Legal Considerations for Running a Cyber Cafe with Sweepstakes Games

As sweepstakes software gain popularity with U.S.-based cyber cafes, being aware of the legal status surrounding them is vital. They are a very profitable business model, albeit not one with complicated compliance. This piece discusses key legal concerns so that you can operate safely and responsibly.

What Are Sweepstakes Games?

Sweepstake games are promotional games in which prizes are awarded randomly but no one has to buy anything to play. They can be as visually and play-imetensively indistinguishable from cas1no-styled games as legal gambl1ng, but they are played on pre-conditioned legal terms.

These games normally offer participants entries or credits for free or as part of a product (e.g., internet time). A predetermined algorithm, not a bet, selects the winners, which is at the heart of their legal difference.

Legal Difference Between Sweepstakes and Gambl1ng

Gambl1ng is best characterized in the United States by three characteristics:

• Consideration (payment to play)
• Chance (random result)
• Prize (something of value)

Sweepstakes games try to remove the first element—consideration. Participants should have the ability to play for free, most times by offering a free entry element. This is the legal aspect that distinguishes sweepstakes from gambl1ng in the majority of states.

Payment elimination, however, is not enough. The game structure and gameplay need to be in harmony with promotional sweepstakes laws, instead of gambl1ng laws.

State-by-State Variation in Laws

American sweepstakes law is not uniform. The states themselves are free to interpret and put into effect regulations in different manners, leaving cyber cafe owners in confusion.

Permissive States: Some states have more clearly delineated boundaries for sweepstakes models, provided they are following some advertising regulations.

Restrictive States: Some states, such as Washington and Utah, have more stringent legislation that can criminalize specific sweepstakes models as illegal gambl1ng.

Gray Areas: Some states prohibit or permit these systems, and it's for courts or regulatory bodies to decide.

Due to this variation, it's wise to consult with an attorney familiar with your state's policy on sweepstakes gaming before opening.

Most Significant Legal Compliance for Cyber Cafes

If you're opening a cyber cafe with sweepstakes games, the following compliance measures are usually required: