Online Gambling Questions

[Goodfella]

Jurisdiction

Other

Greetings all,

I have a few questions regarding a enterprise that may be operating a somewhat "illegal" gambling business.
A little background about this enterprise. This is a online mmorpg game, the game is very international (USA, UK, EU, and many other places). What the game allows you to do is purchase "virtual" currency with real money. Then that "virtual currency" is used to gamble.
At the moment they offer two types of gambling games poker and slots. I believe that their poker games and slot machines are "fixed" very corrupt. I also believe that they are not being regulated at all.
If i had to estimate the amount going into this gambling gig would be well over $1,000,000/yearly.

I believe they are breaking quiet a few laws because they are hiding the gambling within a mmorpg game,

My question is:

1) Do they have to comply with jurisdictional gabling laws?

2) With your knowledge do you believe that they are breaking any laws? If so could you point me to the specific gambling laws that they may be breaking.

3) Is there a regulatory agency in the USA, EU, UK, (or anywhere in the world) where this can be reported and investigated?


Im sure i will think of some more questions.

Thank you for all the help.

 

[army judge]

Greetings all,

I have a few questions regarding a enterprise that may be operating a somewhat "illegal" gambling business.
A little background about this enterprise. This is a online mmorpg game, the game is very international (USA, UK, EU, and many other places). What the game allows you to do is purchase "virtual" currency with real money. Then that "virtual currency" is used to gamble.
At the moment they offer two types of gambling games poker and slots. I believe that their poker games and slot machines are "fixed" very corrupt. I also believe that they are not being regulated at all.
If i had to estimate the amount going into this gambling gig would be well over $1,000,000/yearly.

I believe they are breaking quiet a few laws because they are hiding the gambling within a mmorpg game,

My question is:

1) Do they have to comply with jurisdictional gabling laws?

2) With your knowledge do you believe that they are breaking any laws? If so could you point me to the specific gambling laws that they may be breaking.

3) Is there a regulatory agency in the USA, EU, UK, (or anywhere in the world) where this can be reported and investigated?


Im sure i will think of some more questions.

Thank you for all the help.

There's NOTHING a private legal discussion site can do about law breakers.


If you observe laws being broken, or suspect that laws are being broken report your suspicions to the federal aw enforcement agencies of the countries where the laws are being broken.

In the USA that might be the FBI, Secret Service, or the local US Attorney.

 

[Goodfella]

There's NOTHING a private legal discussion site can do about law breakers.


If you observe laws being broken, or suspect that laws are being broken report your suspicions to the federal aw enforcement agencies of the countries where the laws are being broken.

In the USA that might be the FBI, Secret Service, or the local US Attorney.

I am NOT asking a legal discussion site to do anything about law breakers....

I simply asked general questions, please re read my post and questions. Not one of them asks anything to be done by thelaw.com.

I am trying to determine what laws are being broken (if any).

 

[Michael Wechsler]

Greetings all,
I have a few questions regarding a enterprise that may be operating a somewhat "illegal" gambling business.
A little background about this enterprise. This is a online mmorpg game, the game is very international (USA, UK, EU, and many other places). What the game allows you to do is purchase "virtual" currency with real money. Then that "virtual currency" is used to gamble.
At the moment they offer two types of gambling games poker and slots. I believe that their poker games and slot machines are "fixed" very corrupt. I also believe that they are not being regulated at all.

This is actually an interesting question. I have seen a HUGE number of new sites going up to sell coins, all attempting to rig SEO (search engine optimization) so that they can appear high in search engine results and gain affiliate revenue through the sales of these coins and virtual currency. This includes Star Trek Online, EVE Online, Guild Wars, Everquest and let us not forget World of Warcraft (WoW), the grand daddy of them all. It is incredible how much real money is being thrown into these games that use virtual money and currency. Makes bitcoin all the more tangible.

I believe they are breaking quiet a few laws because they are hiding the gambling within a mmorpg game. My question is:

1) Do they have to comply with jurisdictional gambling laws?

2) With your knowledge do you believe that they are breaking any laws? If so could you point me to the specific gambling laws that they may be breaking.

3) Is there a regulatory agency in the USA, EU, UK, (or anywhere in the world) where this can be reported and investigated?

To begin, take a look at what recently happened with fantasy football online, especially concerning the New York State Attorney General suing DraftKings and FanDuel for running an illegal gambling operation and the return of money due to unlawful practices. Many questioned the NY State Attorney General going after fantasy football leagues that concern the expenditure of money online. It took years until enforcement was able to put this huge operation on the list of priorities to investigate before declaring it illegal gambling. Just because something is going on doesn't mean it's lawful. It could take time until a member of legal enforcement observes, researches and decides to take action against an unlawful operation.

That said, I don't know that the currency itself is illegal gambling. But if what you describe is true, meaning the ability to use virtual currency (which is purchased or acquired through compensation and has a tangible value) in order to play games of chance that constitute illegal gambling, I'd say that you are probably heading on the right track. Just read the article above regarding gambling laws and it will lead you to many more articles. I'll also point you to the article that started it all, which is the New York State Attorney General's statement on the cease and desist it sent to FanDuel and DraftKings. You might find interesting news from the New York State Gaming Commission too.

 

[Michael Wechsler]

New York General Obligations Laws

§ 5-401. Illegal wagers, bets and stakes.
All wagers, bets or stakes, made to depend upon any race, or upon any gaming by lot or chance, or upon any lot, chance, casualty, or unknown or contingent event whatever, shall be unlawful.

§ 5-411. Contracts on account of money or property wagered, bet or staked are void.
All contracts for or on account of any money or property, or thing in action wagered, bet or staked, as provided in section 5-401, shall be void.

§ 5-413. Securities for money lost at gaming, void.
All things in action, judgments, mortgages, conveyances, and every other security whatsoever, given or executed, by any person, where the whole or any part of the consideration of the same shall be for any money or other valuable thing won by playing at any game whatsoever, or won by betting on the hands or sides of such as do play at any game, or where the same shall be made for the repaying any money knowingly lent or advanced for the purpose of such gaming or betting aforesaid, or lent or advanced at the time and place of such play, to any person so gaming or betting aforesaid, or to any person who during such play, shall play or bet, shall be utterly void, except where such securities, conveyances or mortgages shall affect any real estate, when the same shall be void as to the grantee therein, so far only as hereinafter declared.

When any securities, mortgages or other conveyances, executed for the whole or part of any consideration specified in the preceding paragraph shall affect any real estate, they shall inure for the sole benefit of such person as would be entitled to the said real estate, if the grantor or person incumbering the same, had died, immediately upon the execution of such instrument, and shall be deemed to be taken and held to and for the use of the person who would be so entitled. All grants, covenants and conveyances, for preventing such real estate from coming to, or devolving upon, the person hereby intended to enjoy the same as aforesaid, or in any way incumbering or charging the same, so as to prevent such person from enjoying the same fully and entirely, shall be deemed fraudulent and void.

§ 5-415. Certain transfers of property in pursuance of lottery, void.
Every grant, bargain, sale, conveyance, or transfer of any real estate, or of any goods, chattels, things in action, or any personal property, which shall hereafter be made in pursuance of any lottery, or for the purpose of aiding and assisting in such lottery, game or other device, to be determined by lot or chance is hereby declared void and of no effect.

§ 5-417. Contracts, agreements and securities on account of raffling, void.
All contracts, agreements and securities given, made or executed, for or on account of any raffle, or distribution of money, goods or things in action, for the payment of any money, or other valuable thing, in consideration of a chance in such raffle or distribution, or for the delivery of any money, goods or things in action, so raffled for, or agreed to be distributed as aforesaid, shall be utterly void.

§ 5-419. Property staked may be recovered.
Any person who shall pay, deliver or deposit any money, property or thing in action, upon the event of any wager or bet prohibited, may sue for and recover the same of the winner or person to whom the same shall be paid or delivered, and of the stakeholder or other person in whose hands shall be deposited any such wager, bet or stake, or any part thereof, whether the same shall have been paid over by such stakeholder or not, and whether any such wager be lost or not.

§ 5-421. Losers of certain sums may recover them.
Every person who shall, by playing at any game, or by betting on the sides or hands of such as do play, lose at any time or sitting, the sum or value of twenty-five dollars or upwards, and shall pay or deliver the same or any part thereof, may, within three calendar months after such payment or delivery, sue for and recover the money or value of the things so lost and paid or delivered, from the winner thereof.

§ 5-423. Money paid for lottery tickets may be recovered by action.
Any person who shall purchase any share, interest, ticket, certificate of any share or interest, or part of a ticket, or any paper or instrument purporting to be a ticket or share or interest in any ticket, or purporting to be a certificate of any share or interest in any ticket, or in any portion of any lottery, may sue for and recover double the sum of money, and double the value of goods or things in action, which he may have paid or delivered in consideration of such purchase, with double costs of suit.

Any person who shall have paid any money, or valuable thing, for a chance or interest in any lottery or distribution, prohibited by the penal law, may sue for and recover the same of the person to whom such payment or delivery was made.

 

[Michael Wechsler]

New York Penal Law

§ 225.00 Gambling offenses; definitions of terms.

The following definitions are applicable to this article:

1. "Contest of chance" means any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.

2. "Gambling" A person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome.

3. "Player" means a person who engages in any form of gambling solely as a contestant or bettor, without receiving or becoming entitled to receive any profit therefrom other than personal gambling winnings, and without otherwise rendering any material assistance to the establishment, conduct or operation of the particular gambling activity.

A person who gambles at a social game of chance on equal terms with the other participants therein does not otherwise render material assistance to the establishment, conduct or operation thereof by performing, without fee or remuneration, acts directed toward the arrangement or facilitation of the game, such as inviting persons to play, permitting the use of premises therefor and supplying cards or other equipment used therein. A person who engages in "bookmaking", as defined in this section is not a "player."

4. "Advance gambling activity" A person "advances gambling activity" when, acting other than as a player, he engages in conduct which materially aids any form of gambling activity. Such conduct includes but is not limited to conduct directed toward the creation or establishment of the particular game, contest, scheme, device or activity involved, toward the acquisition or maintenance of premises, paraphernalia, equipment or apparatus therefor, toward the solicitation or inducement of persons to participate therein, toward the actual conduct of the playing phases thereof, toward the arrangement of any of its financial or recording phases, or toward any other phase of its operation. One advances gambling activity when, having substantial proprietary or other authoritative control over premises being used with his knowledge for purposes of gambling activity, he permits such to occur or continue or makes no effort to prevent its occurrence or continuation.

5. "Profit from gambling activity." A person "profits from gambling activity" when, other than as a player, he accepts or receives money or other property pursuant to an agreement or understanding with any person whereby he participates or is to participate in the proceeds of gambling activity.

6. "Something of value" means any money or property, any token, object or article exchangeable for money or property, or any form of credit or promise directly or indirectly contemplating transfer of money or property or of any interest therein, or involving extension of a service, entertainment or a privilege of playing at a game or scheme without charge.

7. "Gambling device" means any device, machine, paraphernalia or equipment which is used or usable in the playing phases of any gambling activity, whether such activity consists of gambling between persons or gambling by a person involving the playing of a machine. Notwithstanding the foregoing, lottery tickets, policy slips and other items used in the playing phases of lottery and policy schemes are not gambling devices.

7-a. A "coin operated gambling device " means a gambling device which operates as a result of the insertion of something of value. A device designed, constructed or readily adaptable or convertible for such use is a coin operated gambling device notwithstanding the fact that it may require adjustment, manipulation or repair in order to operate as such. A machine which awards free or extended play is not a gambling device merely because such free or extended play may constitute something of value provided that the outcome depends on the skill of the player and not in a material degree upon an element of chance.

8. "Slot machine " means a gambling device which, as a result of the insertion of a coin or other object, operates, either completely automatically or with the aid of some physical act by the player, in such manner that, depending upon elements of chance, it may eject something of value. A device so constructed, or readily adaptable or convertible to such use, is no less a slot machine because it is not in working order or because some mechanical act of manipulation or repair is required to accomplish its adaptation, conversion or workability. Nor is it any less a slot machine because, apart from its use or adaptability as such, it may also sell or deliver something of value on a basis other than chance. A machine which sells items of merchandise which are of equivalent value, is not a slot machine merely because such items differ from each other in composition, size, shape or color.

9. "Bookmaking" means advancing gambling activity by unlawfully accepting bets from members of the public as a business, rather than in a casual or personal fashion, upon the outcomes of future contingent events.

10. "Lottery" means an unlawful gambling scheme in which (a) the players pay or agree to pay something of value for chances, represented and differentiated by numbers or by combinations of numbers or by some other media, one or more of which chances are to be designated the winning ones; and (b) the winning chances are to be determined by a drawing or by some other method based upon the element of chance; and (c) the holders of the winning chances are to receive something of value provided, however, that in no event shall the provisions of this subdivision be construed to include a raffle as such term is defined in subdivision three-b of section one hundred eighty-six of the general municipal law.

11. "Policy" or "the numbers game" means a form of lottery in which the winning chances or plays are not determined upon the basis of a drawing or other act on the part of persons conducting or connected with the scheme, but upon the basis of the outcome or outcomes of a future contingent event or events otherwise unrelated to the particular scheme.

12. "Unlawful" means not specifically authorized by law.


§ 225.05 Promoting gambling in the second degree.
A person is guilty of promoting gambling in the second degree when he knowingly advances or profits from unlawful gambling activity.

Promoting gambling in the second degree is a class A misdemeanor.

§ 225.10 Promoting gambling in the first degree.
A person is guilty of promoting gambling in the first degree when he knowingly advances or profits from unlawful gambling activity by:

1. Engaging in bookmaking to the extent that he receives or accepts in any one day more than five bets totaling more than five thousand dollars; or

2. Receiving, in connection with a lottery or policy scheme or enterprise, (a) money or written records from a person other than a player whose chances or plays are represented by such money or records, or (b) more than five hundred dollars in any one day of money played in such scheme or enterprise.

Promoting gambling in the first degree is a class E felony.

 

[Michael Wechsler]

There are many more gambling laws if you are interested... lots of them. What you describe, if accurate, is no different than gambling with actual currency. In a casino you purchase tokens to put into machines, which translates into basically being the same thing. I haven't looked at the details yet but it it certainly an interesting question that I would have to believe these large companies have had at least some legal research performed by an attorney. That still doesn't mean that they may not be pushing the law until it reacts but that might not be a wise move if the case. Thanks for the question.