I have noticed a proliferation in card and game stores in Colorado since 2010. A lot of this growth is on the back of very lucrative games like "Magic: The Gathering," that encourage customers to enter tournaments hosted by card and game stores that award prizes in the form of cash or products to tournament winners. Some stores even offer coffee-house-like amenities to their players.
I have been asked several times about the legality of charging people to play games like Magic and then distributing prizes to the winners. As a practical matter, I have never heard of anyone in Colorado getting into trouble with the Attorney General’s office over an accusation of gambling.
That does not mean it could not happen, however. It is wise to be concerned about how this business model might be regulated, particularly if it continues to grow.
Colorado’s gambling laws
Colorado regulates gaming under several laws, including the Colorado Criminal Code, C.R.S. §§ 18-10-102 and 106, the Bingo and Raffle statutes, C.R.S. § 12-0-101, et seq., the Sweepstakes and Contest statutes, C.R.S. § 6-1-801, et seq., the Colorado Lottery Law, C.R.S. § 12-35-101, et seq, and the Limited Gaming Act, C.R.S. § 12-47.1-501, to name a few. And, on top of that, several federal laws might apply.
As I mentioned above, many card and game stores make a good deal of revenue from charging customers to enter tournaments to play games like "Magic: The Gathering," "Yu-Gi-Oh," "Pokemon," and similar games, and distribute cash or product prizes to winners. Any store doing so should at least consider whether the way they are doing it is legal.
While the answer to this question probably varies depending on the details of each store's business model, there are some general questions to ask. First, does charging people to play these games for prizes constitute “gambling?” If so, that would not be good, because gambling, as well as the communication of information used in gambling, is illegal in Colorado. C.R.S.§ 18-10-102 and 106. The Colorado Criminal Code defines “gambling” as “risking any money . . . or other thing of value for gain contingent . . . upon . . . chance . . . or the happening or outcome of an event . . . over which the person taking a risk has no control.” C.R.S. § 18-10-102(2).
Social Gaming Versus Paying to Play
This does not mean that you or your sons or daughters are breaking the law by playing a trading card game for ante in the basement. There are exceptions allowing gambling activity in a purely social setting. However, when a card store runs a tournament, it probably does so for a profit motive, and this can make the (alleged) gambling “professional.” Charnes v. Central City Opera House Assoc., 773 P.2d 546, 548 (Colo. 1989). So, while playing poker socially among friends is probably not a crime, organizing a club whereby strangers pay a chair fee to play poker probably is. Compare Houston v. Younghans, 580 P.2d 801 (Colo. 1978) to People v. Wheatridge Poker Club, 569 P.2d 324 (Colo. 1977).
Does Skill or Luck Dominate the Game?
While there is no bright-line rule, many American courts demand that a game require more than a minimal amount of skill or judgment. In fact, as early as 1904, a court ruled that “the test of the character of the game is not whether it contains an element of chance or an element of skill, but which is the dominating element that determines the result of the game.” People ex rel. Ellison v. Lavin, 71 N.E. 755, 755 (N.T. 1904). In other words, does the game require more skill than luck (in which case, it is not gambling), or does it require more luck than skill (in which case, it could be illegal gambling).
In 1993, the Colorado Attorney General issued an opinion about poker. He thought that, “while the call is a close one,” poker “is a game in which skill, not chance, dominates” and therefore is not, in and of itself, illegal gambling. Colo. Op. Att'y Gen. No. 93-5. Of course, the opinion noted that “certain forms” of poker might still be prohibited, and of course we have a different Attorney General today than we did over a decade ago.
Still, if poker is considered to be a game in which skill dominates over chance, a collectible card game might also be a game of skill. And, if that is true, then it is probably not "gambling" under the Colorado Criminal Code.