Legal Hurdles Foil Mass Effect 3 "Space Edition" Lottery - UPDATED

 Pages 1 2 NEXT
 

Legal Hurdles Foil Mass Effect 3 "Space Edition" Lottery - UPDATED

image

A plan to raffle off a "space edition" of Mass Effect 3 and donate some of the money to Child's Play has been called off after the owners learned that the idea was totally, seriously illegal.

The copies of Mass Effect 3 flung into space by Electronic Arts will make fine collectors editions for people lucky enough to find them. Or they could make fine sources of income as unique curios dueled over by the deep-pocketed among those fans. That was the plan Michael Davis and Miguel Droz came up with when they discovered one of the sub-orbital copies in the Arizona desert over the weekend: a raffle, at $5 per ticket, with 33 percent of proceeds going to Child's Play and the rest to help fund a new videogame company.

It seems like a pretty solid idea to me but as Kotaku was told by attorney Mark Methenitis, the man behind the Law of the Game blog, it contravenes a lot of laws, beginning with a Nevada law stating that such things are legal only if all money raised goes to charity.

"You can pretty much never rely on a charitable gaming exemption unless 100 percent of the money goes to a charity [though you can often use part of the funds to cover event costs, ie. dealers at a charity casino night]," Methenitis said. "Diverting the funds here is about as clear cut as you can get; they're using the funds for personal gain."

Furthermore, the duo made the mistake of promoting the draw on YouTube, which exposes them to federal penalties as well. And this isn't just slap-on-the-wrist stuff, either. "It's often a felony, which usually means something like 1-10 years in prison and/or a fine [usually in the thousands to tens of thousands range]," Methenitis added.

Faced with the ugly reality of the law, they first decided to give all proceeds to Child's Play before ultimately pulling the plug on the whole thing. "As of now we are officially canceling this entire thing, and refunding everyone's money through PayPal," Droz said in a statement. "Sorry about that, we should have done our homework first, but in the rush to get this done, hopefully do something cool for charity and get ourselves a kickstart to start our company, we just didn't do our due diligence. Again, we super apologize for wasting anyone's time."

It's an unfortunate end to a nice idea, but I suppose nothing is stopping them from taking their chances on eBay and then doing whatever they want with the money. Ain't the law grand?

UPDATE: Based on the response I've seen here and elsewhere, I don't think too many people see this mini-mess as anything more than a good idea that took a bad turn, but to ensure that nobody has the wrong idea about their intentions, Miguel Droz [by way of Ryan Neal] sent us the following statement:

"Hey guys, I'm the Droz from the article. I wish I could blame it on something else (it was the desert madness! I swear) but the truth is we made a rushed decision based more on excitement than stopping and considering common sense. This wasn't completely thought through, but was done with 100% honest intentions. In our excitement and enthusiasm to get our video online as soon as possible we just never stopped to think about the potential negative outcomes.

Our love for social media just took over our brains and honestly the least important thing to us was the money, we just believed it was a cool way to launch our company. What we were really hoping for was a mention on Kotaku (we just didn't realize the headline would be "Two Idiots Try Something Dumb")!

A representative of Child's Play wrote us a very kind e-mail, and provided us with links to rules and regulations and best practices when trying to do something like this in the future. We've also reached out to EA to assure them we have zero future intentions of profiting from their competition in any way, and that will will not be transferring/gifting/giving/providing this copy of the game to any other party due to the unfortunate massive legalities.

We do however super appreciate (yes, Joystiq, we really talk that way) the very kind words and support we've received from the people who did donate, and the patience and understanding of everyone who donated when it came to getting a refund and the contest being cancelled. We also have very real intentions of starting this video game company (but will be heavily Googling the potential legal troubles of any event we try in the future). So if you're at all interested in seeing how that works out, friend us on FaceBook, follow us on Twitter or subscribe to our YouTube channel for future announcements on our products to be released and fully sanctioned contests and fundraisers. We're not that bad of guys if you get to know us. :)"

(photo)

Permalink

That'll teach those greedy bastards to try and do something nice like donate some money to a charity!

Also, stuff is illegal in Nevada? Bwaaah?

How long before people say "I knew it was a bad idea!"

Qitz:
That'll teach those greedy bastards to try and do something nice like donate some money to a charity!

Also, stuff is illegal in Nevada? Bwaaah?

The trick with this story is that they attempted to host a raffle where a majority of the proceeds went to the creators of the raffle, without consent from the state in a form of a license (which are considerably difficult to obtain). If it's hard to imagine why this is a law, think about it from the other side: two young men are asking people for unlimited (read: any amount of money in $5 intervals) dollars for a chance of winning an early copy of a game, whose existence was never proved in the first place. The only promise these two men made was that some percentage of this money would eventually go to charity.

EDIT: Fixed to reflect the fact that an amount going to charity had been specified.

I'd have thought there'd be something in the rules of the competition to stop people selling, or otherwise passing on the copies of the game they found...

Seems like they wouldn't have been in any trouble if all the money would have been given to charity, instead of keeping two thirds of it for themselves.

Qitz:
That'll teach those greedy bastards to try and do something nice like donate some money to a charity!

Also, stuff is illegal in Nevada? Bwaaah?

Nevada laws are like magnets, no one knows how they work!

shado_temple:

Qitz:
That'll teach those greedy bastards to try and do something nice like donate some money to a charity!

Also, stuff is illegal in Nevada? Bwaaah?

The trick with this story is that they attempted to host a raffle where an unspecified portion of the proceeds went to the creators of the raffle, without consent from the state in a form of a license (which are considerably difficult to obtain). If it's hard to imagine why this is a law, think about it from the other side: two young men are asking people for unlimited (read: any amount of money in $5 intervals) dollars for a chance of winning an early copy of a game, whose existence was never proved in the first place. The only promise these two men made was that some percentage of this money would eventually go to charity.

Read the part where it says 33 percent. It was in fact specified.

This is a shame, for once they had a decent marketing stunt which didn't insult anyone and there would be a charity aspect of it. Well, at least they tried.

This is pretty funny since Charities can take up to like 60% of the profits they raised for whatever they want, but I guess what they're doing is terrible too.

Haha, you aren't allowed to keep 66% of a game raffle but 99% of everything the red cross brings in is used by the red cross.

Haha, here it is: It's just easier to sell the copy for big money and give none of it to charity. That is government at work folks.

Snotnarok:
This is pretty funny since Charities can take up to like 60% of the profits they raised for whatever they want, but I guess what they're doing is terrible too.

Is that in the U.S.? I know in Canada that only 25% of charity profits need to be actually used and everything else can be used for payroll and costs, learned that while working for World Vision and Plan Canada.

Blind Sight:

Snotnarok:
This is pretty funny since Charities can take up to like 60% of the profits they raised for whatever they want, but I guess what they're doing is terrible too.

Is that in the U.S.? I know in Canada that only 25% of charity profits need to be actually used and everything else can be used for payroll and costs, learned that while working for World Vision and Plan Canada.

I have to confess I don't know the exact percentage, however I was told it's something disgusting like that, I'll have to ask my sister (who's involved in a lot of non profit stuff).

Talk about making the crimb fit the punishment. You would get less time for stealing stuff or beating someone up. Some laws are fucked up.

Hey guys, I'm the Droz from the article about Davis and Droz. I wish I could blame it on something else (it was the desert madness! I swear) but the truth is we made a rushed decision based more on excitement than stopping and considering common sense. This wasn't completely thought through, but was done with 100% honest intentions. In our excitement and enthusiasm to get our video online as soon as possible we just never stopped to think about the potential negative outcomes.

Our love for social media just took over our brains and honestly the least important thing to us was the money, we just believed it was a cool way to launch our company. What we were really hoping for was a mention on Kotaku (we just didn't realize the headline would be "Two Idiots Try Something Dumb")!

A representative of Child's Play wrote us a very kind e-mail, and provided us with links to rules and regulations and best practices when trying to do something like this in the future. We've also reached out to EA to assure them we have zero future intentions of profiting from their competition in any way, and that will will not be transferring/gifting/giving/providing this copy of the game to any other party due to the unfortunate massive legalities.

We do however super appreciate (yes, Joystiq, we really talk that way) the very kind words and support we've received from the people who did donate, and the patience and understanding of everyone who donated when it came to getting a refund and the contest being cancelled. We also have very real intentions of starting this video game company (but will be heavily Googling the potential legal troubles of any event we try in the future). So if you're at all interested in seeing how that works out, friend us on FaceBook, follow us on Twitter or subscribe to our YouTube channel for future announcements on our products to be released and fully sanctioned contests and fundraisers. We're not that bad of guys if you get to know us.

i am still waiting for one of them to land in a African Tribe and they began Worshiping Mass Effect 3...

ALL HAIL COMMANDER SHEPARD!! MAY HE PROTECT (insert Tribe name here) FROM THE REAPERS!!!

seems like a stupid law to me, its your property and when you exchange it for money that money is yours to do what you want with.
strange world

What a shame, those two seemed like decent-enough chaps. So it's an all or nothing sort of deal? Sucks.

FOR THE LOVE OF CHRIST THESE LAWS ARE STUPID!! Why should the state tell me how I wish to spend my money, if I want to put my money into a raffle for the chance of winning a product I should have the right. Why the government has to be involved is beyond me.

That's too bad, personally I would have went ahead with the charity anyway, giving all the proceeds away, kinda lame on their part to just give up after they got people excited simply because they didn't stand to gain anymore, kinda selfish.

A shame. I'd like to see what these guys would do with their new video game company, and, of course, there would still be some compensation to a charity, which is always a good thing in my book.

Plus, they were going to launch a copy of Mass Effect 3 into space. We could be educating aliens of the greatness of Mass Effect this way! (Or we could possibly make every alien xenophobic because they'll think we'll shoot them in the face with our thermal snipers.)

Wow, of all things that could be illegal in Nevada...this is one of them. Seriously?

Mike Droz:
Le snip

I'm speaking on my behalf, but I think a lot of people would agree on this: No one thinks you're bad guys. What you did was very noble, so to speak, and you did it for a good cause. if the headline would have been "Two idiots attempt to sell mass Effect 3 copy in order to buy booze and naked women", then sure. That would be pretty dumb.

Either way, I think it's funny that out of all the people out there who could have found the game, you guys did. And you got your jumpstart, in a way. So...talk about serendipity.

I can totally relate to your cause. As a 24 year old less than a year away from graduation, I'll probably be trying to start, or join, a company. I probably would have done the same, although I gotta say the idea of donating money to a good cause would have never crossed my mind. Not because I'm a jerk, but because...it just wouldn't have crossed my mind.

You, sir(s), have gained a Facebook follower. Maybe we'll meet one day if we both end up being successful in this industry (Though you guys are like 20 steps ahead of me). Godspeed.

I could also see how EA would not be thrilled by people using the proceeds to start a competing company. Even though they would likely only raise enough to make a single extremely small indie game, the idea of taking a free prize and selling it at an outrageous markup to form a company seems in really fucking bad faith. All of this is even coming from someone who hates EA.

Play it really quick and raffle off the used copy for charity.

Edit: I realized this comes off as harsh, and I don't mean it quite that way. Wanting to start a game company is a noble enough goal, as is charity. Also getting the funding is difficult, but it's likely not going to happen in the form of falling out of the sky.

Yet another point to add to the eternal ever expanding list of sources that the government is in fact destroying 100% of all harmless fun.

The moral of this story is... always consult with a lawyer first.

Hooray lawyers!

It's a shame they only did it in the 'special' countries.

Mike Droz:
We've also reached out to EA to assure them we have zero future intentions of profiting from their competition in any way, and that will will not be transferring/gifting/giving/providing this copy of the game to any other party due to the unfortunate massive legalities.

Wait, you aren't even allowed to sell the game on E-Bay and then donate part of the proceeds to Child's Play?

I thought half the point of the space edition was that people would be selling the games on E-Bay for thousands of dollars.

Well... that sucks. That realy, really sucks. Sorry to hear about this. I thought your idea to raise money and help Child's Play was a pretty good one.

Why the fuck is this even illegal? They found it, they should be able to do what they want with it.

Don't you love bureaucratic nightmares?

I sure do and this world sure is getting their. Im just waiting for the law stating that if your shoe isn't tied properly that you will be fined/jailed. You know so that we are protected from the accidents that could occur.

"I would say that our Bureaucrats are no better than vipers but I shouldn't insult the vipers."

Running a raffle is a game of chance, and if the people doing it profit from it they themselves have a vested state in the outcome, running it as a business. Not to mention the issue of taxes, an unrecorded raffle could take in any amount of money, and Uncle Sam wants to make sure he gets his cut.

I worked Casino Security, but it was down here in Connecticut, for the Indian Casinos (which are two of the three largest in the world... #1 and #3 respectively, or they were when I worked there), I'm no expert on Nevada gaming policy, but I have some familiarity with it because a lot of people hired to set policies and procedures and help run things, especially early on when Mohegan Sun Opened, were veterans of Nevada or Atlantic City Casinos.

Any kind of gambling usually has to be overseen by a gaming comission when it's for profit, to make sure it's kosher, and also to make sure it's properly recorded for tax purposes and so on. Things were a little differant because while the Indians didn't pay taxes in a traditional sense, their negotiations with the state over zoning and such lead to them giving the State Of Connecticut a cut of the profits, so of course The State had people there to keep an eye on things. It could get really complicated where you had Tribal Comissioners watching for the Tribe, State guys watching for the state, and Security who are the representitives of the Casino itself (which is in part financed by non-tribal entities and it's own entity which the Tribe holds ownership of along with the people they borrowed money from for construction). Nevada is apparently less complicated due to less players, but has a similar situation where there are people who want to have their eyes on any kind of gambling taking place.

Raffles conducted entirely for charity tend to be a bit differant, because the person holding the raffle has no direct financial stake in it, since none of the proceeds go to them. Depending on where you are, there can still be requirements you annouce what your doing ahead of time though and get it approved, I don't know how this works in Nevada.

With something like this the big thing they are probably worried about is that the lottery will be a scam. Imagine a situation where in a totally unregulated lottery run for the profit of the people holding it, the item being put up is arranged to be "won" by a friend of theirs who just gives it back to them. After all with all the power in their hands, who is going to verify the validity of the random draw. They arrange for the shill to win, take the money of all the people who paid for a change, and then have a ton of money for nothing except for some time. Whether a percentage goes to charity in a situation like that is irrelevent.

With raffles and lotteries for charity, there is also the technicality that the money being bet is actually being donated as the primary purpose. The prize is just an incentive to donate as opposed to the purpose (allegedly). Thus there are less requirements to watch it because techically it shouldn't matter if the people running the raffle wind up keeping the item... In practice it would upset people, but the technicality inherant in the alleged intention creates differant standards.

I'm no expert, but have learned a little about this stuff. To be honest I'm kind of surprised they got nailed though, they must have done quite the advertising blitz to wind
up on the radar. Part of me wonders if they actually planned to run this as a scam and got ratted out, causing the authorities to take more notice than they otherwise would have. Especially seeing as these guys apparently saw that video game disc as being enough of a meal ticket to presumably fund a company, and that intention, especially with 33% going to charity, seems ambitious for what they actually had. I mean it's cool, but it's not THAT cool. If they were careful though I could see them doing something like using a shill to sell it multiple times, and maybe come up with money somewhere around the level they were expecting... but that would take a lot of luck.

This also raises another interesting question... do these discs have any identifying marks on them that proves what they are? When the game is released on the 6th is there any way to tell the "Space Edition" from say a regular copy that didn't get sent up on a balloon? I might have missed that if there was. If there isn't, I'm not sure if this has much value at all as a collectible because it won't be long before it becomes impossible to prove what it actually is.

i think it wasnt as much as a need for rafle as it was kickstarting a new company. somone didnt like competition.

Thinking about what they wanted to do, it only seems illegal because the state isn't controlling it. WTF do you think a state lottery is!?! Exactly what they wanted to do! But god forbid people want a LITTLE personal gain to do something.

Qitz:
That'll teach those greedy bastards to try and do something nice like donate some money to a charity!

Also, stuff is illegal in Nevada? Bwaaah?

yea in a state where gambling and whore houses are legal you think a raffle should be fine. But i guess the state has to get its money from this somehow.

SL33TBL1ND:
Why the fuck is this even illegal? They found it, they should be able to do what they want with it.

Seriously though, it makes me kindof sad that this sort of thing is illegal. Yes, they should pay taxes on the proceeds like the rest of us, but they shouldn't be penalized for what they wanted to do. Especially seeing as the two obviously didn't realize that they were doing something wrong.

That's just pathetic.

Nothing else need be said. The law be damned here.

Snotnarok:
This is pretty funny since Charities can take up to like 60% of the profits they raised for whatever they want, but I guess what they're doing is terrible too.

For operating costs. Usually within what is stated in their status. Sure You can bend some of the points there to buy a new plasma TV but usually it get's picked up on rather fast.

The thing was they wanted to do a raffle, which is essentially gambling. Without any form of legal backing behind it could get ugly fast. First, all You have is their word that They will donate the money to charity. Second, lacking the regulations, You can't be sure if the winner of such raffle is legit or not just friend of the guys, which may expose them to lawsuits from people who pay for the ticket. Third, since they don't run non-profit/charity organization, it's hardly charity raffle when You take 66% of the money for personal gain.
If tell people to give me 1 million dollars and promise to send 300k to charity, is it really charity ?

They had good idea generally, but poor execution and They should be thankful someone warned them because otherwise They could get into more trouble than it's worth.

it kind of did fall from the sky, you're talking about them!

 Pages 1 2 NEXT

Reply to Thread

Log in or Register to Comment
Have an account? Login below:
With Facebook:Login With Facebook
or
Username:  
Password:  
  
Not registered? To sign up for an account with The Escapist:
Register With Facebook
Register With Facebook
or
Register for a free account here