An online casino's new referral program has raised some legal questions. One of the industry's top legal experts says the plan is legally OK, but that players may be opening themselves up to additional liability in the case of a civil lawsuit.
Last week Global Player Casino introduced a new system that enables players to not only refer other players to the online casino, but also to take a percentage of the profits those referred players generate as well as a percentage of any profits generated by players referred to the casino by the original referred players.
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"If you are sharing in the revenues, there is a chance that you are just another part to the illegal transaction. Take it out of the context of gambling and put it into the context of another crime. If someone is committing a crime and you are receiving a certain percentage of the revenues from it, you are a participant."
- Tony Cabot
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The idea, loosely based on the pyramid-scheme concept, could see customers generate large cuts of the profit if enough players are referred.
According to Global Player's calculations, assuming that the average players loses $15 a month, the program could serve as a nice alternative income for a referring player. Under such conditions, if a customer refers 10 users and each of them refers another 10 users, then the original customer would receive a commission in excess of $11,000 per year.
The system does have limits though, with players only getting the profits of referred players four times over.
Las Vegas-based gaming law expert Tony Cabot said the system isn't illegal like a pyramid scheme, but it could leave players open to civil liabilities in some jurisdictions that are tough on Internet gambling.
"If you are sharing in the revenues, there is a chance that you are just another part to the illegal transaction," he said. "Take it out of the context of gambling and put it into the context of another crime. If someone is committing a crime and you are receiving a certain percentage of the revenues from it, you are a participant."
Cabot feels that, legally, a person who shares in just a small percentage of the revenues is just as liable in the court's eyes as the majority owner of the operation.
"Marketing programs that are based on percentage of revenue will subject the person who is involved in it to substantially the same exposure as the person who is actually conducting the operation," he said.
Although he admits that he's no marketing expert, Cabot says Global Player's concept is a great one.
"It is like one of the major portals putting up banners and receiving an impression or a click-through fee, or doing it and receiving a percentage of the revenue from the people they are referring through," he said. "I think it increases your exposure anytime you are a participant in revenues."
While land-based casinos frown upon their own employees gambling at their facilities, Cabot said those standards are industry-based. Although it may not create a good public perception to have an owner of a land-based casino gambling at his own facility, there is no law stopping an owner from doing that.
"From a federal law perspective there is nothing that even talks about that," he said. "Those are just industry standards; there is no charge that can be filed for someone gambling at their own casino."