Are virtual cryptocurrency trading platforms considered gambling when cash is involved?
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Are virtual cryptocurrency trading platforms considered gambling when cash is involved?
I am looking into starting a website and have some concerns it might be considered gambling. The website is a cryptocurrency trading platform that uses virtual funds but does have cash games that accept fees and distribute some of the fees collected to winners of the competition. Is that considered gambling?
Asked on May 12, 2019 under Business Law, Alaska
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 4 years ago | Contributor
Games that accept fees and distribute some of the fees to winners is gambling IF there is any chance involved. For there to be gambling, there must be--
1) "Consideration," or something of value offered in exchange for the opportunity to participate;
2) An outcome determined by factors beyond an individual's player's control or "chance"--e.g. if there is any random element or chance at all involved in the outcome of games, including in the initial set up of them that then influence player strategy (e.g. in a first person shooter game, if the positioning of weapons or treasure in a game is random, as compared to a player's starting position); and
3) A "prize"--something of value the winner(s) get.
There is definitely elements 1) and 3) in what you describe. So the issue is: is there any chance at all? To analogize: even though poker and backgrammon require skill, because there is chance (the draw of cards; the roll of the die), paying money to play them with a chance of winning a prize is gambling. A chess tournament is not gambling, because there is no chance whatsoever: it is 100% skill.
So the nature of the games involved will determine if this is gambling or not.
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