United States: Gambling And Lottery Risks Are Highlighted By New York City Marathon Lawsuit And Settlement

Last Updated: December 15 2016
Article by Ronald R. Urbach

The filing of a lawsuit against the organizer of the New York City Marathon began in 2016, and the end of this year has seen a proposed resolution of that case. This court action makes it very clear that gambling and lottery law analysis continue to be a core promotion concern.

Background

In January, two Utah residents sued New York Road Runners Inc., the organizer of the New York City Marathon, asserting that the method it used from 2010 to 2015 to select runners to participate in the race was an illegal lottery. The plaintiffs contended that, during those years, runners paid a non-refundable fee of up to $11 each for the opportunity to win a "prize" – the right to run in the marathon. Fewer than 18 percent of the applicants were chosen, and New York Road Runners grossed "millions of dollars" from this "lottery," the plaintiffs alleged.

A proposed settlement of the class action lawsuit was recently reached. Under the proposed settlement, among other things, many applicants will receive a credit that they can apply to entry fees for future races. Moreover, New York Road Runners will donate $100,000 to New York City parks and will pay up to $650,000 for the plaintiffs' attorneys' fees.

Notably, New York Road Runners specifically agreed that it would increase its disclosures about the process it uses to choose people to run in the race. It also said that, for three years, it would not apply for a license to run a lottery to determine the runners.

The federal district court in New York overseeing the lawsuit has scheduled a fairness hearing on the proposed settlement for February 10, 2017. If the court approves the settlement, the lawsuit against New York Road Runners will end.

The legal issues raised by the lawsuit, however, will certainly continue well into the new year – and beyond.

Other Actions

As I discussed in my presentation at the 2016 ANA/BAA 38th Annual Marketing Law Conference, the New York City Marathon lawsuit was not an aberration. This year, two other class actions were filed asserting similar claims.

One lawsuit involved the "Game of War" video game, where users spend virtual currency (paid for with real money) in an in-game casino. The lawsuit alleged illegal gaming, but the court ruled that because users only could win more virtual currency, which was not convertible back to cash, users were actually not gambling. In fact, "Game of War" reaped the same profit whether users won or lost.

Another court action involved the video game "Counterstrike," where leagues of professional gamers are watched in real-time. Regular players of the game can buy, trade, or sell extra in-game items for cash. Third-party sites allow players to gamble on the professional matches using these extra in-game items.

The "Counterstrike" case failed on grounds unrelated to the merits, but there may be future challenges that will result in a court ruling resolving the gambling allegations asserted by the plaintiffs.

What Is a Lottery?

Generally speaking, an illegal lottery under the law of most states requires the presence of three elements: prize, chance and consideration. Thus, for example, the plaintiffs in the action against New York Road Runners contended that the prize was the ability to run in the marathon, the chance was the random drawing to determine who could participate in the race, and the consideration was the fee charged by New York Road Runners.

The way a promotion is presented can be critical to whether it is perceived as an illegal lottery or a legitimate contest. For instance, if a promotion requires entrants to pay to participate and can be interpreted as a chance promotion, e.g., by using words describing it such as "chance," "win" or "drawing," then it may be hard to argue that it does not violate the law. Importantly, however, the absence of that kind of language does not necessarily protect a premium program – the facts and law will be determinative.

Companies with systems for selecting those who can purchase a ticket or participate in an event also should keep in mind that promotion terms are a contract between the brand and the consumer. Therefore, the terms must be clear and comprehensive, keeping in mind that any ambiguity will be interpreted against the drafter (i.e., the brand). The terms also must be consistent across different media and consumer touch points.

Best Practices

There are a number of best practices that companies should consider adopting in this context. They include the following:

  • Companies should not use a past year's official rules or terms, or simply insert facts into an existing form;
  • Forms should be carefully read to see if they actually apply;
  • Knowledge gained from positive and negative lessons should be incorporated into new programs;
  • Changes in the law and enforcement practices should be considered; and
  • There should be consistency in what is said in or by all advertising, in-store materials, signage, influencers, bloggers, entry materials, customer service representatives and online FAQs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions