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Compensation

Many prize machines have a compensation mechanism within them. In broad terms ‘compensation’ affects payout; it can alter the chances of winning, or of winning an advertised prize, depending on the circumstances (for example the amount of money a machine has already taken and paid out). Compensation can also result in the outcome of a game which is presented as random or dependant on chance being, in fact, predetermined.

There are many different types of compensation mechanism. It is not possible to generalise as to their legal effect. Each case needs to be considered on its individual facts. However, the operation of compensation is clearly a relevant factor which the Commission will take into account, when considering the questions in Part 2 of this document.

Where a compensation mechanism introduces a random element into the game, this may result in the game being one of chance, but it does not necessarily follow in every case. If a player’s achievement during the game or the game’s outcome depends to any appreciable extent on chance / luck, the Commission takes the view that the game is a game of chance for the purposes of the Act. However, not every random or unpredictable element in a game necessarily leads to the conclusion that the game is a game of chance, because the Commission recognises that there will be cases where the unpredictable or random element is present for the very purpose of testing the skill or knowledge of the player. For example, the random element, such as that introduced by certain types of compensation mechanism, may be present solely for the purpose of challenging a player’s use of skill, whether manual dexterity / hand-eye co-ordination or knowledge / judgement.

It follows that compensators that vary the degree of skill required to win a prize, without introducing an appreciable element of chance, will not necessarily, in and of themselves, make a game a game of chance, provided that compensation does not prevent a suitably skilful player from being able to win any of the published prizes.

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Skill based prize games

Last updated: 5 August 2021

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