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I have a plan to create an online game with multi-level marketing.

Is it legal to create a game which costs money to buy, and then reward them with more money than they used to buy the game if three more people join using their username? (The money they are rewarded with is real money.)

If so, would it be legally classified as gambling, and would people have to be ~18 to play it?

EDIT: Please note, that all information will be present in the disclaimer, and there will be a warning of diminishing returns.

EDIT: It's an Egyptian-themed pixellated dungeon crawler . Zero gambling in game. The only way that even vaguely resembles gambling, is to simply the possibility of buying a character, in the hopes you will be rewarded. Almost everything is accessible through one character that you can control. You might consider buying more than one character, either because you want to access different class features or for the (potential) monetary reward.

  • @Piomicron and does this Egyptian themed crawler have a lot of slot machine areas or characters you can only obtain from with money randomly through chance? – LateralTerminal Mar 22 '18 at 14:15
  • @LateralTerminal No. Zero gambling in game. The only way that even vaguely resembles gambling, is to simply the possibility of buying a character, in the hopes you will be rewarded. – Piomicron Mar 22 '18 at 18:14
  • "the possibility of buying a character, in the hopes you will be rewarded." Like the game FFBE? Because then not only is it 100% gambling. but also a cancer on society – LateralTerminal Mar 22 '18 at 18:17
  • @LateralTerminal Almost everything is accessible through one character that you can control. You might consider buying more than one character, either because you want to access different class features or for the (potential) monetary reward. – Piomicron Mar 22 '18 at 18:20
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    @Piomicron: Where is "the hopes you will be rewarded"? In the gameplay, or the MLM? How/why do people get rewarded? – cHao Mar 22 '18 at 18:46
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If you're selling your game as a game, and particularly if it's well within the range of prices for similar games, you should be OK. If your game costs more than its competitors, it may raise some flags. But as long as the point of buying the game is to play it, you should still be OK.

If the perceived primary value of the game is the MLM component, though -- ie: if your average customer would buy the game not to waste a few hours playing a fun little game, but to profit from recruiting new players -- then it might be classified as a pyramid scheme. It doesn't really matter how many warnings you slap on the box; if it's a pyramid scheme, it's probably illegal.

Either way, whether the game qualifies as "gambling" depends on the game itself; MLM doesn't affect that classification. You may want to restrict it to 18+ regardless, though, for your sake. In promising to exchange money for sales, you are effectively entering into a contract with your players, and minors often can't enter into a contract.

  • We now know it's an Egyptian themed dungeon crawler. If that changes how much it resembles gambling maybe you could add that to your answer. – LateralTerminal Mar 22 '18 at 14:14
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    @LateralTerminal: It makes the classification as "gambling" less likely, but we'd still have to know more. Whether the slot machines exist, for example -- and whether the items they accept and pay out are worth real money. Or whether the game comes with a random, rare, tradable item (that might or might not be worth a boatload of money). Etc. – cHao Mar 22 '18 at 15:22
  • With the new information provided from OP. Is this gambling? I think it is but that's just my opinion. – LateralTerminal Mar 22 '18 at 18:41
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    @LateralTerminal: Can't tell -- frankly, the OP is wording the idea very vaguely. Whether it's gambling depends in huge part on what a player needs in order to profit -- be it friends to recruit, gameplay skill, persistence (without having to rebuy), something else, and/or dumb luck. – cHao Mar 22 '18 at 20:35
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This is not gambling.

In fact calling it MLM is a huge stretch - MLM implies multi level and this would not qualify.

Assuming for the moment that this did qualify as MLM, its legality would be dependent on jurisdiction - which you have not specified. In most places, MLM is legal (as distinct from Pyramid schemes which are not. The distinction being that MLM provides a product, while a pyramid scheme derives value primarily from those who are persuaded to join - the problem is often working out if something is MLM or a pyramid scheme). From my very limited experience, countries in Asia seem to have more prohibitions against MLM schemes then european countries, with much tighter regulation)

  • If the players being recruited can get the same deal as the recruiter (ie: they can profit from recruiting other players), that's MLM by definition. – cHao Mar 23 '18 at 8:46
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    @cHao Not so, MLM, by definition (multi level) requires a pyramid structure where those at the top get paid by all those/multiple levels beneath them. (Downlines). What the OP has proposed is nothing more then a generous referral commission structure. Another Hallmark if MLM is ongoing /repeat sales which is not present either. – davidgo Mar 23 '18 at 8:59
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    Pretty sure those are not required elements. Either way, buying again to profit again basically makes the profits trickle up, satisfying your requirements...while making the whole system look that much more like a pyramid scheme, as it's not really a product being bought or sold anymore. – cHao Mar 23 '18 at 9:11
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    But if you're buying again to profit again, then your recruiter is making money off of your recruits. And if your recruits are doing the same thing, then you are making money off them (and passing some portion of it upward by rebuying, so your recruiter is even making money off your recruits' recruits). The effect is the same. – cHao Mar 23 '18 at 9:28
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    Of course, this whole problem vanishes in a puff of logic if monetary profit is not possible -- ie: if the most you can gain from recruiting is an effectively free game. – cHao Mar 23 '18 at 9:39

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