Treasure Hunt Business Idea that sells clues, is it legal?

UPDATED: Oct 1, 2022

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Treasure Hunt Business Idea that sells clues, is it legal?

I started developing a business model that organizes treasure hunt events. Clues would be available for members free to join website for a small fee using virtual currencies on the website. These treasure hunts would be coordinated in my local city. Without getting to much in detail, would this be legal? I started reading more about lotteries and such and I fear this business model might be infringing on that area. If that is the case, what can I do or change up in the model to get around this?

Asked on June 30, 2018 under Business Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

It would very likely be illegal if the treasure found had any economic value. No gambling is legal unless specifically authorized by your state, and legal/authorized gambling is restricted to the state lottery, certain charitable fund-raising events, licensed card rooms, tribal casinos, and horseracing. What you propose would qualify as gambling since gambling is whenever someone pays something of value (including a virtual currency) for the opportunity to win a prize which has any economic value, when chance is  factor. "Chance" in this context is anything outside of the participant's own control, and with so many people getting "clues" and various random factors (distance of each participant to the treasure, traffic and construction delaying travel, the identity of the other participants, number of other participants, etc.) poised to intervene in the outcome, there would almost certainly be "chance" involved. So people would pay for an opportunity to win something of value based at least in part on chance--that is gambling. And since it is not state-authorized gambling, it would be illegal.
If the treasure however has no value but for "bragging" rights--so that people play only for fun, not potential profit--then it would be legal.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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