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Does CentSports Engage in Illegal Bookmaking?

centsports3I was recently hired by my colleague Chuck Humphrey over at www.gambling-law-US.com to research whether or not www.centsports.com engages in illegal bookmaking.  CentSports operates an interactive website in which the company gives players 10 cents of start up money in which to bet on sporting events.  If a player reaches $20 in winnings they may cash out their winnings if the company has enough funds to pay them off.  So the question is, is CentSports engaging in making an online sports book?

In order for an illegal book to be made, gambling must be involved and in order for an activity to be considered gambling the activity must consist of (1) Prize, (2) Chance, and (3) Consideration. The prize and chance elements would clearly be present, however the question is whether any consideration is involved.  Consideration is defined as a bargain for exchange, meaning both parties have to give something up or take a risk when making a bet.  It can be argued that centSports players are not taking any kind of risk since they are not betting with their own funds, only the funds that were deposited in their accounts by CentSports.  Furthermore they are not guaranteed to any winnings.  They will only be paid if centSports has the funding.  Therefore CentSports is most likely not engaged in illegal gambling, however a case could certainly be made for the other side.

Does CentSports violate NCAA bylaws?

CentSports is very popular across college campuses nationwide.  The website is a social networking tool and allows friends to compete against one another online and determine who has the best winning percentage when placing bets.  The NCAA membership has adopted specific rules prohibiting student-athletes, athletics department staff members, and conference office staff from engaging in sports wagering (Bylaw 10.3).  NCAA national office employees are also prohibited from engaging in sports wagering.  A violation of this law could cost a student athlete their athletic eligibility to play sports in college whereas NCAA employees would most likely be terminated.

The NCAA rules are similar to state law rules that prohibit gambling and sports wagering.  The NCAA member colleges and universities have defined sports wagering as putting something at risk – such as an entry fee – with the opportunity to win something in return.  With CentSports no entry fee is required and nothing of value is given up since the entry fee is provided and there is no guarantee of any payouts.  By definition no wager has been made.  Therefore I do not believe CentSports would violate NCAA rules as there is no consideration present, however the NCAA recently published an opinion on the matter which is discussed below.

UPDATE, 3/28/09 – The NCAA’s Agent, Gambling and Amateurism Activities division recently weighed in on whether CentSports violates NCAA Bylaws.  They have determined that the free 10 cents given to players is in fact considered “something of value” due to the potential payout down the road.  It is the policy of the NCAA that they do not want anybody associated with the NCAA to be involved in any sort of gambling, even if it is questionable as to whether the activities are actually gambling.  If you are an NCAA student athlete or employee of the NCAA you should refrain from using websites that engage in any sort of gambling or wagering, even if there is no guarantee of a payout.  The NCAA’s opinion on CentSports can be read in the AGA’s March 2009 newsletter available at:  http://www.ncaa.org/wps/ncaa?ContentID=6685

For more information contact Seattle Attorney Richard Symmes.

 
 
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