Online Sweepstakes and Skill Games Are Not the Solution

Online Sweepstakes and Skill Games Are Not the Solution

When the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed by Congress in 2006, it exempted a number of games that are played for money.  These games were exempted under state skill game laws, sweepstake laws, the Interstate Horseracing Act of 1978 or lottery laws.  Arguably, most of these games do not really require the level of skill lawmakers wanted to establish.  They simply had a strong enough lobby behind them.

Fantasy Sports

The most popular form of skill game that was born from this act was fantasy sports betting.  The sports leagues heavily lobbied for this exemption.  The National Football League (NFL) seems to have especially benefited from this.  Fantasy sports leagues were popular before the UIGEA passed and became even more popular after the fact.  That is because many skilled gamblers that were betting on sports or poker used their math and analyst skills and applied them to fantasy sports.

Long sports seasons were not interesting enough for some of these bettors.  Daily and weekly contests started appearing on fantasy betting sites.  A losing Illinois fantasy sports player has challenged the legitimacy of these games.  Fantasy players may be quick to label the plaintiff a sore loser, but his lawsuit moves on and the outcome could change the fantasy sports industry in the United States forever.

There are some examples of governments and casinos getting into the fantasy sports business.  The Montana Lottery offers fantasy sports through a pari-mutuel pool on both NFL and NASCAR.  The State is exempted from the Professional and Amateur Sports Protection Act (PASPA), though their games may not need that exemption.  Cantor Gaming, a Nevada company that operates seven Las Vegas sports books and a mobile gaming business, also offers fantasy sports betting.  The New Jersey Casino Control Commission passed regulations for Atlantic City casinos to offer fantasy sports betting while the State fights the major sports leagues and the federal government over the constitutionality of PASPA.  That law allows four states to offer sports betting, but not New Jersey.

Online Skill Games

There are other skill games that have taken off since the UIGEA passed.  Worldwinner, owned by the Game Show Network, is one example of a website that claims to fall under the skill game umbrella.  Many different word games, puzzle games, game shows and card games are offered by Worldwinner.  The group accepts Paypal and a number of credit cards.  The problem is that they place players into skill groups and only allow players within the skill tiers to play each other.  The point of a skill game is for the player with the higher skill to prevail over time.  Worldwinner has decided to segregate the player pool to the point that most players will eventually lose to the rake, which is often 30% or more.  This is hardly fairer to players than online poker would be.

Subscription Online Poker Sites

Sites like ClubWPT and PurePlay are another solution for U.S. players.  These are subscription online poker services.  Players can pay about $20 each month and earn chips to move up in limits and enter freerolls.  These types of services can be rip-offs.  First, one has no idea what the return on their investment is.  The sites rake in an unknown number of subscription fees and offer a certain amount back.  The problem is that nobody on the outside of these companies knows what that percentage is.  Players could be receiving 50% or less of their investment and there is no way to know as there is no transparency.

There is one solution for these subscription sites.  Sweepstakes laws require subscription poker rooms to allow free entry; otherwise it would still fall under gambling laws.  Each of these websites has their own process for signing up for free in their terms and conditions.  Players that do this may lose some of the VIP benefits, but they will have access to the prize pools others not in the know will have to pay a subscription rate to enter.  Some states recognize the issues with this model and specifically outlaw it.

Online Horseracing

A number of states allow online horse racing bets through their off track betting laws allowed by the Interstate Horseracing Act of 1978.  This is what got the US into trouble with the World Trade Organization through a complaint filed by Antigua.  While horseracing is a pastime in the United States, it is hardly a game where skill can help most players win.  That is due to the fact that the house advantage on most wagers is between 15% and 30%.  This house edge is nearly impossible for anyone to overcome.

Online State Lotteries

The UIGEA granted state lotteries an exemption.  The conflict of interest here is clear.  States lobbied hard for a carve out because lotteries are a source of massive tax revenues in many states.  Most lottery games have a house advantage of between 30% and 50%.  There is no skill involved in these games that could be offered online.

US poker players know all too well how unfair the skill game system is.  Many countries around the world determined that online poker is a game of skill and allow fairly managed cash games and tournaments to operate in their country.  Players in the US are stuck playing “skill games” such as horse racing, fantasy sports, online game shows, certain non poker card games or the lottery with massive house holds.  At the same time, games that are widely accepted and legal in brick and mortar casinos or in home games across the country cannot be played over the internet in the US. The fact that these games are legal, while online poker is not, clearly shows how out of touch with reality that too many lawmakers are in this country.



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