Gambling on Skill: Enforcement of Gambling Laws Against Skill Games in Outlier States

By: Jordan Briggs

In many states, people can legally pay entry fees to participate in a skill game and win cash prizes. For most states that allow participants to wager on their own skilled gameplay, the analysis for whether a certain game qualifies as a legal skill game turns on whether the game is one of chance or of skill.

Each state has its own test to determine if a game is chance or skill, but these tests fall into three categories. The most common test is the “predominant factor” test, which recognizes that all games have some element of chance but hinges on whether skill dominates the contest. If factors like superior knowledge, dexterity, and practice contribute largely to the outcome (i.e., winning) then the game is one of skill. Also reasonably common is the “material element” test, which more restrictively asks whether chance is present to a material degree, even if some skill is involved. A few states apply the “any chance” test, which limits games of skill to only those without a modicum of chance.

However, some states fully prohibit skill games. For example, in South Carolina, recording bets or selling pools on contests of skill is prohibited.[1] The South Carolina Supreme Court upheld a strict interpretation of this statute, stating that “gambling” under South Carolina law includes “games in which skill outweighs chance.”[2] The  Supreme Court concluded that gambling depends not on skill or chance, but rather on whether a wager is involved. In other words, the presence or amount of skill involved in a game is not relevant as to whether a game constitutes gambling.

Last year, the South Carolina Court of Appeals came to the same conclusion—that the inclusion of a wager is the issue under South Carolina law—while reviewing a dragon-themed video game with a cash payout.[3] Specifically, the Court of Appeals examined whether the game was a prohibited “machine or device licensed pursuant to Section 12-21-2720 and used for gambling . . . or other device pertaining to games of chance of whatever name or kind.”[4] The Court of Appeals thoroughly reviewed and ultimately relied on Chimento. So, instead of watching presumably engaging gameplay of colorful dragons and turrets and analyzing testimony about rules, gameplay, skilled player versus newcomer outcomes, and other considerations to determine if the game is one of skill, the Court of Appeals simply looked to whether or not the entry fee was a wager. Because users bought credits as an entry fee and could play through those credits without winning a prize or could choose to withdraw early and receive cash based on their points, the Court of Appeals found a wager was involved. It concluded that the game was prohibited gambling because it “attract[ed] players to deposit money for the purpose of trying to ‘win’ more, whether by skill or chance.”[5] In sum, even skill games with entry fees are prohibited in South Carolina.

As discussed above and illustrated by 1 Dragon’s Ascent, whether an activity is gambling depends on the definition of “gambling” in each state. In a state that uses “chance” as an element in its definition of gambling, i.e., most states, it is necessary to analyze the gameplay, the features, user patterns, and more to assess whether a game is a game of skill and, thus, not prohibited gambling. However, some states break the mold. In addition to South Carolina, Maryland and Michigan state laws each focus on whether a wager is placed and disregard the chance-skill distinction used by the majority. Still some other states, like Washington, may seem to allow games of skill based on statutory language, but the case law and regulatory enforcement actually prohibit any online gaming. Accordingly, game providers need to be familiar with the laws of each state in which they intend to offer their products, recognizing the necessity of comparing the unique features of their games to the specific—and wildly varying– laws of each state.

You can find more insights into skill games and the industry generally in our e-book, The Definitive Guide to Online Gaming and Betting in the U.S.

[1] S.C. Code Ann. § 16-19-130; see also id. § 16-19-40.

[2] Town of Mt. Pleasant v. Chimento, 737 S.E.2d 830, 837 (S.C. 2012).

[3] 1 Dragon’s Ascent Video Gaming Machine; SC Games of Skill, LLC v. S.C. Law Enforcement Div., 445 S.C. 252, 912 S.E.2d 407 (Ct. App. S.C. Feb. 5, 2025) (hereinafter “1 Dragon’s Ascent”).

[4] Id. at 258–59, 912 S.E.2d at 411 (quoting S.C. Code Ann. § 12-21-2710).

[5] Id. at 264, 912 S.E.2d at 413.