The meteoric rise of mobile games and online wagering sites has sparked intense interest from developers, platforms, and investors seeking to capitalize on what has ballooned into a multibillion-dollar industry. However, those looking to break into the market should carefully weigh the legal and regulatory challenges that could accompany building business models around real-money games and betting. Before charging ahead, stakeholders should understand the critical distinctions between skill-based gaming and games of chance that could determine the legality of playing and hosting them.
In skill-based games, players pay an entry fee for the chance to win a prize, with outcomes that are meaningfully dependent on the relative talents of the competitors. Games of chance, on the other hand, are defined by randomness and probability, though standards vary from state to state. Some outright ban any element of chance, while others are more permissive as long as chance is not the predominant factor determining winners. Regulators may rule that games like poker contain enough skill components to fall outside gambling restrictions, while slot machines and roulette would likely fail such a test. These designations carry high stakes, as skill-based gaming faces fewer legal hurdles.
The gaming space intersects with a complex web of laws and regulations covering, among other aspects, how these products can be advertised, promoted, and presented to players.
State-level rules can impose strict requirements around transparency, odds disclosures, and responsible gaming practices. At the federal level, statutes like the Unlawful Internet Gambling Enforcement Act (UIGEA) further restrict how online wagering can be offered across state lines. And for mobile platforms and app stores looking to host real-money games, terms of service often prohibit any form of wagering without prior approval.
Navigating these intricacies is not easy, but the potential rewards of entering the gaming market make it an appealing prize. That is why developers should retain legal counsel intimately familiar with gaming laws and regulations nationwide. Experienced attorneys can help stakeholders mitigate risks in the earliest stages of conceptualizing and building new products. They can also advocate for sensible policies that don't needlessly restrict innovation in this burgeoning industry. With sound legal advice, new entrants can thoughtfully weigh their options and make informed decisions.
Reasoned Legal Opinion
Social media sites, search engines, and platforms that host real-money games are eager to cash in on other advertising revenue they can generate. They should remain cognizant, however, of the risks accepting these marketing messages can pose in terms of social backlash, regulatory scrutiny, consumer protection, and liability exposure should messages run counter to public policy in the jurisdictions in which they appear.
To avoid liability under federal and state laws, media, advertisers, and their advisors have increasingly required that game publishers provide a "reasoned legal opinion" assessing the legality of their offerings. This standard emerged from UIGEA, which mandates that banks and payment processors conducting transactions for gaming operations verify their legality. A reasoned legal opinion serves this purpose — a comprehensive analysis by a lawyer experienced in gaming law who evaluates whether the skill versus chance balance complies with statutes across jurisdictions where the game is accessible.
Specifically, the analysis delineates the game's prevailing skill elements over chance. This includes strategic decision-making and knowledge application that govern outcomes more than random factors. A strong opinion will compare these dynamics to both federal definitions and individual state regs on permissible skill-based play versus prohibited gambling games. For multistate launches, each state's gaming classification laws must be addressed.
The lawyer will use this full analysis to determine the game's legal status. Given their liability risks, financial institutions place great weight on reasoned legal opinions in deciding whether to process payments. Similarly, major advertising platforms like Google and Facebook prohibit the promotion of illegal gambling products, relying on reasoned legal opinions in crafting ad policies on real-money games.
So, for game publishers, a reasoned legal opinion carries immense strategic import beyond mere legal compliance. It only requires a factual, good-faith assessment of the game. But it simultaneously unlocks financing channels and marketing avenues that can fuel growth. With so much at stake, retaining an experienced gaming attorney to conduct this review is a prudent necessity for real-money skill game operators. A well-crafted opinion can reassure partners, advertisers, and regulators that a venture complies with gaming laws — clearing the way for sustainable success.
Social Network Advertising
Social media and online marketing platforms have adopted varied policies on advertisements for real-money games like online casinos, sports betting, poker, and other skill- or luck-based games. Facebook, Google, and Twitter prohibit marketing messages they deem to target minors and vulnerable populations.
Platforms that do allow such ads typically require advertisers to comply with local laws and regulations. Advertisers may need to implement age verification mechanisms or utilize advanced targeting options to exclude underage users. Social media policies also usually prohibit ads with unrealistic depictions of winnings that could mislead users. This includes suggesting financial success is guaranteed or implying players will make easy money through gambling games. Depictions of luxury living funded by gambling are also prohibited in most cases.
In addition, many platforms prohibit testimonials that imply wins are typical or exaggerate likely earnings. Some also ban ads containing puffery or unsubstantiated claims about a game's fairness or odds. Anything misleading about the risks, rules, or probability of winning is generally prohibited.
- Meta —Advertising
real-money games on the company's Facebook platform. requires
jumping through some hoops. Meta has strict policies requiring
approval before any online gaming ads can run. Note that the
platform does not distinguish between skill-based games and
gambling:
"Meta defines online gambling and gaming as any product or service where anything of monetary value is included as part of a method of entry and prize," says Meta's Transparency Center.
Part of the approval complexity lies in categorizing the games and the jurisdictions in which they will be offered. Platforms must select the states and countries where the game will be available and describe the gameplay from Meta's inconsistent, restrictive, and outdated list.
In addition to proof of game licensure and the considered legal opinion outlined above, which must address each targeted jurisdiction, gaming companies also must prove to Meta that they have implemented geofencing and age compliance. Smaller companies without internal resources and expertise may need third-party Know Your Customer (KYC) services to comply. Meta's legal counsel will evaluate the application, the considered opinion, and game screenshots and render a decision in a few weeks to a few months.
- X (Twitter) —Twitter maintains
a rigorous and nuanced ad policy under Elon Musk. Sites promoting
gambling and skill-based gaming are generally banned in many
worldwide jurisdictions, though several exemptions are in place for
promotions targeting US- and Japan-based players. Meticulous about
complying with diverse local laws, Twitter allows but restricts ads
for sportsbooks, gaming aggregators, fantasy sports platforms,
online and physical casinos, horse racing, poker, and pay-to-play
noncasino games.
In Japan, Pachinko machine manufacturers and physical Pachinko parlors are allowed. Some skill games, especially poker, horse racing, sports betting, and fantasy sports, may be allowed with Twitter's prior approval.
Real-money gaming sites and service providers must understand that regulations differ significantly across countries and jurisdictions. Advertisers or their legal advisors must thoroughly research and comply with all local requirements where their ads will be shown. For example, a US fantasy sports advertiser would need proper licensing documentation for each state where ads appear.
Beyond legal compliance, Twitter's policy sets standards for responsible practices. Ads cannot promote irresponsible gambling behavior and must clearly disclose risks. Age verification is mandatory to prevent underage users. Influencer marketing must also avoid glorifying illegal or addictive gaming activities.
- Twitch —As the leading live
gamer streaming platform, Twitch wields tremendous influence over
gaming culture and emerging trends like real-money wagering. In
2022, Twitch instituted a major policy update banning most forms of
gambling content amid rising harm and scams in the online betting
industry.
Streaming sites — and sharing referral links or codes to sites not licensed in the US or a reputable regulatory body — are not allowed. Approved jurisdictions must implement key consumer protections, including deposit limits, waiting periods, and age verification.Poker, fantasy sports, and regulated sports betting are exempt from the ban.
- TikTok —TikTok is quite strict,
banning outright ads that promote poker and
most games of chance, simulated gambling, and casinos. The platform
does allow fantasy sports and sports betting advertising with its
explicit permission. Advertisers cannot promote websites, products,
or software that direct users to casino games or gambling-related
content like odds calculators, tips, or strategies.
TikTok is developing a dedicated mobile gaming tab within the app. This would allow users to play casual games directly within TikTok. While details are still limited, it seems TikTok aims to capitalize on the popularity of gaming content and culture on its platform. However, it remains to be seen whether real-money gaming or gambling-style games would be included.
- LinkedIn —The site bluntly
states, "Ads related to gambling or sweepstakes of any kind
are prohibited." LinkedIn does not expand on this statement,
seemingly leaving the door open to ads for sites, platforms, and
products that can demonstrate their association with skill-based
games rather than gambling. Games still must be operated by a
licensed and regulated entity, clearly and prominently disclose the
risks associated with playing the game, including the potential for
financial loss, and target users of legal age and jurisdictions
where the game is legal.
Advertisements for real-money and skill-based games must not be misleading, sensational, or exploit user vulnerabilities. They must also comply with all other LinkedIn advertising policies, such as those regarding prohibited content and creative standards.
Conclusion
Ever-evolving social media platforms' policies regarding real-money game advertisements present a complex landscape for businesses. Understanding the fine print and regulatory nuances is crucial, as noncompliance can lead to penalties or account suspension.
An experienced Web3 attorney specializing in real-money gaming can offer expert guidance on interpreting these policies, ensuring that your advertising strategies align with each platform's requirements. Such specialists can also keep you updated on the latest changes in the regulations, helping platforms and game developers stay ahead of the curve.
Online skill-based gaming presents an intriguing business opportunity, making it essential to adhere to a professional and thorough approach. With the right legal guidance, real-money gaming-related businesses can confidently advertise on social media platforms, leveraging their potential to drive growth and profitability.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.