QUESTION
what are the legal issues i have to consider while operating a website that people can win cash prizes online
Asked on Aug 22nd, 2012 on Business Law - New Jersey
More details to this question:
i just finished a website that people can play free games online and they can use points they earn while playing to enter for the daily weekly or monthly draw. they can also redeem the points with other prizes on the website.
I want to register my company name to operate this website.
My questions are
1. is it legal to do this
2. do i have to give out the names of the winners to IRS and what is the maximum amount or prize they can win.
3. is it legal to operate this website in the US and people all over the world can win cash prizes and is there any tax that will be paid by users outside united states.
4. is there any special tax that i will need to pay while operating this website
5. what are the other issues that i have to consider while operating this website and company so that i dont break the law
1 ANSWER
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It is really not clear how people will qualify for these cash prizes. As a general matter, if they must pay anything in order to participate, your arrangements will constitute an illegal game of chance. U.S. law generally prohibits online gambling of any kind.
Answered on Aug 22nd, 2012 at 1:01 PM