I think it's a great idea, huge revenue potential.

Are there legal issues, at least in the US? I'm not a lawyer, but I thought any kind of betting on game outcomes was illegal except in specially-permitted situations.

Thanks for the feedback micco!

I am not sure if it would be considered "betting" if you "bet" on yourself. I have contacted a few lawyers but haven't gotten a straight answer. They didn't know if it was legal or not. If anyone has any facts that they would like to share in regard to whether or not it is legal, please share it with us. Thanks!

If it was illegal I wonder if we could sidestep this by setting it up as a pay to play fee in which most of the fees paid by both players are assigned to the winner.

Not a lawyer, but both betting on yourself and pay-to-play with a payout to the winner could both describe a poker game, and I think that's illegal in most places. As far as I know, even our backyard poker games are technically illegal but the law isn't really enforced unless there's a house taking a rake.

Besides government, i think any parents or teachers will also really hope that their child or students never know there are such a thing!

Even pure LAN games are already wasting alot of important time of the young students. When $$$ is involved, addiction is definitely doubled.

You are evil enough to come with this idea Vizion...lol..clever thought.

Thanks for the vote of confidence Magickaito :-) I agree; the parents need to teach their children responsibility and good time management skills. I think video games are just like any other medium; moderation is the key. Video games can be very useful and contrary to popular opinion research has shown that playing video games improves one's intelligence quotient (IQ) via increased problem solving ability.
http://abcnews.go.co...d=814080&page=1

Nowadays video games have become so popular that many careers have sprung from them, including "cyber athletes" (i.e. professional gamers). These professional gamers compete in tournaments around the world for high dollar top prizes (e.g. $1 million). These players work hard just like everyone else it's just that instead of working in a cubicle or factory, they have to put in 8-10 hours per day preparing and developing winning strategies for upcoming game tournaments.
http://en.wikipedia....ki/Electronic_sports

The video gaming industry has also led the way to great career training tools such as training simulators that have been used in many job industries. More importantly such training simulators/video games are used by our own government to train workers, soldiers, pilots, etc.

Anyway the video game industry is huge these days with many released games rivaling the sales of top hollywood movie productions. Actors get paid to act, why can't gamer's get paid to play? They are already going to play games anyway, why not let them make some money doing it?

micco,
Thanks again for your input. I think the main difference is that poker is considered a game of chance and is not considered a skill according to our goverment. If I played a professional poker player in a hand of poker, even I, a very bad poker player, still have a chance at defeating him since a large portion of the probability of winning is governed by the cards that are dealt (which I have no control over). However, with competitive video games (i.e. sports games such as Madden NFL 08) if I were to play a professional gamer there is no way I could win at such a game. This is because it is not a game of chance; the player's skill level determines absolute success.

Regardless my thoughts on this, I am still unsure if such a venture would be considered illegal according to U.S. law. Since it has probably not been done before, I imagine that it may be considered illegal. However, I still don't know for sure and if anyone can give me some direct evidence as to the legality of this business idea I would greatly appreciate it. Thanks again for you input, time, and help.

Based on previous comments, I have revised the pitch to include entry fees instead. Thanks everyone!

This seems like a great idea.

Addictions do make money.

This business is already existed. It is called Tournament.com. However, they have shut down their website on Dec. 2nd. Maybe there is some problem with this business model and idea.

I found a couple articles regarding Tournament.com's demise.

http://www.gamesindu...t_page.php?aid=30855
http://www.joystiq.c...tournament-com-dies/

It would seem that gamers are unwilling to part with money. How do you intend on learning from their failure. It sounds like a decent operation, and I'm certain they had a good chuck of start up capital to get involved with Valve(c).

I like the concept VQ and there may be some way around it. I volunteered for WotC for a while and MTG Online is probably a good example of a grey-area gaming site. They probably get away with it since you buy product (cards and credits) and play to win more credits. With credits you can buy product.

You could do something similar where you sell credits and make some money on (1) people not redeeming credits for anything (2) running large tournies with entry fees and (3) selling products (games, hardware, etc.) where credits (bought for same $1) buy products at less than a $1 value (hence making a small percentage).

Thanks for the info on Tournament.com. I have been aware of these combat sites and am already aware that they do not work. Such was the case for PrizeFight.com which, to my knowledge, actually launched before Tournament.com.

The main difference between what I am suggesting is the type of competitive video games we are talking about. I do NOT intend to market this to gamers of multiplayer combat sports such as those in which Tournament.com and PrizeFight.com were totally based. I am marketing to those that play sports video games such as the NCAA Football and the Madden Football series.

It is my experience that the learning curve and the potential to develop greater skill ability at such games is drastically between the two. That is, it takes very little time to learn how to shoot and move in a combat game. However, it takes much more time and effort to learn how to play sports games because they are much more complicated. Football games for example require you to coordinate all the players on your team to effectively move the ball down field by successfully passing, running, pitching, recieving, and defending the ball. Such actions as well as correct offensive and defensive play calling insure to a much greater degree [compared to combat games] that the best player wins. This is the reason why people who play sports games are more willing to engage in play for profit play than those that play combat games.

By the way, I have organized play for profit sports game tournaments before that required a $5 entry fee and I had no trouble getting people to sign up. And these were local gamers who didn't even know me to begin with.

To clarify the specific target market of interest (i.e. sports gamers) I have revised the title and pitch. Sorry for the confusion, hopefully it is clear now that we are NOT interested in targeting the combat video gaming market. Thanks for all your comments, they have been very insightful and helpful!

So this would be something like fantasy football on the money side right? With the exception being that gamers are taking an active part in process.

VisionQuest, I respect your idea and opinion...but you said:

"It is my experience that the learning curve and the potential to develop greater skill ability at such games is drastically between the two. That is, it takes very little time to learn how to shoot and move in a combat game. However, it takes much more time and effort......."

Holy moly Shazbot! I have a great deal of experience in multiplayer firstperson TEAM based, full throttle gaming. It takes an extraordinary amount of Teamwork and Skill to coordinate a victory. It takes a great deal of time to learn to shoot AND kill a skilled moving target with nothing but victory on their mind. Sticking to the plan, mastering various vehicles, guns, terrains, on and on. Being a former Tribes2 addict....I can still say that T2 rules the world as the best and most engaging Team based FPS ever made.

OK OK...that's my T2 plug. I had to put it somewhere.

It seems as though everyone is a walmart shopper. Unless you have a better twist than the failed sites I'd say revenues may be hard to come by.

David

DavidDubree, thanks for your great insight into multiplayer combat gaming. I don't doubt that it takes skill to play combat video games but the learning curve is much steeper (easier to master the game over a short period of time) than it is for sports video games.

Also, I am talking about a one on one competition, not mulitplayers per side. I think that is part of the problem with why sites like Tournament.com and PrizeFight.com failed; you are only as good as your team. The more players you have the more potential there is for someone to make a fatal error and thus players are less willing to pay. Plus with combat games, if you get shot (i.e. huge error) the game is over. However, with sports video games you can make huge errors and still recover to win because it is not a life and death scenario, the game has a set time limit (unlike combat games).

Again we are targeting the sports video gaming industry and not the combat gamers because we have first hand experience that sports video game players are willing to pay entry fees. This obviously is not the case with combat video game players (e.g. Tournament.com, PrizeFight.com).

'Easier to master' ......hmmm......ok last plug about it....I played heavily for 4 years and still had skilled players own me....and my team. Difficult.

OK. One on One sounds better. It IS very difficult to keep a good team together and coordinate a tournament type game with everyone involved.

I can see a huge need to promote the winners to keep it a big ego trip. Money helps too. It would take alot of marketing. Maybe employee the mad skilz of mob4hire. Hit all the college areas, sports bar types, 20and 30 somethings that have money and time to spend.

I see some possiblities.

Maybe a MySpace/ Facebook addon that autoposts a members rank on their profile. It could become a coveted badge.

FYI, mob4hire is for testing mobile apps, not general purpose mobs ;)
http://www.mob4hire.com/

You might be thinking of HypeSphere or Marketing Mob, those are more related to marketing activities.

---------------------------

My main concern would be if the earnings get significant, it may count as income in the US and the IRS will want a cut. (As micco alluded to)

Perhaps you can roll it out in a different country to work out the kinks. I would think Japan might be an even better market.

What about hacks?

Hacks? Could you elaborate please?

Just found some crucial information regarding the legality of this business idea. Apparently 36 of the 50 states make exceptions for skill-based gaming even if there are cash prizes and entry fees. The following do not: Alaska, Arizona, Arkansas, Connecticut, Delaware, Florida, Illinois, Iowa, Louisiana, Maryland, Missouri, South Dakota, Tennessee, and Vermont.

Also, back in June of this year, Congressman Robert Wexler (D-Florida) introduced The Skill Game Protection Act to make 'skill' games, including poker, mah-jongg, bridge, and chess, exempt from current laws aimed to stop online gambling in the USA, including the Unlawful Internet Gambling Enforcement Act (UIGEA).

Thus it indeed seems that such a business entity would be within the law as long as it is established in one of the states sited above. Another alternative would be to establish the business outside the United States.

As for the Skill Game Protection Act bill, I cannot find any recent information about it. I don't know its status or if it passed or not. If anyone has some insight to this bill and its current status please let us know. Thanks for all your helpful comments!

Here the current status of The Skill Game Protection Act:
http://thomas.loc.go...ry/z?d110:h.r.02610:

Tournament.com... and it failed.
I don't think 'Sports' games will be any different. I think it probably failed because of the lack of players. And I don't think there are more players of sports games than FPS games.

I think you should work off of your experience organizing tournaments, and create a site that helps people easily organize game tournaments. Either provide the tools to organize a tournament or provide the complete turn-key service to host the tournament. I believe there are people that make a living organizing game tournaments at restaurants and bars etc. already, so you may have some competition out there.

If I was going to play for money I would only want to play with players that had less skill than me. Of course they would want to do the same so there would be very few matches. Only those who were at exactly the same skill level or those that didn't know their skill level.

In order to overcome this you either have to introduce point spreads, differential odds or automated rotating matches.

echen, thanks for your comment. It looks like sites like Tournament.com failed not because there wasn't enough players but because they weren't willing to pay to play. I would argue that they see too much risk involved in multiplayer combat games (see above for previous comments).

I believe that it is a solid business model that has tremendous potential. Obviously I am not the only one that thinks so given that Tournament.com was one of many sites that has launched in spite of a fairly long track record of failures. The business model can work, it just has to be implemented correctly and targeted at the correct user that is willing to pay.

LarsBell,
Interesting point. I agree that there may be a need to create incentives for players with less skill to challenge those with greater playing skills. Thanks for the comment!

LarsBell,
For non-tournament play, I think the point spread idea would even the playing field and provide such an incentive for lower ranked players to challenge higher ranked players. Obviously players would have to be presented with the point spread beforehand and agree to them prior to challenging each other and engaging in play. We may also have to allow them to negotiate the point spread themselves to some degree. Any other thoughts on this?

"Hacks? Could you elaborate please?"
Well in gaming tournaments, competitions, and pro gamers. They play in a very anti-hacking environment they have moderated computers on isolated connections. To keep people from just cheating. It is very hard to keep out cheaters when you have open connections on the Internet. What happens if someone cheats?

Also, how is this not falling under gambling laws?

You will probably need to have 3rd party odds makers to establish point spreads.

The old tradtional way went something like this:

If two people couldn't agree on a the point spread/ pay out terms, they would go to a third party. Each of the racers/players/betters would put a coin in their hand and stick their hand in a bag. The 3rd party would get the details of the situation, then announce the odds. Each player would decide if that was worth doing. If it was a good deal for them they would leave the coin in the bag. If not they kept the coin in their hand. Once both hands were out they revealed if they had left the coin in the bag. If both had empty hands then the bet/match was binding. If both or either hand the coin in their hand then the odds were not acceptable and there was no match. If both coins were in the bag then the 3rd party kept that as payment for his time, this gave him an incentive to suggest a deal that both parties would do.

Of course you could create a computer program equivalent of this behind the scenes. But the concept would be the same.

BTW the Rumor is that this system is what lead to the tradition of shaking hands to seal bets. (ie physically checking for the coin, so you couldn't try a slight of hand)

I don't think you should limit yourself to sports games. Let players use it for for whatever game they want to use it for.

I also disagree with your analysis that sports games are harder and that will lead to a difference in behavior for your customers. It doesn't really matter anyway. But just drop that argument from the idea and move on with the parts that do work.

Kevin,
I was not actually intending to host the games myself if at all possible. But you are correct and I am still developing some strategies to prevent cheating (i.e. using game sharks, etc.).

My understanding is that it would not be considered gambling because it is a game of skill not a game of chance. There are 36 states that gaming with cash prizes and entry fees (see above comments). Although we would definintely have to get our lawyer to help us make darn sure we are within the law.

LarsBell,
I agree, I would like to start with sports video games first to test the market. If it works we would expand it to other one on one competitive skill based games.

With regard to the comparison of sports games verus combat games, I agree; let's just agree to disagree.

Thanks again for all your great insight and help!

hello! I 'm French and I'm working about a similar idea... In France you can't bet real money (it's not legal)! But you can bet points that you could exchange with present 'Ipod, TV, Tshirt, ....) !
Maybe I could work with you on the European Market...

FYI, a good site to track the "Skill Game Protection Act" is govtrack.us

The skill game act is located here:
http://www.govtrack....l.xpd?bill=h110-2610

also, there is a website called http://www.king.com that allows users to deposit money into an account and play games for money, including sports games (albeit lame ones). Here is some info from there site:

"King.com is an international web site based in the UK open to players from many major international markets. King.com is also available in a number of languages to simplify your experience.

The skill based games hosted King.com are only offered to certain countries due to the laws and legal aspects governing tournaments, money games and such in different countries. Find more information about the different countries we service in the section "How it works". If you cannot find your country listed there, legal restrictions in your country today prevents us from offering our service to you. We will continuously strive to increase the number of countries we service, and advise you to come back to see if we have opened our service to your country."

Yes I was thinking of Marketing Mob. Thank you for the correction.

I like what rom1 said. That seems to simplify things. Unless you were really thinking cash is king.

Rom1,
Thanks for your input. The points idea may have to be used, I am not sure if it is required to be within U.S. law.

SaulGood,
Thanks for the gaming bill link, that answers my question! King.com is very similar to Pogo.com. I think both allow you to earn cash by playing games.

I already played in that way. it's good, but maybe it can be considered a casino, so have some legal advice before starting.

noelius,
Thanks for your comment! As you can see from previous comments that we have discovered that it is indeed a legal business venture but will require some close attention from our attorneys.

refer your idea to legitimate consultants....

"I was not actually intending to host the games myself if at all possible."
There is like no way you can control betting or winning if you don't have control over the game environment.

Personally I know there are all ready tournaments for games. None of them I have seen have ever taken place directly online. I have seen lots of game contests with No-entry fee.

There are online games, I guess you could say even poker is a "game of skill" as well. But, it seems like you are going to run into legal issues.

I think this idea most likely have large competition with other company's if this is even possible.

Given your resources right now. How long will this venture take to get going? What type of resources will you need?

Thanks josielyn!

Kevin_Cox,
Lot of online gaming systems (Xbox, PS3) already have anti-cheating technology in place in the games I am referring to. If at all possible we would like to not have to host the games ourselves. Hosting them would requrie us to obtain licensing agreements with the game creators which costs big bucks and they might not even give us the rights to do so.

We believe that there are other strategies that can be employed to minimize and prevent cheating that exist outside the gaming environment as well. Such strategies may include video recordings and review of each game if needed, live video feeds required by each player at the time of play, legitimate player challenges (lets players challenge the game for review of cheating), reported user disconnect rates, reported username stats, user based anti-cheating committees, incentive based reporting of cheaters, etc... Let us know if you have any other ideas/strategies that lay outsite the game itself.

I agree, with a good business model there will always be the potential for lots of competition. The competition doesn't bother me, being a successful first-mover has its benefits. And even if we aren't the first-mover the alternative has its benefits as well. Web based ventures rarely have any barriers to entry, it basically comes down to who can provide the better experience.

ccozad,
I think it would take approximately one to two months to have a working prototype ready. We would need a iron clad terms of service agreement and some help from some good business attorneys to make sure we establish the business in the correct location and are within our legal rights.

"Lot of online gaming systems (Xbox, PS3) already have anti-cheating"
All based server side there is NO client to client. Also, NO real money transactions between client and client.

Kevin_Cox,
Regardless of the strategies employed to prevent cheating, if someone really wants to cheat they will find a way, even if you have the best anti-cheating client to client systems in place. Vegas cheaters are a prime example and casinos use way more sophisticated and expensive means to prevent this than what you are describing. Thus I would suggest to you that deterents are perhaps just as important or even more important at preventing cheating.

We intend to enable users to challenge the integrity of another's game play to determine if cheating occurred. In that case, the funds would be held until a decision was made using evidence acquired via the already discussed means. Users caught cheating would face serious consequences to deter others. This can be easily done because the gaming systems used log ones IP address and is attached to their username.

If we find that these strategies do not work and users do not trust such a system. THEN, we will host the games ourselves and employ such client to client ant-cheating strategies. From our perspective, not hosting the games eliminates a ton of risk and expense and is a great starting point.

Thank you for your insight and help, it is greatly appreciated Kevin.

To add on to the video blog comment. About party poker, the system they are using is server side.

I think a close example to this is second life, where second life currency that you earn in the game is traded server side and it can them be exchanged into real currency. I know some other games that allow this as well.

I am not saying the idea can't be done. Just that you will run into big issues without the games hosted server side.

How about charging a subscription for unlimited practice and watching others? Then, charge tournament entry fees. Practicing and watching should help the neighborhood champs determine when they are ready to enter tournaments. They could watch the reigning champions and not pay to find they are outmatched.

Please forgive me if this was already said, as I started skimming the comments much higher up.

Hacks, slow internet connections, law and a highly complicated webservice. Nice dream, but you will need a huge amount of cash to make this work.

I'm not a huge gamer, but i like the idea .. Just one issue, what about cheats... how would the website overcome players gaining unfair advantages through the pressing of certain buttons?

"Hacks, slow internet connections, law and a highly complicated webservice. Nice dream, but you will need a huge amount of cash to make this work."
splash112 you hit the nail on the hammer. =)

other than the pay against, what is difference from these:
http://internetgames...ame_Competitions.htm