By Eriq Gardner
Is holding an online office pool to predict Oscar winners unlawful gambling?
The answer: It depends.
Although the risk of prosecution is minimal, any contest that is based solely on luck is considered a "lottery" and prohibited by law.
However, in 2006, President Bush signed into law the Unlawful Internet Gambling Enforcement Act, which affirmed gambling statutes but carved exceptions for games that have "an outcome that reflects the relative knowledge of the participants."
According to Douglas Bordewieck, an attorney at Mitchell Silberberg & Knupp, "If an entrant must exercise some skill or display some knowledge in order to win, the game is a legal 'contest' and entry fees can be charged."
Does predicting whether Academy voters will favor "Avatar" or "Hurt Locker" take skill? We'd like to think so. But does it take enough skill? That depends on this question: Is predicting Oscar winners closer to poker or closer to a fantasy football competition?
Most U.S. jurisdictions apply a so-called "Dominant Factor test" in determining whether a competition is gambling or not. In the past, courts have found that poker has some skill involved but is illegal because there's a greater amount of luck. Conversely, fantasy sports competitions are blessed by law because they are seen as tests of knowledge beyond the luck involved.
Bordweieck believes that an Oscar betting pool likely qualifies as a contest of knowledge and would thus be legal. For any true worrywarts, here are three rules on how to have a legal Oscar betting pool:
- Make sure the contest has skill involved.
- Make sure the rules are outlined with necessary disclosures.
- Yes, the winner has to declare the winnings as income and pay taxes.