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Vermont Revises Law to Permit Entry Fee to Enter a Skill Contest

On April 26, 2013 Vermont enacted a law that now allows a contest sponsor to require an entrant to pay an entry fee or purchase a product to enter a skill contest or other promotion where the winner is not determined based on chance.

On April 26, 2013 Vermont enacted a law that now allows a contest sponsor to require an entrant to pay an entry fee or purchase a product to enter a skill contest or other promotion where the winner is not determined based on chance.

Historically only a few states did not permit a sponsor to change an entry fee to enter a skill contest. The new law specifically states, "Nothing in this chapter shall be construed to prohibit a person from requiring or paying any kind of entry fee, service charge, purchase, or similar consideration in order to enter, or continue to remain eligible for, a game of skill or other promotion that is not based on chance." 9 V.S.A. 2481x. With the change, Vermont is now in the majority. Determining which state does not permit an entry fee to enter a skill contest remains a state by state analysis.

To the extent a promoter is seeking to structure a skill contest that does have an entry fee component, it is imperative that the promotion does not have winners determined based on chance. In determining whether a promotion is a skill contest or chance promotion, states generally employ one of four tests, the Dominant Factor Doctrine, the Material Element Test, the Any Chance Test, and the Pure Chance Doctrine. Application of the doctrine is state specific. The majority of jurisdictions have adopted the Dominant Factor Doctrine. In those states a promotion is considered a game of chance when chance dominates the distribution of prizes, even though the distribution may be affected to some extent by the exercise of skill or judgment.

The line between chance and skill can be difficult to determine, but if a Sponsor is able to ensure that its promotion is a skill contest then the states in which it will now have the option to charge an entry fee or require a product purchase to enter has expanded.