Vermont has the reputation of being a state of rugged individualists, radical hippies and stubborn “woodchucks,” who eschew the majority, stick with their principles and buck convention. This is reflected in the Green Mountain State’s strict consumer protection laws and its regulators’ enforcement of them. The Vermont legislature recently stepped back from its minority position on skill contests, however, and passed 9 V.S.A. Section 2453(c), which makes it legal for promotion sponsors to require consideration for entry in a skill contest.
To make sense of the new Vermont law, we need to begin, as usual, at the beginning. The basic truth of promotions law is that an illegal lottery has three elements: (1) prize (something of value, even if it’s nominal); (2) chance (the winners are selected on some random basis); and (3) consideration (something of value that’s given to enter). In order for a company to steer clear of illegal lotteries and run a legal promotion, it must ensure that at least one of these elements is not present. In a sweepstakes, for example, the third element (consideration) is eliminated when sponsors provide a free alternative method of entry.
Contests (games of skill) are usually treated differently. Because the chance element is absent in a skill contest, the sponsor can generally ask for consideration without violating state lottery laws—at least, in most states in the U.S. Before Vermont passed the new law, the state was one of the few jurisdictions that still prohibited sponsors from charging consideration to enter in skill games. But with the new law that just became effective, Vermont now allows contest sponsors to charge entry fees or require a purchase to enter a contest.
As for the other states, a dwindling number of places continue to prohibit consideration in skill contests, though the prohibited category is usually limited to skill contests that require purchase or payment to participate. For example, Maryland prohibits a purchase or payment requirement for skill contests in which the prize values are greater than $200; Colorado and Arizona also prohibit monetary consideration in such contests, though Arizona may permit some registered intellectual contests. In California, consideration is generally permitted in real games of skill, but if the contest involves a tiebreaker round that qualifies participants for additional prizes, then the sponsor generally cannot require the payment of money to enter the tiebreaker round.
With its new law, Vermont has broken with its nonconformist reputation and joined the majority by allowing consideration in skill contests. Perhaps this move will encourage the other hold-out jurisdictions to follow its lead.