Skill game for money in France: is it legal?

by Thibault Verbiest & Pascal Reynaud, Ulys law firm

Skill games for money are becoming more and more popular in France on the internet. But is it legal? This is the question we are trying to answer below.
Concerning the legal framework of skill games in France, we should first say that there is no specific law on that topic.  Four laws provide the legal framework of the game of chance or bingo, and sometimes give some information concerning skill games: the 1983 Act concerning the prohibition of games of chance; the 1836 Act concerning the prohibition of bingo; the 2010 Act concerning the opening of on line game of chance; and article 121-36 of the Consumer Code concerning the legality of specific games of chance during sales promotion.
According to these four laws, there are some basic criteria to be aware of if the game is forbidden. All games offered to the French public are prohibited providing that four specific cumulative elements are fulfilled. These elements are; an offer to the public (1), in exchange of a financial contribution (2), which creates the expectation of a gain (3), by means of chance (4).  If any of these elements are missing, the concept of the game can be said to be legal.

An offer to the public

There is no room for debate on this criterion for the current websites. The fact that players should subscribe to a website is of no consequence, the games are still open to the public.

Financial contribution

If a participant who wants to play has to contribute financially to the game, even if in some special circumstances he can also play for free, this condition is fulfilled.

The French Courts have been very strict on this aspect. Even a very small contribution from the player is sufficient to fulfil this condition. There are, however, two exceptions to this rule; lottery with the obligation to purchase a product or a service (a) and lottery with refund of fees (b).

Lottery with the obligation to purchase a product or a service

The legal situation has changed recently. In the past, the French court used to admit the legality of games where the players had two entries to participate to the game, one for free and one for money. In that situation a player could pay to participate in a lottery, but only if the game was displayed for free in the same time and at the same conditions. This solution was associated with the sale of an independent product or a service (i.e. a biscuit box or hamburger: one could play with or without the purchase of the biscuit box or the hamburger).

Nowadays this crucial question has been modified since a recent decision of the European court of justice (CJUE, 14 January 2010, C304/08) which recognizes the validity of promotional bingo with an obligation to purchase a product or a service for the player:

“Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market (‘Unfair Commercial Practices Directive’) must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which provides for a prohibition in principle, without taking account of the specific circumstances of individual cases, of commercial practices under which the participation of consumers in a prize competition or lottery is made conditional on the purchase of goods or the use of services.”

Concretely, this decision has liberalized French law because a one is no longer obliged to propose a free entry to promotional games. To our knowledge, there is no French court decision on that topic since the decision of the European court of justice of January 2010.

It does not mean that lottery and games of chance are free. The most common interpretation of the European court decision for the French market is the following. We should distinguish two situations:

• If the consumer has to buy a real product (i.e. the biscuit box or hamburger) or service to play to the bingo or the game of chance, the game is legal, provided it has satisfied the other conditions of the European Directive 2005/29/EC.
• If the consumer has to pay to participate in the game of chance itself, the game is still illegal, because the participant spends its money to play. It is no longer a promotional game bingo given with the purchase of a product or service (i.e. the biscuit box) but a fraud to the general prohibition of bingo in France.

Possibility of a refund of the fees

A pay-to-play game is legal if the game offers an easy and clear means to be refunded. The possibility of a refund for the consumer should be given in any advertising concerning the game. Otherwise, the Court could decide that the player was not aware of this possibility and that the game is not actually free. The duration of the period of time in which it is possible to claim for a refund should be sufficient (i.e. 3 months after the spending). The economic business model of this type of games is based on the fact that for small sum of money, there are few demands for a refund. The more the player spends, the more likely it is that he will ask for a refund. This practise is commonly used on private French TV channels.

Expectation to win an advantage:

The French Court condemns the games where the players expect to win a sum of money, a prize or any other form of winnings with monetary value. This does not mean that the player should lose something. In other words, if a participant pays just to play without any hope to win, this condition is not fulfilled and the game is legal.
The question at this stage is to know if additional play time or free parties modified the legality of the game. To our knowledge, the French courts have never treated extra playing time or free parties as an “advantage”. In our opinion, there is nothing to gain in that kind of situation except to play the game for longer, and to be recognized as a good player. So the third criterion to exclude the legality of the game could be missing.
There is another issue concerning extra playing time or free games that should be taken into account. According Article 2 of the 1983 Law prohibits « game machines based on skill and whose technical characteristics show that it is possible to win more than five free games by stake or to win profits either in cash or in kind ».  There is a debate concerning the scope of this Article.

Firstly, websites and software could be considered as « virtual game machines ».  In this hypothesis, any online skill games could be prohibited on this ground if the participant pays to play and it is possible to win more than five free games, even if there is no money or prize to gain.

However, as far as we know, this qualification of a game machine for online websites has never been dealt with. Moreover, a recommendation given by a French administration to ULYS law firm excludes the extension of “games machines” based on skill to software and websites. This article only prohibits “hardware” game machines based on skill. For online skill game websites, the risk of illegality appears to be minor, in our point of view, on the grounds of Article 2 of the 1983 Act.

The chance factor

This is the crucial element which determines whether or not a skill game for money is legal. This question must assess in detail all the laws applicable to the partly pay-to-play games.  Looking at all the relevant laws together, it can be concluded that pay-to-play pure skill games are legal in France, even if the player has the hope to win prizes or money. On the contrary, if chance is a minor or a major factor in determining the winner, the skill game is illegal.

The Act of 12th July 1983 prohibits “games of chance”.

According to settled case law, a game of chance is a game where chance prevails over skill. Games where skill prevails are not prohibited by the 1983 Act. The following non-exhaustive list of games is considered by French court as game of chance: Slot machines; baccara ; craps ; Dice; Bingo/lotto/Videopoker; ngah-ham with dominoes ; petits-chevaux/grand children horses; poker.
Because there is no definition of “chance” in French law, it could be dangerous to give an opinion on what is the predominant factor in a game. For example, poker is a game where the chance is the predominant factor according to courts but belote, billiards and bridge are not games where the chance could be predominant.
It could be said that bridge and belote are not to be considered as games of chance because chance is only involved in the random distribution of cards at the beginning of the game and not after.  After the distribution, the winner can be determined according to his knowledge, his attentiveness and his acuteness. But these kinds of conclusions should be made cautiously in the absence of recent courts decisions on those games. Lawyers could submit mathematical studies in front of court to support their positions but judges are free on that issue.

Definition of “game of chance” by the 2010 Act concerning the opening of online game of chance.

The new 2010 Act gives a definition of games of chance. Article 2 provides that a game of chance is a pay-to-play game where the chance is the predominant factor to win a prize or money rather than skill and knowledge. This definition confirms the traditional definition of the French Courts.
The new Law of 12th May 2010 regulates sports betting (whether fixed-odd or mutual), horse race betting and poker games offered by online gambling operators.  Since skill games are not listed in the above-mentioned games of chance, the Law of 12th May 2010 does not regulate them. This Law imposes on online gambling operators, willing to offer their services to the French market, the obligation to obtain a specific license granted by the national regulatory authority, the ARJEL.

The Act of 21st May 1836 prohibits paying lotteries.

Article 2 of 1836 Act provides for a broad definition of lottery: it concerns all operations offered to the public, whatever the name given to the operation, which involves benefits expectancy based on chance, whatever the part of chance is. On the grounds of this Act, the Court traditionally decides that the chance could be minor but the game prohibited.
Even if in the common language, the concept of “game” implies actions made by the player and intervention of the player to determine the winner and the concept of lottery implies that only fate determines the winner, this is neither the position of the Courts nor the law. In practice, a game where the chance is the predominant factor could fall within the scope of application of both Act of 1836 and the 1983 Act whereas a game where chance is a minor factor fall only within the scope of the 1836 Act.

Therefore, only pure skill games, without any chance, are legal in France. The skill game is legally called a “contest” in that case.
This major difficulty is to determine in which case we are in a pure skill game rather than in a case where the chance is a minor factor. At the moment, there is no jurisprudence for online gaming on this issue. The recent case law prohibits games where the chance was the predominant factor. There are two thesis on that issue:

• One can consider that the player has to master all the aspects of the game. It has been argued that the fact that the player does not know the level of others players is a factor of chance and it is sufficient to prohibit the game. But with that opinion, it is possible to classify any game for money as prohibited lottery. The consequence of that position is a general prohibition for any game where you can earn money.
• This extreme position is not shared by the legal scholarship. The most common point of view is that the random aspect should be present in the mechanism of the game itself, when there is a procedure of random selection at the beginning or during the game that determines the winner. With that definition, a puzzle or Tetris should be qualified as a pure skill game.

The prohibition of Article 121-36 of the Consumer Code

According to Article 121-36 of the Consumer Code :  Written sales promotions which are likely to engender hope of gain for each of the participants, whatever the procedures of random selection, may only be practised if they do not require any financial consideration or expense whatsoever from participants. The entry form must be separate from any purchase order for goods or services.
One of the criterion of the text is that there is a procedure of random selection. This text does not prohibit pure skill game in its special field of written sales promotions. Another issue is to know if this special prohibition could be maintained after the decision of the European court seen above (on that topic, see 2.a and CJUE, 14 January 2010, C304/08)

The sanctions

Infringements to the 1983, 1836, and 2010 Acts may be punished with penalties going up to three years jail sentences and with fines of €90.000 plus additional penalties. These sanctions are increased to a seven years jail sentence and a fine of €200.000 when the infringements are committed by organized groups. Theses penalties can apply to a legal entity and not solely to a natural person.

Conclusions

The fact that pure skill games could be legal in France does not signify that all legal issues are solved. Every pure skill game operator should be careful to avoid any deceptive practices that can be made by a game’s website, for example, if the player is lead to believe that he can win at each party, or if he thinks players can often win a very expensive prize while it is not so in reality. This kind of question can only be studied concretely by analyzing the presentation of the game. Therefore other issues, such as the promotion of the game, the terms and conditions and consumer law, the private data of the players should seriously taken into account.