo, and are complemented by an emerging electronic sports (eSports) industry that lets professional gamers compete in popular video games with real money at stake.

Skillz is a platform that advances this trend, enabling skill-based multiplayer tournaments on mobile devices while offering gamers the ability to compete for real prizes. Games powered by Skillz take the clear distinction as being games of skill -- and not games of chance -- a difference which makes Skillz tournaments legal in the majority of the United States.

Are Skill-based Tournaments Gambling?

Cash-based tournaments in games of skill are not considered gambling because the generally accepted definition of gambling involves three specific things: (1) the award of a prize, (2) paid-in consideration (meaning entrants pay to compete) and (3) an outcome determined on the basis of chance. Without all three of these elements, a competition that reward real prizes is not gambling. In the case of Skillz tournaments, outcomes are not determined by chance, but are rather achieved through a player’s skill or ability, making these tournaments legal in most U.S. states.

How are skill-based games different from chance-based games?

• Games of skill require a physical or mental ability and a learned capacity to carry out a result. These games commonly include the use of strategy, tactic, physical coordination, strength, technical expertise, or knowledge.

• Games of chance are games with an outcome strongly influenced by random chance or uncertainty. Common randomization devices include dice, playing cards, or numbered balls drawn from a container.

• Games of chance may have some skill, and games of skill may have some chance, however, most U.S. courts use either the predominance test or the material element test to look at the role that skill and chance each take in determining the outcome of the game.

The Predominance Test

The predominance test is the most commonly used indicator of whether a game is skill- or chance-based. Under this test, one must envision a continuum with pure skill on one end and pure chance on the other. On the continuum, games such as chess would be almost at the pure skill end, while traditional slot machines would be at the pure chance end. Between these ends of the spectrum lie many activities containing both elements of skill and chance. A game is classified as a game of skill if the game falls predominantly closer to the skill end of the continuum.

The Material Element Test

The material element test is the second most commonly used test in the U.S. and is relied upon by 8 states to evaluate whether a game is skill or chance based. The test asks the question of whether chance plays a material role in determining a game’s outcome. As an example, in games like Minesweeper, a great deal of skill is generally exercised by players, but there are moments when players are forced to guess at random, with the results of that guess determining the winner and loser of the game. Skill predominates but chance plays the material role in determining the game’s outcome.

Where does Skillz offer real prize competitions?

In the U.S., the legality of skill-based competitions is determined at a state level and Skillz has taken extensive measures to ensure that its products are in full compliance with all the applicable laws. As of today, Skillz powers real prize competitions in roughly 80% of the world and 45 US states - the exceptions being Arkansas, Connecticut, Delaware, Louisiana, and South Dakota. Additionally, real prize gameplay is currently not available in Maine and Indiana if playing cards are involved, as well as New Jersey for domino-based games. Our virtual currency tournaments are available globally.

How does Skillz determine which games are skill-based?

Skillz has developed an advanced statistical model to evaluate whether a game is a game of skill. The model was developed by one of the world’s leading statisticians and can be used to analyze game results from almost any game, outputting the fractional importance of chance in determining a game’s outcome. The model has been validated and reviewed by the preeminent legal experts in the field of gaming and has been granted a U.S. patent.

To further remove randomness from games, Skillz has developed a sophisticated randomness replacement engine which can help “skillify” games that have some degree of chance embedded in them.

What happens if someone logs in from a place where real prize gaming is not legal?

For states where skill-based real prize gaming is not allowed, a player who logs in to Skillz will still be able to compete in virtual currency tournaments. Skillz uses the built-in GPS in a player’s smartphone in order to determine location and eligibility to play for real prizes.

Is your game a game of skill?

• Is skill the determining factor in the outcome of the game?
• Are tiebreakers handled based on skill?
• Does the game’s format allow a skilled player to have a consistent advantage over a non-skilled competitor?
• Is the game free of important decisions that can be made only by guessing?
• Are there defined rules without predetermined odds of success?
• Are random events removed as much as possible?

Skillz Compliance

Skillz provides a forum for safe, friendly, and competitive entertainment with monetary stakes tied to the competition of players at all levels. Skillz operates in full compliance with U.S. Federal and State laws, verifying the residency of anyone seeking to open an account and using IP address as well as other location-based services to determine a player’s eligibility for real prize competition.

Is Sponsorship Considered Gambling?

Sponsorship is a form of "staking." Staking is not gambling when the underlying act (a skill-based gaming competition) is legal. No U.S. state independently prohibits stakings when the underlying act in which the staked individual is competing (a skill-based gaming competition) is legal. As discussed above, games powered by Skillz are games of skill – and not games of chance – which makes Skillz tournaments and, therefore, sponsorship legal in the majority of the United States.

All gamers must be at least 18 years old and their device location settings must be enabled to ensure Skillz eligibility.