Quote:
Originally Posted by Gzesh
Dean,
An advertising model can work, as requiring participants to view ads may fall short of "consideration" even if a player is winning real value prizes. The "free to play" model can be leveraged to massive participation, and underwrite prizes with ad revenues, but your set-up does not actually let "winners" own the "prizes" in their accounts:
"You understand that while you may "earn" or"win" Coins or Virtual Items in our Services, You do not legally "own" the Virtual Items and the amounts of Coins held do not refer to any credit balance of real currency or its equivalent. Any "virtual currency" balance shown in your Account does not constitute a real-world balance or reflect any stored value, but instead constitutes a measurement of the extent of your limited license."
https://www.biguglypoker.com/company/terms_of_service
So, 20,000 coins "would be about $20", but the "winners" do not actually own the prizes ?
An advertising model can legally reward free participants/players with real money prizes. How about you let players own the prizes they win ?
How do you otherwise draw an equivalency between coins on your site and USD ? How do players "win real money" if they don't own the prizes they "win"?
Are players allowed/required to cash out for USD/"real money" to get ownership of their prizes won ?
What your "winners" hold on your site or in their account is some license extension which you seemingly say lacks "a real world balance or stored value", not a USD equivalence.
Excellent points that all deserve a thoughtful answer. I'll give it my best shot...
Before addressing the conversion or value of coins and cash and prizes, allow me a moment to articulate the basic premise of our site. Which is, everyone plays for free, and we share the revenue that the video ads generate with players in the form of prizes that are won in our poker tournaments. Ultimately, it is our hope that players will realize profit through their poker play that will eventually come in the form of either cash or products, such as direct paypal transfers, gift certs, hats t-shrts, etc.
So if I understand you correctly, you're asking or suggesting that we just hand out cash for winning tournaments. And that certainly could be done without jeopardizing the legal standing of the site. What
defines gambling throughout the U.S. is whether or not a person can lose something of value based on the outcome of a future event. So long as we don't allow anyone to re-wager the reward from a tournament, then we should be safe. This is why we don't have ring games. And why we invented our new Play and Go tournament format (patent pending, naturally).
So why do we pay out tournament prizes with coins? Well there are a few reasons for this:
For one, if we were to pay out in cash, say USD, then we'd feel kind of obligated to transfer that money to you somehow. Which means we would have to set up bank transfers and potentially many other complicated payment processing solutions. What if someone won only $0.14 -- we couldn't efficiently process a payment that low. Or what if our players were from Canada or France? They probably would have a tough time receiving USD. By rewarding with our coins, we can offer other types of eventual payouts such as Euro, CAD, BTC, ETH, various gift certs, etc. via a purchase in our store.
Another reason to reward in coins is a lower level business decision related to an ever-fluctuating advertising rate that is highly sensitive to the region in the world where ads are shown. With coins as an intermediate payout from tournaments, we are able to manage this business risk to a certain degree.
There are legal reasons as well, which have to do with various state laws that hinge upon the type of prizes that are offered. Specifically, those that pay out consideration that has no real-world value outside the scope of our web site are treated differently than if we paid out in cash.
Lastly, there are accounting reasons that make for many a sleepless night for our accountants having to to with the liability of accrued coins from users who have abandoned the site. Coins provide solutions for that issue too.
Hopefully I have correctly understood and addressed your question and concerns. I'm glad you brought this up because we feel it's all very important that people know these sorts of things. If somehow I misunderstood what you were saying, please let me know and I'll try again.
Ultimately, what I do want everyone to know is that the coins you earn playing poker now and in the future can be spent in the store (when it goes live, hopefully at the end of Aug) and exchange them for something of considerable value in the form of cash, currency, or other goods. For a typical poker player, rather than depositing money every so often, we sincerely hope that they are able to withdraw money every so often. This would be a refreshing change of pace from the norm. Having worked for a very, very large online poker site in the past, I've seen that a majority of players tend to deposit and never withdraw. On our site, the opposite is the case. No player will ever deposit, and most will withdraw at some point.
Because we operate so efficiently, we intend to return half of our advertising revenue back to players in the form of prizes. We don't believe any other site can operate anywhere within 1 to 2 orders of magnitude of our level of efficiency and offer such a return. And if they can, then great, that'll be a good thing for the poker playing community.