Skillz operates legally by leveraging the distinction between games of skill and games of chance, ensuring full compliance with U.S. Federal and State laws, and meticulously verifying player eligibility based on location.
The Legal Framework Behind Skillz
The legality of Skillz's operations primarily stems from its classification of games as skill-based rather than games of chance (gambling). While gambling laws typically regulate games where the outcome is predominantly random, skill-based games, where a player's ability, knowledge, or strategy determines the outcome, are generally not subject to the same strict regulations and are legal in most parts of the United States.
Skill vs. Chance: The Core Distinction
- Games of Skill: These are competitions where the outcome is determined by the participant's physical or mental aptitude. Examples include chess, billiards, competitive video games, or trivia. The more skillful player has a higher probability of winning.
- Games of Chance: These are activities where luck or random occurrences primarily dictate the outcome. Examples include roulette, slot machines, or lotteries.
Skillz ensures that the games offered on its platform are designed with a predominant element of skill, making them distinct from traditional gambling. This fundamental difference is crucial to their legal operation across most U.S. jurisdictions.
Ensuring State and Federal Compliance
Skillz adheres to a rigorous compliance framework to operate lawfully across the United States. Key aspects of their compliance include:
- Adherence to U.S. Federal and State Laws: Skillz operates in full compliance with all relevant U.S. Federal and State laws governing skill-based competitions and prize play.
- Residency Verification: The platform verifies the residency of anyone seeking to open an account. This is a critical step to ensure that only eligible individuals from permissible locations can participate in real prize competitions.
- Location-Based Services: Skillz employs a combination of technologies, including IP address and other sophisticated location-based services, to determine a player's real-time eligibility for real prize competition. This dynamic verification ensures that players located in states where cash prize skill games are restricted cannot participate.
Geographic Eligibility and Player Verification
While skill-based gaming is widely legal, state laws can vary regarding cash prize competitions. Skillz's robust verification process ensures that:
- Players are located in states where real prize competitions are permitted.
- The platform restricts access to cash prize games for players in states that prohibit them, such as Arizona, Arkansas, Connecticut, Delaware, Louisiana, Maryland, Montana, South Carolina, South Dakota, Tennessee, and Vermont (this list is subject to change based on evolving state laws).
- Free-to-play games, however, are typically available nationwide.
By meticulously verifying player residency and leveraging location technologies, Skillz maintains its legal standing and offers a secure environment for competitive mobile gaming.
