“Bet on Yourself” is a phrase used by both Toronto Raptors Guard Fred Van Vleet and Players’ Lounge (an online tournament platform that allows casual video gamers to “pay for play” or “PFP,” for ease of reference). This means that players can pay to enter online matches or tournaments, and the winner of said matches or tournaments can win cash prizes.
Players’ Lounge is just one example of the many PFP platforms in the market today. Some others include Gamersaloon and 1v1Me. This blog will examine different legal considerations of PFP tournament platforms from a Canadian perspective.
The Law in Canada
To determine if a gaming activity is operating in contravention of the Criminal Code of Canada (the Code) and common law principles, it must be determined whether the activity in question includes elements of:
(1) chance (or mixed chance and skill);
(2) payment for participation; and
(3) prizes of money or property of any kind.
If all three elements are present, an activity may be considered an illegal “lottery scheme” and in contravention of the Code.1 Therefore, since users of PFP platforms (1) pay to enter online tournaments/matches and (2) can win prizes or money for winning such matches, the analysis needs to focus on whether the platforms are facilitating games of chance, mixed chance and skill, or games of skill.
If a court finds that these platforms are facilitating games of chance or mixed chance and skill, these platforms may be viewed by a court as operating illegal lotteries. Conversely, if the platforms are found to be facilitating games of skill, they would not be operating illegally according to the Criminal Code.
Chance or Skill?
“Chance” (as held by the Supreme Court of Canada) refers to a type present in a game known as a ‘systematic resort to chance’. When evaluating whether a game has a systematic resort to chance, a court will consider whether the element of chance was inserted into a game for the purpose of defeating skill. In contrast, many U.S. states apply the predominance test to determine whether a game is a game of chance or game of skill: does the game have more skill or more chance? In Canada, games of chance include traditional lotteries and slots. Games of mixed chance and skill include poker, bridge, and even bingo.
In Ross, the Supreme Court acknowledged there is chance present in games of skill like chess, tennis, and golf. However, the court distinguished the type of chance present in these games and characterized it as “the unpredictables that may occasionally defeat skill” like: a bad lie in a fairway, a gust of wind changing a shot trajectory, and a rake left outside of a bunker are examples of the unpredictables that may occasionally defeat skill in golf.
Considerations for PFP Platforms
Following the Canadian legislation and jurisprudence, a court may consider various factors in determining whether PFP platforms are facilitating games of chance, mixed skill and chance or skill. Some non-exhaustive factors that may be looked at include:
- What types of games are offered on the platform? Do those games have algorithms or other systems in place that allow skill to compensate for elements of chance?
- What type of players will players be competing against? Are they players of similar or different skill levels? How will this be determined?
- Are players going to be teamed up with other players as teammates? If so, are those teammates going to be at the same skill level as all the other players? How will this be determined?
- What are the variables within the game? Can you choose your own settings such as teams (in the context of sports games), difficulty, maps, or field dimensions?
- Can a player’s skill compensate for any assigned teammates and/or game settings where they may not have control?
Conclusion
PFP platforms are already a popular business model in the video gaming industry. Many of these platforms have become household names and have large user bases. However, it is important for the business owners to understand the risks and obligations of running such platforms. Ultimately, the more safeguards that are in place to reduce the randomness and chance elements of the matches, tournaments and overall gameplay, the less likely these platforms may be viewed by a court as contravening the Criminal Code.
If you have any questions about your PFP business, please feel free to contact us HERE or reach out directly to zack@gmelawyers.com or jack@gmelawyers.com.
1 Criminal Code, RSC 1985, c. C-46, s206.
