Anyone understand gambling and lottery rules?

**daamazingmrhan** · 04-03-2008 01:52 PM

Hi all,

New to the post here.

I have a new business venture I'd like to start, but it really depends on legalities. I have questions regarding US rules and regulations about online gaming (for money) and the lottery industry. Is there anyone that can help me out?

The business idea is simple. Essentially it requires people registering online for a fee, which automatically enters them into a prize drawing. After a certain number amount of people register, we do a blind drawing and we give away the gift.

Is this legal?

Thanks!

**xSTEEDx** · 04-03-2008 10:48 PM

Hmm...interesting. I think this would depend on your state statutes and laws and all that. You can definitely find out by around or asking a lawyer via email or phone (don't schedule an appointment).

**pentupentropy** · 04-04-2008 12:27 AM

no. it's absolutely not legal. It violates the wire act. host it offshore and only take money from other countries' residents. Their money is worth more anyway. China/Hong Kong, huge into gambling. Thailand, all over Europe. You'll do fine with them

**BusinessAdviser** · 04-04-2008 12:55 AM

Originally Posted by Players of America

Hmm...interesting. I think this would depend on your state statutes and laws and all that. You can definitely find out by around or asking a lawyer via email or phone (don't schedule an appointment).

Don't schedule an appointment?

**xSTEEDx** · 04-04-2008 01:36 AM

No. Why pay 200 an hour when you can get this info for free?

**BusinessAdviser** · 04-04-2008 01:41 AM

You're exactly right. Why pay 200? There are TONS of attorneys out there that offer free initial consultations.

**jasaunders** · 04-04-2008 07:55 AM

Depends on how you structure the business. Do the users receive anything or do anything for registering? Or do they just sign up for a lottery. The latter is going to be illegal in almost all cases. The former can be done depending on what exactly you are doing. If the fee is a "membership" fee and you are offering something of value, then this could be legal. There are several businesses doing this, the biggest being iWon, but also several new poker startups.

**pentupentropy** · 04-04-2008 08:44 AM

Saunders has a point. But entrance into the contest cannot be associated with the signup fee in any way. This is why whenever there's a contest for a product you see "no purchase necessary". Obviously you may not have to, but it'd be much easier to buy the box of cereal than to send in a self addressed stamped envelope to the company and wait for your entry form and then fill that out and send it back.
The other thing you need to do is establish the rules of the contest and call a hosting company to find one that will carry it. A lot of them won't.