Individuals and entities have asked us, “is what you are doing with your WarZone Secure® website on-line gambling?” The answer we believe is no. This is based upon review and application of the Dominant Factor Test.
To be clear: Internet gambling is almost entirely illegal in almost every state within the United States and we neither condone nor endorse on-line gambling. States typically employ the “Dominant Factor Test” (DFT) in determining whether a game, where player-participation is paid-for and prizes (cash or other things of value) can be awarded, is a game of skill or a game of chance. The distinction need not be 100% of one or the other –every competition involves some “chance” or “luck.” Rather, the DFT seeks to determine which predominates in the process.
For example, in a lottery game where a player pays for a ticket that includes randomly-assigned numbers and the winner is based on selection from a corresponding set of tickets that can include that player’s numbers, winning is pure chance. No skill is involved in purchasing a random set of numbers.
In a game such as “Trivial Pursuit™”, winning is based on skill predicated upon knowledge, intelligence, etc. Almost no “chance” is involved; a player either knows the answer or does not know the answer.
In many games, however, there is some combination of both skill and chance. In most sporting events, almost every victory is based upon superior skill – however, elements of chance can determine the outcome: for example in football, a recovered fumble may change the outcome of the game, the fumble being based on chance, and the recovery involving chance or skill.
Games typically involved in “gambling” (for example, poker), tend to involve a mixture of both. However, it is intuitively obvious that the element that is dominant in terms of winning is chance – cards that are dealt from a fully-shuffled and “hidden” deck determines the outcome, such that even a non-professional card player can beat a professional if a winning hand is randomly dealt to the non-professional. On the other hand, gambling games such as roulette is entirely a game of luck – absolutely no skill is involved in selecting a number and then having a rotating wheel stop at a corresponding number to determine a winner.
In determining whether a game is such that the outcome of victory is based on skill or based on chance, states typically rely upon the DFT in making such determinations.
Dominant Factor Test
The Dominant Factor Test can be described as follows:
‘Chance’ is one of the elements generally required to be present in order for a game to violate a state anti-gambling statute. Most states have concluded that where the elements of skill, whatever they may be, predominate over the elements of chance, whatever they may be, in determining outcome, then the ‘chance’ element is lacking and the game involved does not violate that state’s anti-gambling law. This question considers whether the state applies this ‘dominant factor,’ or predominance, test.
Historically, the Dominant Factor Test was defined in a 1973 case from Alaska, Morrow v State 511 P.2d 127 (Alaska, 1973). In Morrow, the court articulated four qualifications to determine if the outcome is based predominately on skill, or on chance/luck:
- The participants must have a distinct possibility of exercising skill and must have sufficient data upon which to calculate an informed judgment.
- The participants must have the opportunity to exercise the skill, and the general class of participants must possess the skill.
- Skill or the competitor’s efforts must sufficiently govern the results.
- The standard of skill must be known to the participants, and this standard must govern the results.
As an example, golf meets the above criteria. Tiger Woods could be expected to beat the casual weekend golfer. Even if the golfer was to place a wager on the outcome, the results would be determined primarily upon the skill of the competitors. While there is a slim chance that the professional might lose – based on either bad luck by the professional or “beginner’s luck” for the casual golfer — the dominant factor is skill, not chance. As such, the event would not be deemed gambling under the Dominant Factor Test.
In states that use the Dominant Factor Test, a bowling alley, golf course, or bar could hold a tournament where they collect an entry fee and award a prize without violating anti-gambling laws. Similarly, individuals could make bets on the outcomes of these events without violating anti-gambling laws.
CHI believes that much in the same way, the Matches offered on the WZS website fit within the same category and therefore do not involve prohibited gambling.
First Person Shooters: Skill Predominates
In assessing the four criteria with respect to First Person Shooter games, i.e. those games that will primarily be played using the WZS website, it is intuitively obvious that the factor of skill predominates: furthermore, the lack of anti-cheat software can artificially increase the factor of “luck” in that the lack of such software removes most of the elements of the game that demand and require skill. Therefore, we believe that our proprietary Win With Honor anti-cheat software actually decreases the element of chance and therefore correspondingly increases the requirement of skill.
FPS games all require significant skills to achieve victory, including excellent hand-eye coordination, intelligence, memory, strategy, coordination, teamwork, etc. Luck rarely, if ever, is involved. Applying the four factors articulated by the Morrow court, an analysis can be suggested as follows with respect to FPS games:
The participants must have a distinct possibility of exercising skill and must have sufficient data upon which to calculate an informed judgment.
In all FPS games, all participants have a distinct possibility of exercising skill (except of course beginners whose skill set is improving or developing) and by having knowledge of the game, how it operates, what the goals and objectives of the game are, the participants have or can gain access to data upon which to calculate and informed judgment as to playing the game.
The participants must have the opportunity to exercise the skill, and the general class of participants must possess the skill.
In all FPS games, all players have the opportunity to exercise skill, and those participating have the skill sets necessary to play (this is not to suggest that all players have the same skill level – however, a player will be expected to, for example, know how to operate a joy-stick or similar device to allow the “cyber-persona” for that player to function during the game). Indeed researchers at Leiden University and Leiden Institute for Brain and Cognition, have shown that playing FPS video games is associated with superior mental flexibility, and that compared to non-players, players of FPS games were found to require a significantly shorter reaction time while switching between complex tasks, possibly because they are required to develop a more responsive mindset to rapidly react to fast-moving visual and auditory stimuli, and to shift back and forth between different sub-duties.
Skill or the competitor’s efforts must sufficiently govern the results.
In all FPS games, the elements that determine the results are all skill-based. The abilities of the players and their efforts more than sufficiently govern the results.
The standard of skill must be known to the participants, and this standard must govern the results.
In all FPS games, players improve their skill sets by continuous play, and it is understood by these players that those with higher skills and experience will tend to win more often than not, such that the best way to compete at that level is by practice and improvement in the skill sets of the player. These standards govern the results, and are well understood by those who participate in these games.
Note that the determining factor is not based upon the transfer of money, the payment of money to participate, or the payment of money to winners. Stated differently, providing a financial reward is not the issue, and most often those who are unfamiliar with the Dominant Factor Test can incorrectly assume that paying to play a game where cash can be awarded is by definition “gambling.” That assumption is incorrect. The issue turns on whether the game involves skill, or involves chance, and which element predominates in determining the outcome.
Our proprietary “Anti-Cheat” software reduces chance and increases skill.
We believe that when cheating software is utilized in FPS games, such software artificially enhances the opportunity for winning by providing an unfair advantage over those players who rely on skill alone. Cheats, by diminishing the element of skill, correspondingly increase the element of chance because skill is no longer the standard by which victory is determined, and the cheater who wins with such cheat-software does so by essentially eliminating the skill set of the other players. Even the most skilled FPS player cannot be assured that his/her skill will determine the outcome when an opposing player is cheating.
Thus, independent of the FPS games for which the element of skill dominates that of chance, our anti-cheat software further increases the element of skill in situations where a player may otherwise be inclined to use cheat software. By removing the opportunity for cheating software to be utilized, we believe that the WZS website “levels” the playing field and assures that the outcome is predominantly focused on player skill.
Do we exclude some potential customers based upon the foregoing?
Yes. Six states in the United States do not as of this time apply or use the Dominant Factor Test. These states are: Arizona, Arkansas, Illinois, Iowa, Louisiana, and Maryland. Under the Terms of Service section of the WarZone Secure website, we alert potential customers that if they live in one of these states, they are prohibited from registering for a WarZone Secure account, and in the section where a potential customer provides address information, these 6 states are excluded from our drop-down list of State choices. Our position on this is that if a State does not follow the Dominant Factor Test, it is simply prudent to exclude citizens of those States from participating in our Matches.
 Recently, a Federal Judge, in USA v. DiCristina, 11-CR-41 NYLJ 1202568480608 (EDNY, August 21, 2012) in dismissing an indictment and setting aside a jury verdict, held that poker is a game of skill and not chance under the Illegal Gambling Business Act, 18 USC Section 1955.
 Colzato LS, van Leeuwen PJA, van den Wildenberg WPM and Hommel B (2010-04-21). “DOOM’d to switch: superior cognitive flexibility in players of first person shooter games”. Frontiers in Psychology. http://www.frontiersin.org/Cognition/10.3389/fpsyg.2010.00008/abstract. Retrieved 2011-02-08.