Hosting xbox tournaments with entrace fee and prizes
I want to start a company based on a website that hosts gaming tournaments. In order to enter the tournament players would have to transfer an entrance fee via paypal. The fee would be minimal, 25 to 50 dollars. The games would be played over xbox live. There would be a number of rounds. Then based on winners ranking (1st, 2nd or 3rd) money prizes would be awarded. Of the money collected as entrance fees about half or more would be given out as prizes (amount would be predetermined). From what I've heard online gambling is illegal but does his count as gambling since it is still based. I know events like these take place off the internet at large gaming events. If this is legal what kind of licenses would i need if any if i do this on a small scale to start?
1 Answer from Attorneys
Re: Hosting xbox tournaments with entrace fee and prizes
There are actually a number of issues you face to accomplish what you want, the least among them is dealing with the ban on 'net-based gambling. That said, you need to answer a series of questions to determine the best jurisdiction to set up your company, where your servers should be located (or, more properly, not located), etc. You will also have to deal with some government oversight if you are awarding money prizes. You will want also to pay particular attention to the ToS/U and rules applicable to visitors to you site and players. Finally, you will have a number of intellectual property issues to deal with due to your reliance on 3rd-party platforms (i.e. xboxes), etc.
Sounds like a lot but it's not really too bad -- about par for any online business these days.
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