Is it illegal gambling in Texas to charge an entry fee for an online quiz contest with prizes?

Plain-English summary

Mike Hamilton, then chair of the Texas House Committee on Licensing and Administrative Procedures, asked the Attorney General about an e-commerce website that charged a nonrefundable entry fee to play a timed online quiz, with the highest scorers winning prizes. The central worry was whether that entry fee amounted to an illegal "bet" under the Penal Code's gambling prohibitions.

The opinion limited itself to the Penal Code's definition of "bet." Subsection 47.01(1) defines a bet as an agreement to win or lose something of value "solely or partially by chance," but it carves out "an offer of a prize, award, or compensation to the actual contestants in a bona fide contest for the determination of skill, speed, strength, or endurance." Because the website described its contest as one of knowledge, skill, and speed, the Attorney General advised that if the contest was in actuality one of skill or speed and did not involve an element of chance, a court could conclude the entry fee fell within that carve-out and was not a bet.

The opinion was deliberately cautious. It declined to opine on the legality of any particular contest, and it cited a prior opinion holding that if any element of chance is involved in a game, the arrangement is embraced within the definition of a bet. The dividing line, in other words, was chance: a genuine skill-or-speed contest could escape the gambling definition, but the presence of chance could pull it back in.

The requestor also asked whether the contest might implicate the bingo and charitable-raffle statutes (chapters 2001 and 2002 of the Occupations Code). The opinion read both as defining specific games of chance, bingo and raffles, that the Legislature has authorized under limited circumstances, and concluded they did not on their face appear to apply to the skill-based online contest described.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant for those who asked

The House committee chair (as the opinion described it): The opinion gave the legislator the legal framework rather than a verdict. A paid contest that genuinely turns on skill or speed, with no element of chance, could be found outside the Penal Code's definition of a bet, but the opinion expressly did not rule on the legality of the specific website at issue.

Online contest and website operators (as the opinion held for them): The opinion located the dividing line at chance. Under subsection 47.01(1)(B), a bona fide contest of skill, speed, strength, or endurance is excluded from the definition of a bet, while a prior opinion the office cited held that any element of chance brings the arrangement back within that definition.

Anyone weighing the bingo and raffle laws (as the opinion described it): The opinion treated chapters 2001 and 2002 of the Occupations Code as defining games of chance, bingo and raffles, and found they did not on their face appear to cover the skill-based quiz contest described.

Common questions

Is charging an entry fee for an online contest illegal gambling in Texas?
According to this opinion, it depends on whether the contest turns on skill and speed or on chance. The opinion advised that a contest genuinely based on skill or speed, with no element of chance, could be found not to be a "bet" under Penal Code subsection 47.01(1)(B).

What makes a paid contest "not a bet"?
The opinion pointed to the statutory carve-out for "a bona fide contest for the determination of skill, speed, strength, or endurance." A prize offered to actual contestants in that kind of contest is excluded from the definition of a bet.

Did the Attorney General approve this particular website?
No. The opinion stated that it did not opine on the legality of any particular contest. It gave the general legal standard and left the specific application to a court.

Does any amount of chance change the answer?
According to the opinion, yes. It cited a prior opinion for the proposition that if an element of chance is involved in a particular game, the arrangement is embraced within the definition of a bet.

Do the bingo or charitable-raffle laws apply?
The opinion read chapters 2001 and 2002 of the Occupations Code as defining bingo and raffles as games of chance and concluded those definitions did not on their face appear to apply to the described online contest.

Background and statutory framework

The opinion turned on Penal Code section 47.01(1), which defines "bet." The definition reaches an agreement to win or lose something of value "solely or partially by chance," but subsection (B) excludes "an offer of a prize, award, or compensation to the actual contestants in a bona fide contest for the determination of skill, speed, strength, or endurance." Tex. Penal Code Ann. § 47.01(1)(B) (West 2011). The opinion limited its analysis to that provision, citing prior opinions Tex. Att'y Gen. Op. No. DM-344 (1995) and Tex. Att'y Gen. Op. No. GA-0335 (2005), the latter for the point that any element of chance brings a game within the definition of a bet.

The opinion also addressed chapters 2001 and 2002 of the Occupations Code. Chapter 2001, the Bingo Enabling Act, defines "bingo" as "a specific game of chance, commonly known as bingo or lotto," and chapter 2002, the Charitable Raffle Enabling Act, defines a "raffle" as "the award of one or more prizes by chance." Tex. Occ. Code Ann. §§ 2001.001-.657 (West 2012); id. §§ 2002.001-.058. The opinion concluded those games-of-chance definitions did not on their face appear to apply to the skill-and-speed contest described.

Citations

Statutes:

• Tex. Penal Code Ann. § 47.01(1)(B) (West 2011)
• Tex. Occ. Code Ann. §§ 2001.001-.657 (West 2012)
• Tex. Occ. Code Ann. §§ 2002.001-.058

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0926
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2012/ga0926.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

May 7, 2012

The Honorable Mike Hamilton Opinion No. GA-0926
Chair, Committee on Licensing and
Administrative Procedures Re: Whether a website may charge a fee to
Texas House of Representatives participants who answer questions for the
Post Office Box 2910 opportunity to win prizes (RQ-1011-GA)
Austin, Texas 78768-2910

Dear Representative Hamilton:

You describe an e-commerce website that offers an opportunity, after the payment of an entry fee, for members of the public to participate in a contest that awards prizes. You reference the website's proposed contest rules and seek an opinion on the legality of the contest.[1] See Request Letter at 1 (referring to contest rules, available at https://holeykow.com). You ask whether it is a "violation of Texas law for an e-commerce site to permit visitors to pay an entry fee for an opportunity to take a quiz that would test their knowledge, skill and speed, if the contestants with the best overall scores were awarded valuable prizes[.]" Request Letter at 1.

The contest requires participants to pay an entry fee to take a quiz of up to 100 multiple choice[2] questions, the subject matter of which is unknown until the participant sets up an account and pays the nonrefundable entry fee. See "How our contests work," at Nos. 2, 5, available at https://holeykow.com/index.php?action=help/3. The participant's task is to pick the "'most correct'" answer for each question. Id. at No. 2. The quiz is also timed, and the participant's quiz completion time is used to determine a winner among participants with the same number of correct answers. See id. at No. 4. The winner receives a prize selected and offered by the website operator, but the prize comes directly from a third-party vendor or merchant. See "Our Official Contest Rules, Regulations and Disclaimers-Products, Services and the Award Process," at A, available at https://holeykow.com/index.php?action=help/8. You are primarily concerned about whether the entry fee required to participate in the online contest constitutes a "bet" in violation of the Penal Code's gambling prohibitions. See Request Letter at 1-2 (discussing meaning of the term "bet"). Thus, we limit our opinion to a consideration of the relevant Texas Penal Code provision. Cf. Tex. Att'y Gen. Op. No. DM-344 (1995) at 3, 5 (discussing federal laws relevant to computer gaming).

Subsection 47.01(1) of the Penal Code defines "bet" to mean "an agreement to win or lose something of value solely or partially by chance. A bet does not include ... (B) an offer of a prize, award, or compensation to the actual contestants in a bona fide contest for the determination of skill, speed, strength, or endurance ...." TEX. PENAL CODE ANN. § 47.01(1)(B) (West 2011). You describe the contest about which you inquire as one involving knowledge, skill, and speed. See Request Letter at 1. While we do not opine on the legality of any particular contest, we advise you generally that if the online contest is in actuality one of skill or speed, and does not involve an element of chance, a court could conclude that this arrangement falls within the scope of subsection (B) and is excluded from the definition of a bet. See id. § 47.01(1)(A)-(B); but see Tex. Att'y Gen. Op. No. GA-0335 (2005) at 4 ("If an element of chance is involved in a particular game, it is embraced within the definition of 'bet.'").

You also raise the possibility that the online contest could implicate chapters 2001 and 2002 of the Occupations Code, which govern bingo and charitable raffles, respectively. See TEX. OCC. CODE ANN. §§ 2001.001-.657 (West 2012) ("Bingo Enabling Act"), 2002.001-.058 ("Charitable Raffle Enabling Act"). Under chapter 2001, "bingo" is defined as "a specific game of chance, commonly known as bingo or lotto, in which prizes are awarded on the basis of designated numbers or symbols conforming to randomly selected numbers or symbols." Id. § 2001.002(4). Chapter 2002 defines a "raffle" to mean "the award of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize." Id. § 2002.002(6). These definitions refer to specific types of games of chance that the Legislature has authorized under other circumstances and do not on their face appear to apply to the online contest that you describe.

SUMMARY

The mere payment of an entry fee to participate in a contest that tests skill or speed, and that does not involve an element of chance, could be found not to constitute a bet under subsection 47.01(1)(B) of the Texas Penal Code.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

DAVID J. SCHENCK
Deputy Attorney General for Legal Counsel

JASON BOATRIGHT
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee

[1] Letter from Honorable Mike Hamilton, Chair, House Comm. on Licensing & Admin. Procedures, to Honorable Greg Abbott, Tex. Att'y Gen. at 1 (Oct. 21, 2011), http://www.texasattorneygeneral.gov/opin ("Request Letter").

[2] The contest rules also state that "[q]uizzes may be of any format such as a brief essay, multiple choice, fill in the blanks, select and match or any combination of these" at the discretion of the website operator. "How our Contests Work," at No. 5, available at https://holeykow.com/index.php?action=help/3 (last visited Apr. 24, 2012).