Is a promotional sweepstakes at an internet cafe legal in Virginia if customers can either get entries by buying internet time or by entering for free?

Plain-English summary

A delegate asked whether a particular kind of business setup is illegal gambling. The setup: a retailer sells internet and computer time, with high-speed internet access and software for word processing and spreadsheets. Customers who purchase time also receive entries for prizes. The customers can find out whether their entries are winners through any of three methods (cashier announcement, on-screen reveal, or a game-style reveal); the method doesn't affect the odds. Customers can also get free entries by logging into their account or by mail. The odds are the same whether the entries come with a purchase or for free.

The AG worked through Virginia's gambling statute. Section 18.2-325 makes "illegal gambling" a crime, defined as a bet or wager of money or other thing of value, made in exchange for a chance to win a prize, dependent on a game, contest, or event of uncertain outcome. To be illegal gambling, three elements must all be present: prize, chance, and consideration.

In the setup described, prize and chance were clearly present. The question was consideration. Virginia case law and Va. Code § 18.2-332 say that consideration is not present when no purchase is required to enter. Prior AG opinions consistently reached the same conclusion. Section 18.2-325.1 (enacted during the 2010 General Assembly) codified the rule, requiring that a "lawful game, contest, lottery, scheme, or promotional offering" must include (1) a free method of entry and (2) equal odds and opportunity for paid and free entrants, plus certain disclosure requirements.

The setup the delegate described met those criteria. So under the analysis offered, the activity was not illegal gambling.

The AG ended with the standard prosecution caveat: ultimately, applying these elements to a specific set of facts is the job of the Commonwealth's attorney, the grand jury, and the trier of fact.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG 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.

Virginia's gambling laws have been amended many times since 2010, especially around skill games, internet sweepstakes machines, and "internet cafe" operations. There have been legislative efforts to restrict these operations specifically, and the gambling code now includes various provisions targeted at sweepstakes models that didn't exist or were undeveloped in 2010. Anyone operating or prosecuting these businesses today must look at the current statutory text and recent Virginia case law, not just the 2010 framework.

Common questions

What are the three elements of illegal gambling in Virginia?
Prize, chance, and consideration. All three must be present together for an activity to be illegal gambling.

What is "consideration" in the gambling context?
A bet or wager of money or other thing of value. Section 18.2-325 expands the term to include "the purchase of a product, which purchase credits the purchaser with free points or other measurable units that may be risked by the purchaser for an opportunity to win additional points or other measurable units that are redeemable by the purchaser for money at the location where the product was purchased."

Does showing up at a store count as consideration?
No. Section 18.2-332 specifies that consideration is not present because of "any person's attendance upon the premises of another; his execution, mailing or delivery of an entry blank; his answering of questions, verbally or in writing; his witnessing of a demonstration or other proceeding; or any one or more thereof, where no charge is made to, paid by, or any purchase required of him in connection therewith."

What does § 18.2-325.1 specifically require?
At the time, two main things: (1) there must be a method of free entry available to participants who wish to enter without a purchase, and (2) all participants must have an equal opportunity to play and equal odds of winning, regardless of whether they entered through purchase or through the free alternative method. Plus certain disclosures (subdivisions (3) through (6)).

What about poker, blackjack, or other skill-or-chance games?
The opinion does not address them. The AG's analysis here is limited to the purchase-or-free-entry sweepstakes model the delegate described. Different analysis applies to games whose legality turns on the skill-versus-chance question.

Is the answer the same if the "free" alternative entry is hard to use or hidden?
The opinion does not directly address that scenario. Prosecutors and courts have generally been suspicious of free-entry alternatives that exist on paper but are practically unavailable. The promotional offering has to be a real alternative, not a sham, for the consideration element to be absent.

Who actually decides if a specific business is illegal gambling?
The AG noted that ultimately the application of these elements rests with the Commonwealth's attorney (who decides whether to prosecute), the grand jury (which decides whether to indict), and the trier of fact (judge or jury at trial). The AG's opinion provides legal framework, not a get-out-of-prosecution-free card.

Background and statutory framework

Section 18.2-325 defines illegal gambling broadly: any bet or wager of money or other thing of value, made for a chance to win a prize, dependent on an event of uncertain outcome.

Section 18.2-325.1 (enacted during the 2010 General Assembly) is the savings clause: a "lawful game, contest, lottery, scheme, or promotional offering" can be conducted if (1) free entry is available and (2) odds are equal between paid and free entrants, with disclosures required. The legislation states that its provisions are declaratory of existing law, meaning the analysis was meant to reflect what was already true under § 18.2-325 and the case law.

Section 18.2-332 spells out what does not count as consideration: mere attendance, mailing an entry blank, answering questions, witnessing a demonstration, etc., when no charge is required.

The AG noted that prior opinions of the Attorney General have consistently concluded that the element of consideration is missing when no purchase is required to enter a drawing or game of chance, but is present when eligibility for a prize is limited to those who make a purchase.

Citations

• Va. Code Ann. § 18.2-325
• Va. Code Ann. § 18.2-325.1
• Va. Code Ann. § 18.2-332

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2010/10-064-Janis.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

July 30, 2010

900 East Main Street
Richmond, Virginia 23219
804-786-2071
FAX 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

The Honorable Bill Janis
Member, House of Delegates
P.O. Box 3703
Glen Allen, Virginia 23058-3703

Dear Delegate Janis:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether prizes offered by a retail provider of internet and computer services are permissible or whether they constitute illegal gambling under the laws of Virginia when entries to win prizes are available to persons who purchase computer time as well as to those who do not.

Response

It is my opinion that the element of consideration is missing, and therefore no illegal gambling occurs, when the opportunity to win a prize is offered both with a purchase and without the requirement of a purchase.

Background

You relate that a business engages in the sale of internet and computer time. Consumers who purchase time on the computers use on-site computers that are equipped with high-speed internet access and various software programs, including word processing and spreadsheets. This business also provides office support services at this location, including fax and copying services.

When customers purchase internet time, they are issued entries for possible prizes. The purchaser of time has several options to determine whether the entry is a winning entry. First, the cashier can announce whether any of the entries are winners. Second, the computer stations are equipped with software that will reveal whether any of the entries are winners. Finally, the computer user can select a game that uses a display to reveal whether any of the entries are winners. Selecting the game option does not improve the odds of winning and does not deplete the customer's purchased internet time. Regardless of the method used to learn whether any of the entries are winners, the odds and prizes remain the same.

You further represent that consumers also may obtain free entries by logging into their account on the terminal or by mail. The odds of winning are the same regardless of whether the entries are provided in conjunction with a purchase of internet time, or whether the entries are received for free.

Applicable Law and Discussion

Illegal gambling is a crime. Code § 18.2-325 broadly defines "illegal gambling" as:

The making, placing or receipt of any bet or wager in the Commonwealth of money or other thing of value, made in exchange for a chance to win a prize, stake or other consideration or thing of value, dependent upon the result of any game, contest or any other event the outcome of which is uncertain or a matter of chance, whether such game, contest or event, occurs or is to occur inside or outside the limits of the Commonwealth.

Section 18.2-325 further states that

the making, placing, or receipt of any bet or wager of money or other thing of value shall include the purchase of a product, which purchase credits the purchaser with free points or other measurable units that may be risked by the purchaser for an opportunity to win additional points or other measurable units that are redeemable by the purchaser for money at the location where the product was purchased.

Finally, if a "lawful game, contest, lottery, scheme or promotional offering" complies with the requirements contained in § 18.2-325.1, it is not prohibited. Section 18.2-325.1, enacted during the 2010 General Assembly, provides in relevant part that

Pursuant to subdivision 1 b of § 18.2-325, any lawful game, contest, lottery, scheme, or promotional offering (the contest) may be conducted provided the following requirements are met:

1. There is available a method of free entry to all participants wishing to enter the contest without a purchase.

2. There is equal opportunity to play and equal odds of winning for all participants regardless of whether a participant entered with a valid purchase or through a free alternative method of entry.

Section 18.2-325.1 (3) through (6) requires that certain disclosures be made. Finally, the legislation states that its provisions are declaratory of existing law.

It is well settled that "an activity constitutes illegal gambling when the elements of prize, chance and consideration are present together." The promotional scheme you describe clearly includes the elements of prize and chance. Therefore, whether the activity is illegal depends on whether the element of "consideration" is also present. Consideration is not present

because of any person's attendance upon the premises of another; his execution, mailing or delivery of an entry blank; his answering of questions, verbally or in writing; his witnessing of a demonstration or other proceeding; or any one or more thereof, where no charge is made to, paid by, or any purchase required of him in connection therewith.

Prior opinions of the Attorney General consistently have concluded "that the element of consideration is missing when no purchase is required to enter into a drawing or other game of chance, but that it is present when eligibility to receive a prize is limited to those who make a purchase." Section 18.2-325.1, which expressly provides that its provisions are declaratory of existing law, is consistent with this longstanding interpretation of "consideration."

I must further caution that, ultimately, the application of various elements of a criminal offense to a specific set of facts rests with the Commonwealth's attorney, the grand jury and the trier of fact.

Conclusion

Accordingly, it is my opinion that the element of consideration is missing, and therefore no illegal gambling occurs, when the opportunity to win a prize is offered both with a purchase and without the requirement of a purchase.

With kindest regards, I am

Very truly yours,

Kenneth T. Cuccinelli, II
Attorney General