Can I use copyrighted music in adult videos if I credit the artist?

No. Giving credit does not replace the need for a valid license. You must obtain permission from the copyright holder before using the music.

Is fair use a reliable defense for adult creators?

Fair use is rarely reliable for adult content since most use is commercial and not transformative. Always seek legal advice before claiming fair use.

Are royalty-free songs safe for adult entertainment?

Only if the license explicitly allows adult or commercial use. Review the terms of service or contact the platform to confirm.

What is the Interstate Obscenity Definition Act?

The Interstate Obscenity Definition Act is a proposed federal bill that seeks to establish a national definition of obscenity, replacing the current community-based Miller Test. It could expand what is considered obscene and give the federal government greater power to regulate adult content online.

How would this bill affect free speech?

The bill threatens free speech by removing local community standards and allowing the federal government to decide what content is considered obscene. This change could criminalize legal adult content and silence creators through self-censorship.

Why is replacing the Miller Test controversial?

The Miller Test allows each community to determine its own standards for obscenity, which protects diverse values across regions. Replacing it with a national standard removes this protection and risks overcriminalizing legal speech.

Who could be affected by the Interstate Obscenity Act?

Adult content creators, website operators, publishers, and even users could be affected. The act would increase legal risk for those producing or distributing adult content online, regardless of local legality.

Has the Supreme Court ruled on this type of law before?

Yes. The Supreme Court has consistently upheld free speech protections under the First Amendment and has not expanded the definition of unprotected speech beyond the current obscenity standard. New federal laws that challenge this precedent often face constitutional scrutiny.

What should I do if I’m concerned about this bill?

You should consult with a First Amendment attorney, follow updates from civil liberties organizations, and consider speaking out to your elected representatives. Legal professionals can help you understand how to protect your rights as this legislation evolves.

Can this law criminalize private communication?

Yes. The bill could potentially criminalize private adult communication via phone or internet if the content is deemed obscene under the new federal standard, even without malicious intent.

Is the bill already law?

No. As of now, the Interstate Obscenity Definition Act is a proposed bill and has not been passed into law. However, its introduction signals a shift toward broader federal regulation of online content.

What is NCII (Nonconsensual Intimate Imagery)?

NCII refers to sexually explicit images or videos shared without the subject’s consent. This includes deepfakes, voyeuristic images, or content originally shared with limited permission but later distributed publicly.

What are the legal consequences of sharing NCII?

Under 15 U.S.C. § 6851, individuals who publish or distribute NCII without consent may face civil lawsuits with damages up to $150,000 plus legal costs. The TAKE IT DOWN Act adds criminal penalties of up to 2–3 years in prison.

How can adult platforms protect against NCII liability?

Platforms must collect written consent, maintain abuse complaint logs, publish takedown policies, and respond to NCII removal requests within 48 hours to comply with MasterCard and federal guidelines.

Is there protection for creators against false NCII takedown claims?

Currently, there is no penalty for false NCII claims under the TAKE IT DOWN Act, which raises concerns about abuse of the takedown process. Legal reform advocates recommend adding appeal processes and safeguards.

Walters Law Group

Mystery Box Gaming Business Model – Legal Issues

Mon, 22 Dec 2025 13:54:11 +0000

By: Lawrence G. Walters

Overview

Everyone loves surprises. Not knowing what’s in the box makes gift giving fun. The concept of opening an unknown gift has made its way into the world of online gaming in the form of mystery box websites. The idea is simple: offer users the opportunity to open a box containing contents that are determined by chance, in exchange for payment. So long as the user always receives an item or combination of items worth the amount paid to open the box, no gambling concern is triggered. However, the devil is always in the details.

The Elements of Gambling

An activity will generally be deemed to be gambling if it contains all of the following elements: 1) a prize of value; 2) chance (i.e., a risk of loss); and 3) consideration (i.e., payment). Interstate online gambling is prohibited in the United States. Most states’ laws prohibit various activities related to gambling as well. While some states permit intrastate online gambling, which is offered by licensed operators to players physically located in the licensed state, such licenses can be difficult and time-consuming to obtain, where available. The mystery box business model seeks to eliminate the “risk of loss” element of gambling by ensuring that each user that opens a box receives one or more goods or services that have a combined value that is at least equal the amount paid. Successfully doing so removes the activity from the realm of gambling, even though the good or service received may be considered a prize of value that is determined by chance in exchange for a payment.

Eliminating Risk of Loss

The mystery box business model seeks to eliminate the “risk of loss” element of gambling by ensuring that each user that opens a box receives one or more goods or services that have a combined value that is at least equal the amount paid.

Physical Mystery Boxes

The manufacturers and sellers of physical mystery boxes approach legal compliance in various ways, and each has different levels of risk. Many manufacturers and sellers commonly operate under a relatively untested legal theory that no gambling occurs when a mystery box is sold so long as the combined fair market value of all goods within each box is at least equal to the amount paid by the customer.

For example, a manufacturer may sell physical mystery boxes with a MSRP of $20 that contain three randomly assigned figurines, including one of ten large figurines and two of twenty small figurines. Zealous prosecutors could attempt to make an argument that the three elements of gambling are present, because $20 has been paid for three randomly assigned figurines. However, the manufacturer could potentially defend itself by arguing that no gambling is occurring, because the customer always walks away with merchandise that has a combined fair market value of at least $20. More specifically, the manufacturer may assert that the fair market value of the large figurine is $10, and the fair market value of each small figurine is $5 each, ensuring that the customer never faces a risk of loss by receiving merchandise with a combined fair market value less than the price paid for the physical mystery box.

Often, mystery box manufacturers utilize certain marketing tactics to increase sales which may increase the risks of illegal gambling. For example, of the ten potential large figurines that may come in any single box, eight of the large figurines may be common and have a 12% chance of appearing in any single box, while the remaining two large figurines may be rare and have only a 2% chance of appearing in any single box. This element of rarity incentivizes customers to purchase multiple boxes in hopes of being able to collect a complete set and therefore, potentially, excites the “spirit of cupidity” (i.e., the term that courts often use when analyzing gambling considerations).

Further, this element of rarity often creates a secondary marketplace where customers resell the common figurines at a price less than the value that would be argued by the manufacturer, and the uncommon figurines at a price more than the value that would be claimed by the manufacturer. For example, customers may resell the common large figurines on eBay or similar sites for a reduced $6 while selling the uncommon large figurines for an increased $40. The creation of this secondary marketplace for the figurines potentially frustrates the manufacturer’s ability to assert that all ten of the large figurines have a fair market value of $10. Generally, the manufacturers of mystery boxes can take the position that the values assigned to those figurines on a secondary marketplace have no impact on the initial fair market value of the physical mystery box and the figurines therein, so long as the manufacturer does not participate in the secondary marketplace for the figurines.

Sellers of mystery boxes also have different considerations when evaluating the risk of a potential gambling violation than do the manufacturers of those mystery boxes. In particular, the gambling risks are lower for sellers that do not participate in the secondary marketplace compared to those sellers who do participate in the secondary marketplace.

For example, a big box retailer like Target may sell mystery boxes and be able to make the same legal arguments as the manufacturer, because the big box retailer does not participate in the secondary marketplace for the figurines. On the other hand, a trading card and collectibles shop where those mystery boxes are sold may offer customers the opportunity to sell the common large figurines back to the shop for $6 apiece and to sell the uncommon large figurines back to the shop for $40 apiece. In turn, the shop may then resell those common figurines to other customers for $8 apiece and the uncommon figurines to customers for $50 apiece. The shop’s participation in both the initial marketplace for the mystery boxes and the secondary marketplace for the figurines increases the spirit of cupidity involved in their transactions and may limit their ability to successfully assert the defenses that would likely be raised by manufacturers and big box retailers that do not participate in the secondary marketplace for figurines.

Physical mystery boxes can also be sold by e-tailers. For example, online clothing retailers often sell mystery packages containing one or more randomly assigned articles of clothing, such as a pair of underwear, socks, or shoes. Typically, clothing retailers use these online mystery boxes to offload styles that are out of date, seasonal, or otherwise difficult to sell. This tactic raises its own gambling concerns, especially where those clothing articles can no longer be sold for the price at which the mystery box is being sold.

Skins and Loot Boxes

Video game developers and other loot box operators approach legal compliance in various ways, and each has different levels of risk. Many developers and loot box operators commonly operate under a relatively unsettled legal theory that no gambling occurs when a loot box is opened, because video game skins are not a thing of value which thereby removes the prize of value element.

For example, a video game developer may sell loot boxes for $5 that contain one of ten randomly assigned skins. Often, most of these skins will be extremely common, while one or a small subset of the potential skins will be extremely rare. As with the physical mystery boxes discussed above, this element of rarity motivates customers to purchase multiple loot boxes in hopes of being able to obtain the rarer skins and therefore, arguably, excites the spirit of cupidity. Zealous prosecutors could attempt to make an argument that the three elements of gambling are present, because $5 has been paid for the chance to win a rare randomly assigned skin. However, the video game developer could potentially counter by arguing that no gambling is occurring, because the customer always walks away with a skin that has no real-world value and cannot be used outside of the video game.

However, video game developers often allow users to trade skins which technically enables users to create a secondary marketplace where those skins can be bought and sold for a price that is significantly less than or significantly more than the price of the loot boxes from which that skin was obtained. Generally, video game developers can take the position that the values assigned to those skins on a secondary marketplace have no impact on the initial fair market value of the loot boxes and the skins therein, so long as the developer does not participate in the secondary marketplace for the skins. Many developers further limit their legal risks by prohibiting the trading of skins for money or other things of real-world value on the platforms, while permitting users to trade skins for skins.

Within this secondary marketplace, an additional business model has developed where third-party operators of skins betting sites allow users to wager skins for coins, or to purchase coins, that can then be used to play games that provide a chance to win more coins which can then be traded for other skins. The operators of these sites may argue that no gambling is occurring, since skins are not a thing of value. However, the operators of these sites have different considerations than the video game developers, since the operators of these sites are not participating in the initial marketplace for the loot boxes and are essentially creating a secondary marketplace of repackaged loot boxes. While this approach is viable, operators must ensure that the prohibitions on resale of the skins are strictly enforced. Further, courts in some jurisdictions may consider skins to constitute prizes of value, in certain limited circumstances.

Online Mystery Boxes

The contents of a mystery box need not be a physical good or digital skin. Online mystery box operators may include digital goods (such as downloadable video games) and services (such as exclusive access to entertainment content and benefits) as a potential component of an online mystery box. These digital goods and services may be mixed in with physical goods and services which are shipped to the user, so long as the combined fair market value of all goods and services received is at least equal to the price paid to open the online mystery box.

Some online mystery box operators will offer experience points as a potential service that may be received when opening an online mystery box. Alternatively, these experience points can be purchased directly from the operator at the same price at which those experience points are valued when received as a component of an online mystery box.

The ability to purchase experience points directly from the online mystery box operator is analogous to the rewards points programs offered in other industries, such as in airline or credit card loyalty programs. Such businesses typically assign a specific dollar value to the points and allow them to be purchased independently of any products or services. The same approach should be considered by mystery box operators. Users may have the ability to purchase experience points directly from the operator using the same dollar value assigned to the points awarded in boxes. Such purchases by users constitute compelling evidence that the points are worth the value assigned.

Regardless of whether the user obtained the experience points by direct purchase or by opening an online mystery box, the user gains the same exclusive access to certain entertainment content and benefits. For example, a user may purchase $20 worth of experience points to gain a monthly subscription to a Twitch stream, while another user may purchase a $100 online mystery box that randomly reveals a watch worth $80 and $20 worth of experience points that provide access to that Twitch stream. So long as the combined fair market value of the contents of the online mystery box is at $100, no risk of loss occurs, and thus no gambling.

Determining Prize Value

Mystery box operators must carefully assign fair market value to the prizes contained in any given box to avoid the risk of loss. Artificially inflating the value of prizes can create significant risks of gambling violations. While operators have some flexibility to include a reasonable retail profit in the fair market value calculation, assigning unrealistically high values to prizes will not effectively eliminate the risk of loss.

Determining the value of digital goods and services can be more challenging than physical goods that are readily available in the general marketplace and thus have a known market value. For example, providing access to media such as videos, songs, games, or NFTs as a component of an online mystery box likely has some value, however unless the media is readily available from other sellers, determining its fair market value can be difficult. Operators are cautioned to investigate the value of similar items available for direct purchase from third party retailers that do not utilize any gamified shopping marketing efforts to assist in determining appropriate value.

Importantly, the benefits associated with any experience points awarded or sold must be sufficient to support the value assigned. Operators can consider granting users access to unique platform features based on their experience point level such as unique avatars, the ability to upload media, access to messaging boards, participation in real world events, and other benefits. If challenged, a mystery box operator will be required to demonstrate that the benefits provided by purchasing or obtaining experience points justifies the dollar amount assigned. As noted above, direct purchase of the points by users is the best evidence of their value.

Other Considerations

While concerns with avoiding gambling are paramount with a mystery box business model, additional considerations apply. For example, failure to disclose the chances of winning any given prize or combination of prizes prior to purchase can trigger potential violations of deceptive and unfair trade practices laws. Users should always know what they are purchasing and the likelihood of receiving any specific prize. Other issues include intellectual property concerns, particularly when including copyrighted images or trademarked brands to show the prizes. Many famous brands prefer to avoid any association with chance gaming, even if the activity does not meet the legal definition of gambling. It is important for operators to ensure that they have all necessary rights to display any images or trademarks of products awarded as prizes. Finally, like all online marketplaces, mystery box operators should ensure that their terms of service, privacy policies, and know-your-customer (“KYC”) policies meet current industry standards and legal compliance obligations.

Final Thoughts

The mystery box business model offers an exciting experience for users and an enticing opportunity for operators. By ensuring that gambling and other legal issues are addressed, operators can effectively mitigate risks while maximizing business opportunities.

Lawrence Walters heads up Walters Law Group and frequently represents clients in the mystery box gamified shopping field. Nothing in this article is intended as legal advice. You can contact Mr. Walters through his website, www.firstamendment.com, or on social media @walterslawgroup.

Using Copyrighted Music in Adult Entertainment Content

Wed, 15 Oct 2025 15:51:52 +0000

By Lawrence G. Walters, Walters Law Group
Published October 15, 2025

Using music in adult entertainment content might seem like a simple way to enhance the mood—but it’s a legal minefield. From copyright infringement to licensing hurdles and fair use misconceptions, adult content creators face unique challenges. This post explains how copyright law applies to music in adult media, and what steps can protect creators from legal risks.

Copyright Infringement in Adult Content

Using copyrighted music without permission in videos, live streams, or promotional clips can result in severe penalties. Under U.S. law, rights holders—including artists, composers, and record labels—control how their work is used, distributed, and reproduced.

Even short clips or background audio may trigger infringement claims unless a valid exception applies. Violations can lead to:

DMCA takedown notices
Licensing fee demands
Lawsuits and statutory damages (up to $150,000 per infringement for willful violations)

Many music publishers refuse to license songs for adult content due to reputation concerns, making legal use of mainstream music even harder for adult creators.

Understanding Fair Use

“Fair use” allows limited use of copyrighted material under specific circumstances. Courts weigh four main factors:

Purpose and character – Transformative use (e.g., parody or critique) may qualify. Commercial or mood-setting use rarely does.
Nature of the work – Creative works like songs get stronger protection.
Amount used – Short clips help, but not if they include the “heart” of the song.
Market impact – If the use harms the song’s market value, fair use likely fails.

For adult entertainment, fair use is rarely a safe defense. Always consult an attorney before relying on it.

De Minimis Use: When “Too Small to Matter” Still Matters

The de minimis rule applies when a portion of a work is so minor it doesn’t justify legal action—like faintly audible music from a passing car. Courts, however, are skeptical of this defense in commercial content.

If music is added intentionally to set a tone or mood, it’s unlikely to qualify as de minimis.

The Role of Music Publishers and PROs

Music publishers and Performance Rights Organizations (PROs)—such as ASCAP, BMI, and SESAC—license songs for public and recorded use. They monitor online content, issue DMCA notices, and collect royalties.

For adult creators, this creates barriers:

Many PROs won’t issue licenses for adult media.
Blanket licenses are often unavailable.
Enforcement is strict on streaming and subscription platforms.

When possible, negotiate directly with smaller or independent artists more open to licensing for adult content.

Safer Options for Adult Content Creators

Adult producers can minimize risk by following these strategies:

1. Use Licensed Music

Secure synchronization or performance licenses directly from publishers or PROs.

2. Choose Royalty-Free Music

Platforms like AudioJungle, PremiumBeat, and Artlist offer royalty-free tracks—but read the terms carefully. Many exclude adult or “mature” uses and the terms are frequently updated.

3. Create Original Soundtracks

Commissioning custom music eliminates licensing headaches and creates brand consistency. Make sure to get a work-for-hire agreement or copyright assignment from the composer.

4. Consult Legal Professionals

A qualified intellectual property attorney can help evaluate your specific situation and reduce legal exposure.

5. Review Platform Policies

Adult platforms have strict music rules. Violations can lead to account suspension or termination.

Key Takeaway

Adding music to adult entertainment content carries significant copyright risks. Fair use and de minimis defenses are limited, and obtaining proper licenses can be difficult. Creators who invest in original, royalty-free, or properly licensed tracks can protect their content, income, and reputation.

Disclaimer: Nothing in this post is intended as legal advice. Please consult an attorney if you have any questions. Lawrence Walters can be reached through the firm’s website, www.firstamendment.com , or on social media @walterslawgroup.

Leading Adult Entertainment Attorney with Over 35 Years of Experience

Tue, 14 Oct 2025 12:08:35 +0000

Lawrence Walters – Adult Entertainment Attorney

Walters Law Group has extensive experience representing clients in the adult entertainment industry for over 35 years.

Background

Mr. Walters started representing adult industry clients in 1989 during the obscenity crackdown on local Florida video stores renting adult VCR tapes to customers. All cases resulted in acquittals or dismissals. As a result of his pro bono representation of these clients, the community expressed outrage at the governmental censorship efforts, and the elected State Attorney was voted out of office.

He later began representing adult website operators at the dawn of the Internet age and established his reputation as a skilled First Amendment litigator. Walters defended numerous websites throughout the nation that were accused of obscenity violations. His efforts helped discourage the use of obscenity laws to target adult website operators.

Representative Obscenity Cases

State of Florida v. Tammy Robinson: Accused of obscenity based on operation of personal website. All counts dismissed after the prosecutor and sheriff were sued for violating constitutional rights.
State of Florida v. Chris Wilson: Accused of over 300 counts of obscenity based on user-uploaded content. All counts dismissed after appeals court orders release of Wilson in response to habeas corpus petition alleging First Amendment violations.
U.S. v. Karen Fletcher: Accused of obscenity based on publication of text stories on personal website. Avoided jail time based on plea agreement after filing of Motions to Dismiss alleging First Amendment violations.
Florida v. Clinton McCowen: Accused of racketeering based on obscenity violations in connection with operation commercial adult website. Resolved by plea after Walters issues subpoena to Google for adult entertainment search history in the community where the case was pending.
Florida v. Minakashiben Patel: Store owner accused of obscenity violations for selling 10 X-rated movies. All charges dropped and case dismissed.

Other Legal Victories

Juicy Ads: Adult traffic company dismissed from federal copyright infringement lawsuit after Walters files motion to dismiss.
MyFreeCams: Walters recovers infringing domain name in cybersquatting claim against trademark infringer.
Chaturbate: Famous cam site scores victory recovering Chaturbate.online after Walters files WIPO domain piracy claim against infringer.
Shhh: Virginia adult book and novelty store permitted to open after being rejected by local zoning officials. Walters threatened a First Amendment lawsuit and the county backed down.

Representative Clients

OnlyFans
Fansly
Myfreecams
Chaturbate
Pornhub
PB Web Media
Sex.com
Livejasmin

Recognitions and Awards

Earned the highest “AV-preeminent” rating from Lawyers.com
Awarded 10.0 “Superb” rating by Avvo.com
Recognized as a Super Lawyer by Superlawyers.com since 2020
Received First Amendment Lawyer of the Year from Global Law Experts
Past President and National Chairman of First Amendment Lawyers Association

Summary

Walters is recognized as the go-to lawyer for adult entertainment law. He has represented adult industry companies throughout the world for decades. He has also handled precedent-setting cases nationwide, including numerous cases as the United States Supreme Court. Walters has unparalleled experience in the adult entertainment field.

FAQs

What does an adult entertainment attorney do?

An adult entertainment attorney protects the rights of adult content creators and businesses, including First Amendment defense, regulatory guidance, and litigation involving obscenity, IP, and online speech.

How long has Lawrence Walters represented adult industry clients?

Over 35 years, beginning in 1989.

What distinguishes Walters Law Group?

Decades of precedent-setting First Amendment work nationwide and representation of leading global adult entertainment brands.

Online Gaming Legal Opinions

Wed, 01 Oct 2025 12:19:55 +0000

Launching a gambling, sweepstakes, or skill gaming website requires more than just a strong business model. To gain approval from payment processors, banks, app marketplaces, and ad platforms, operators must present a credible legal opinion from an experienced gaming attorney.

Online Gaming Legal Opinions – What They Cover

A reasoned legal opinion evaluates every aspect of your operation, including:

Business model review: Ensures games are structured within lawful boundaries.
Geo-blocking requirements: Identifies and restricts access from prohibited states.
Compliance documents: Drafting of Terms of Service, Privacy Policy, KYC procedures, and official game rules.
Regulatory analysis: Applies current statutes, regulations, and case law to support conclusions.

Why Legal Opinions Matter

Third-party compliance departments demand assurance that your gaming platform has undergone thorough legal evaluation. A favorable legal opinion from a nationally recognized online gambling attorney provides that assurance, making it easier to secure approvals and reduce business risk.

About Walters Law Group

For over 30 years, Lawrence G. Walters has represented clients in the gambling, sweepstakes, and skill gaming industries. Recognitions include:

“AV” Preeminent rating by Lawyers.com
10.0 “Superb” by AVVO.com
Named a SuperLawyer (top 5% of attorneys) since 2020
Founding member of the International Masters of Gaming Law
Recipient of “Online Gaming Lawyer of the Year” awards from Corporate INTL and Global Law Experts

Our practice serves both publicly listed companies and startups, ensuring legal compliance at every stage of development.

Request a Legal Opinion

If your business requires a legal opinion for gambling, sweepstakes, or skill gaming compliance, Walters Law Group can help. We deliver the expertise and credibility that regulators, payment processors, and mobile app marketplaces demand.

Contact Walters Law Group today to discuss your needs and move forward with confidence.

FAQs About Online Gaming Legal Opinions

What is a “reasoned legal opinion” for an online gaming site—and who asks for it?

A reasoned legal opinion analyzes the business model against federal and state laws. Banks, processors, app stores, and ad platforms rely on these opinions to confirm compliance before approving services.

What does a legal opinion for gambling or skill gaming websites typically include?

It covers the business model, geo-blocking, Terms of Service, Privacy Policy, game rules, KYC/AML procedures, and the applicable statutes, regulations, and case law.

Do sweepstakes or skill gaming platforms also need legal opinions?

Yes. Sweepstakes must comply with “no purchase necessary” rules, and skill gaming depends on legal tests distinguishing skill from chance. A legal opinion ensures compliance and reduces operational risk.

What steps are required to obtain a legal opinion for gaming websites?

The operator must post compliant terms of service, game rules, and privacy policies, and implement any necessary geo-blocking procedures. The business model and website is then ready for review and issuance of a legal opinion.

Adult Website Age Verification Approved by SCOTUS – What Now?

Fri, 15 Aug 2025 16:26:28 +0000

Lawrence G. Walters, Esq. – August 4, 2025

The Ruling and its Legal Context

On June 27, 2025, the United States Supreme Court handed down the landmark decision in Free Speech Coalition v. Paxton, upholding the Texas age verification law in the face of a constitutional challenge. The Free Speech Coalition, and other petitioners, argued that the law failed to survive strict scrutiny review which has historically been applied by the courts in online age verification cases. Laws subjected to strict scrutiny are almost always struck down. Texas, on the other hand, claimed that the law merely needed to pass the lenient rational basis test, which was previously used when evaluating laws barring minors from physical adult bookstores. Laws evaluated under the rational basis test are usually upheld. The Oral Argument spanned some two hours and largely focused on which of these competing tests should be used to evaluate the law’s constitutionality.

The Court Adopts Intermediate Scrutiny

But alas, six conservative SCOTUS justices had other plans for the outcome of this case. Justice Thomas, writing for the Court, announced that the law would instead be subjected to “intermediate scrutiny”, which it easily passed. Under the intermediate scrutiny test, laws only need to serve an important governmental interest and be substantially related to achieving that interest. To justify this result, the Court concluded that the Texas law only incidentally burdened the rights of adults to access sexually explicit content online and adults have no First Amendment right to access such content without age verification. In an act of judicial wizardry, the decision parsed out the act of accessing adult content without age verification, which is unprotected, from viewing adult content which adults have a First Amendment right to do.

Arguments from Petitioners and Child‑Safety Advocates

The petitioners, along with other supporting groups, attempted to educate the Court in the briefing regarding the significant burden imposed on adults by the Texas law, given the risks of data breach associated with online age verification, the significant percentage of adults that do not have identification documents, the threat to individual privacy rights, and the chilling effect of the law that stops adults from viewing age verified content. A large child online protection organization, ICMEC, submitted a brief opposing age verification due to the resulting harm to minors who will avoid regulated adult sites and be driven to the dark corners of the internet where they risk exploitation or worse. These arguments were essentially ignored by the Court, which focused on the ready availability of explicit content online and vast use of mobile devices by minors as reasons to uphold the law.

The Industry Reacts and State Laws Loom

Adult industry organizations and free speech advocates were shocked and saddened by the decision. Effectively, the Court cleared the way for other U.S. states to impose online age verification. Most of the pending legal challenges to other existing laws are likely to be dropped. Some state’s statutes may go too far to survive constitutional muster under the intermediate scrutiny standard. For example, Tennessee imposes felony penalties for violations and requires re-verification every 60 minutes. The Alabama law currently in effect requires that platform operators obtain signed, notarized, consent forms from all persons depicted in pornographic content. The North Carolina law requires that all adult content be supported by separate consent forms for each sex act depiction, and each publication of the depiction. Time will tell whether the courts will impose any reasonable limits on the states’ efforts to restrict access to adult content. The Paxton ruling may incentivize some states to impose even more extreme restrictions. We can be hopeful that the First Amendment still has some meaning when it comes to the imposition of burdens on adults accessing constitutionally protected speech.

Immediate Compliance Steps for Website Operators

From a practical standpoint, the Court’s ruling means that adult website operators whose content meets the applicable definition and percentage threshold in a restricted state should immediately implement the required age verification methods or risk civil claims, administrative penalties, or even criminal prosecution. While geo-blocking residents in a restricted state may be an option, geo-blocking produces many false negatives and false positives. Ultimately, the burden will be on the operator to ensure that it has prevented minors from accessing adult content whether through blocking or age verification. Operators should also seek legal advice on any recommended changes to their privacy policies or user agreements in light of these state AV laws. In that regard, operators should be aware of any new AV data that they will be collecting from users pursuant to their privacy policies, and consider whether to change any dispute resolution terms in their user agreements.

Offshore Operations and Jurisdiction Concerns

Some operators may feel that their offshore location will sufficiently protect them from enforcement of U.S. laws. This is likely a dangerous assumption. If an operator regularly engages in commercial transactions with numerous users or service providers in a restricted state, a strong argument exists for a court having the necessary personal jurisdiction over the company sufficient to force it to defend a lawsuit in the state. However, some foreign operators, such as content aggregators or affiliates that merely drive traffic to third party websites, may be in a different legal position.

A New Litigious Environment

The industry should also be aware of the burgeoning plaintiffs’ law practice area that was created by these laws which allow enforcement through private lawsuits. We expect to see a number of these claims filed against non-compliant operators in the near future, particularly given the ability to recover attorneys fees against unsuccessful defendants. Many litigants were likely awaiting the SCOTUS ruling before filing these claims.

Over‑Moderation and Performer Impact

We can also expect a new wave of adult content moderation by online platforms as they grapple with the need to keep the percentage of adult content below the applicable threshold. It is likely that platforms will over-censor adult content in any close cases, to avoid having that content count in the total calculation.

Many adult performers are asking whether these laws apply to them. The simple answer is yes, some of the state AV laws are clearly broad enough to cover performers who offer adult content on their own landing page, or on third party websites, without age verification. However, we are unaware of any current efforts to enforce the laws in such circumstances. That said, performers have an incentive to ensure that their content is offered on age verified sites, where required, as a risk mitigation effort.

Looking Ahead

While the Paxton decision was a gut punch, the adult industry has overcome many headwinds in the past. Consider the wave of obscenity prosecutions that were directed first against adult bookstores and later against adult website operators, at the state and federal levels. The industry also had to adapt to the passage of Section 2257 and FOSTA/SESTA. However, the adult industry is strong and innovative. Technology like blockchain tokens and AI will likely drive developments in AV tools that will make the process less costly and more streamlined. As the U.S. Supreme Court noted over 60 years ago, “Sex, a great and mysterious motive force in human life, has indisputably been a subject of absorbing interest to mankind through the ages; it is one of the vital problems of human interest and public concern.” The interest in human sexuality shows no signs of slowing, despite governmental efforts to limit access to sexual expression online.

About the Author

Lawrence Walters is the operator of Walters Law Group, which represents adult industry clients worldwide. Nothing in this article is intended as legal advice. You can contact Mr. Walters through the firm’s website, www.firstamendment.com, or on social media @walterslawgroup.

Congress Proposes New Obscenity Definition: What It Means for Free Speech and Adult Content Laws

Wed, 09 Jul 2025 18:10:47 +0000

The First Amendment is under renewed pressure as Congress considers the Interstate Obscenity Definition Act, a bill that could drastically reshape the legal definition of obscenity and threaten free expression — especially for creators, publishers, and distributors of adult content online.

If passed, this law would eliminate decades of constitutional precedent and introduce a national standard for what is considered “obscene” content, disregarding the current Miller Test used by courts across the United States.

What Is the Current Legal Definition of Obscenity?

Under the Supreme Court’s Miller v. California decision, obscenity is defined using a three-pronged test:

Whether the average person, applying contemporary community standards, would find that the work appeals to the prurient interest;
Whether the work depicts or describes sexual conduct in a patently offensive way;
Whether the work, taken as a whole, lacks serious literary, artistic, political, or scientific value.

This framework has allowed local communities to determine what’s offensive or acceptable based on their own values — a core protection under the First Amendment.

What Would the Interstate Obscenity Definition Act Change?

The new bill proposes replacing community standards with a national obscenity standard, effectively erasing regional differences in how adult content is judged. It also expands the criteria for obscenity to include:

“Depicting or describing any actual or simulated sexual act… with the intent to arouse, titillate, or gratify sexual desires.”

This would give federal prosecutors broader power to criminalize adult content — including material that may be entirely legal under current standards.

Why This Threatens Free Speech and Due Process

Unlike the Miller Test, which requires prosecutors to prove that content violates the standards of a specific community, the proposed law would nationalize morality, allowing the government — not the people — to decide what is offensive.

Additional concerns include:

Removal of intent requirements for communications: Content could be prosecuted as obscene even without any intent to harass or threaten.
Criminalization of private adult communication via phone or internet.
No opportunity for defense based on local norms, such as what’s sold in nearby bookstores or viewed by local internet users.

These changes would create a chilling effect on speech, with citizens and content creators self-censoring out of fear of federal prosecution.

What Courts Have Said – And Why That Matters

The Supreme Court has consistently held the line on free speech protections. It has declined to expand the list of unprotected speech beyond the current obscenity definition. Any attempt by Congress to override this precedent could face constitutional challenges.

However, as we’ve seen with FOSTA/SESTA, Section 2257, and online age verification laws, unconstitutional statutes often remain in effect for years while courts sort them out — doing long-term damage in the meantime.

What This Means for the Adult Industry and Content Creators

If this Act becomes law, those involved in the adult entertainment industry, including website operators, producers, and even users of adult platforms, could be targeted under vague and overbroad definitions of obscenity. The consequences could include:

Federal criminal charges
Content takedowns
Platform liability
Loss of free speech protections

How to Respond

This legislation must be vigorously opposed by legal professionals, civil liberties organizations, and citizens who value freedom of expression. While the bill has not yet gained significant traction, it represents a dangerous shift toward government-controlled morality and federal speech regulation.

Consult a First Amendment Attorney

If you’re concerned about how this proposed law could affect your business or online content, speak with an experienced First Amendment lawyer. Legal guidance is critical as laws evolve and enforcement becomes more aggressive.

Author: Lawrence G. Walters, Esq.
Founder, Walters Law Group
Over 35 years defending constitutional rights and adult speech
Follow: @walterslawgroup

This article is for informational purposes only and does not constitute legal advice.

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Protecting Creators and Platforms from Nonconsensual Content

Mon, 02 Jun 2025 18:19:28 +0000

By: Lawrence G. Walters, Esq.
Date: May 27, 2025

The Importance of Consent

Consent lies at the heart of adult content production and distribution. Adult industry participants, processors, banks, and hosts have a vested interest in ensuring that the recording and publication of any sexually explicit content is supported by informed consent. Industry standards for adult content production focus on obtaining and documenting voluntary consent from all participants in the production. Professional producers carefully screen performers for any signs of impairment or duress which may suggest a lack of consent to engage in sexual activity on film, or to authorize distribution of the content as agreed by the parties. The adult industry takes a strong and definite stance against the creation or publication of nonconsensual materials.

Concerns about issues of consent incentivized MasterCard to release its Updated Guidelines for adult user-generated content sites in 2021. These Guidelines impose obligations on any payment processor that accepts MasterCard payment transactions to ensure that their adult merchants require documented consent to recording, publication, and downloading (if allowed) of explicit materials by content creators. Online platforms therefore routinely mandate the collection of written consent forms signed by all performers depicted in any uploaded content. By complying with industry standards and processor obligations in both the production and distribution of adult content, the likelihood of nonconsensual intimate images (NCII) is dramatically reduced.

Developments in AI, Deepfakes, and Takedowns

Developments in technology, including artificial intelligence models, have allowed for the creation of realistic depictions of individuals engaging in sex acts that never occurred. So-called “deepfakes” are not created with the consent of the depicted individuals, even if the underlying materials were voluntarily recorded or published. Such NCII can cause reputational harm and emotional distress to the depicted individuals. Similarly, voyeuristic material depicting body parts that were not intentionally displayed to the public constitutes another category of NCII. Finally, NCII can arise in the circumstance when an individual consents to the creation of the imagery, and/or discloses it to a friend or partner, but does not consent to more widespread distribution. These variants of NCII create more difficult issues for both the individuals depicted and the platforms where the content might appear.

Importantly, an online platform may have no knowledge of any limitations on consent that an individual has imposed in connection with the creation or circulation of specific images or video. While collection of consent forms mitigates these concerns to an extent, consent to publication of some depictions may not authorize wholesale distribution of any content depicting the creator who signed the form into the indefinite future. In some instances, creators may seek to revoke prior written consent. Separately, images that are subject to voluntary consent may be manipulated or altered to depict the creator in a way that he or she did not agree. Fortunately, responsible online platforms promptly respond to abuse complaints asserting NCII concerns. The MasterCard Guidelines require that platforms publish a complaints policy guaranteeing such prompt resolutions as a condition of continued processing. A list of all abuse complaints, and their resolution, must be maintained by the platform and shared with the processor. By promptly addressing NCII complaints, adult platform operators can reduce the potential harm of NCII distribution and maintain healthy relationships with their processors.

The abuse reporting process, itself, can be subject to abuse. Consider the scenario where a performer is paid for the release of rights to record and publish adult content, but later changes his or her mind. Rapid takedown of content labeled as NCII can injure legitimate content producers both monetarily and from a reputational standpoint. Contract rights should be respected irrespective of whether the contract involves adult materials. A separate issue arises where a competitor or harasser wants to harm a creator by taking down their lawful content from online platforms. Wrongful takedowns based on false claims of NCII can wreak havoc on creators and publishing outlets.

Legislation

Many states have laws prohibiting the recording or dissemination of NCII. Congress legislated in this arena in 2022, by passing the law now codified at 15 U.S.C. § 6851. This statute allows an individual to file a civil action for damages against any person or company who transfers, publishes, distributes, or otherwise makes accessible any intimate visual depiction of a person, knowing or recklessly disregarding the fact that the person did not consent to the depiction. The consent must be affirmative, conscious, and voluntary – free from force, fraud, misrepresentation, or coercion. Manipulated images are included within the ambit of this law, so long as an individual is identifiable by face, likeness, or other distinguishing characteristics. This could include a tattoo or birthmark. Successful claimants can recover actual damages plus liquidated damages in the amount of $150,000, in addition to costs and attorneys’ fees. This law is a powerful weapon that can be used by victims of NCII to seek justice. Recognizing that commercial model releases should remain enforceable, the statute notes that its prohibitions do not apply to an intimate image that is “commercial pornographic content” unless such content was produced by force, fraud, misrepresentation, or coercion. Given the broad protection afforded by Section 230, any claims would likely be unsuccessful if asserted against online platforms in relation to user generated content. However, individuals, producers, or even pay sites that produce or publish content alleged to be nonconsensual are potentially liable.

The TAKE IT DOWN Act

On May 19, 2025, President Trump signed the TAKE IT DOWN Act which imposes criminal prohibitions on disclosure of (or threats to disclose) NCII. Offenses involving adults can result in up to 2 years in prison, while offenses involving minors carry up to 3 years. The fact that an individual consented to the creation of the underlying content, or consented to disclosure to another individual, does not establish consent to publication or distribution by a third party. Unlike the law allowing civil claims, this criminal law makes no specific exception for commercial pornography. However, violations are not triggered if the individuals depicted voluntarily exposed themselves in a public or commercial setting. Further, the law imposes a “notice and takedown” regime on covered online platforms which requires the publication of a clear and conspicuous policy detailing how reports of NCII can be submitted. If an NCII takedown notice contains the required information, such as identification of the location of the content, a physical or electronic signature, and a good faith statement that the content was published without the consent of the complainant, platforms must remove the content within 48 hours of receipt, along with all known copies of the depiction. Unlike the DMCA, on which this bill is seemingly patterned, there is no requirement that the statements in the takedown notice be sworn under the penalty of perjury, and there is no provision allowing claims against those who abuse the takedown procedure. Failure to comply with the requirements applicable to online platforms is punished as a deceptive and unfair trade practice by the Federal Trade Commission. Platforms have 1 year from enactment to implement the required procedures.

Numerous civil liberties groups have warned against the unintended consequences of this law, and the threats of censorship posed by compliance with its requirements. Given the potential civil and criminal penalties triggered by the law, the response will likely lead to severe moderation of sexually explicit content to mitigate the risks. We saw this with the passage of FOSTA/SESTA which criminalized online materials that promote or facilitate prostitution or contribute to sex trafficking. All sexually oriented content was banned on many platforms and some service providers shut down completely in response. Similar censorship efforts can be expected in light of this new law. The requirement that a platform promptly remove any identified NCII, and all known copies, could pose an insurmountable burden, particularly on those platforms which offer encrypted messaging features. Again, the likely response would be to cease offering such features which have become invaluable for private, secure online communication. The mandated 48-hour response time may be impractical for startup platforms who employ a small staff, which thereby stifles online innovation. By failing to require that all takedown notices include sworn statements, by omitting any appeal process, and by not offering any method to punish malicious actors, the required takedown procedure invites abuse by frivolous claimants or even competitors. The lack of a specific exemption for commercial pornography compounds the potential for abusive claims. More broadly, the law criminalizes a new category of speech that is deemed unprotected by the First Amendment, which the U.S. Supreme Court has rejected on several recent occasions.

Balancing Free Speech with NCII Enforcement

Restricting the recordation and publication of NCII is a laudable goal that enjoys widespread support within the adult entertainment industry. State and federal laws provide numerous options for victims of this wrongful activity to seek redress in the courts. The ability to create deepfakes, involuntarily depicting individuals in a state of undress or engaging in sexual activity, creates new risks for creators and publishers which should be carefully evaluated. However, given the potential First Amendment concerns, any new criminal legislation in this area requires a scalpel, not a sledgehammer. Imposing penalties on platforms that inadvertently host NCII or fail to remove such content within a very short timeframe, creates a chilling effect on speech resulting in censorship of sexually-oriented materials. Any legislation criminalizing the publication of NCII must make room for satire, political speech, and other forms of protected expression. An appeal provision should have been included to counter unfounded takedown requests. Laws like this must also recognize the practical limitations facing online intermediaries in identifying and removing such content. Finally, any such law should include a specific provision for punishing abusers to prevent misuse and the resulting harm to creators, publishers, and distributors. By failing to strike the necessary balance in protecting free speech and restricting NCII, lawmakers have invited censorship and abuse.

About the Author

Lawrence Walters heads up Walters Law Group and represents clients involved in all aspects of the adult entertainment industry. Nothing in this article is intended as legal advice. You can reach Mr. Walters through his website, www.firstamendment.com or on social media @walterslawgroup.

Legal Claims Against Online Gaming Websites

Thu, 02 Jan 2025 19:52:28 +0000

December 30, 2024

Our firm is often asked by potential clients in the United States to pursue lawsuits or other formal action against online gaming companies that:

Fail to pay apparent player winnings.
Impose difficult obligations to cash out.
Close customer accounts after demands for payment.

Some players consider bringing legal action shortly after purportedly winning a big prize with little or no payment, while others have lost significant sums before being denied payment or simply quitting the site. Occasionally we are asked whether a particular gaming business is legal, in the hopes that the operator can be sued for offering unlawful gambling resulting in the recovery of losses.

While we do not represent players in such claims, given our representation of many online gaming operators, this post is intended to shed some light on the considerations involved in pursuing legal action against online gaming companies.

The vast majority of online gaming services operate in compliance with applicable regulations and industry best practices. Regrettably, however, there are some rogue operators that offer gaming, sweepstakes, or gambling services to the public in an unethical manner. These gaming sites are often (but not always) located in foreign jurisdictions with little or no regulatory oversight.

Any claimant should first review the applicable Terms of Service or User Agreement that forms the contractual relationship between the player and the gaming site. These agreements often include releases, waivers, or limitations on damages that can impose significant restrictions on pursuit of any breach of contract claims. The online terms may also require that any lawsuit be brought in a specific (often foreign) location or require arbitration instead of litigation.

While other claims may be available, such as fraud or deceptive trade practice violations, pursuit of such claims in the United States against a foreign gaming operator faces numerous hurdles.

First is the concept of personal jurisdiction. The claimant must show that some U.S. court is able to force the foreign company to defend a lawsuit in the chosen location by satisfying a complicated legal test that looks at the contacts the company has in the forum where the litigation will occur. Simply offering a website to users throughout the world will typically be insufficient to require a foreign company to defend a case in a specific state. Disputes over personal jurisdiction can be costly, and may result in appeals before the merits of any claim are actually addressed.

Assuming the court has personal jurisdiction to consider the claim, the claimant must prove their case at trial with admissible evidence. Bringing a case to trial can take years and require the outlay of substantial resources to pay court costs and attorney fees. Consumer litigation over gaming disputes is not typically handled on a contingency fee basis (although each firm can make its own decision in this regard). Instead, claimants will likely be required to pay hourly legal fees as the litigation progresses. Unless the amount of the loss is very substantial, claimants may end up paying far more for litigation expenses than can be recovered in damages.

Winning a judgment for damages does not always translate to payment of any compensation to the claimant. A gaming operator may simply not defend the case and accept a default judgment.

If the gaming company does not have sufficient money or property in the U.S., the claimant will be required to look for assets in another country. If foreign assets are found, the claimant must establish the validity of the U.S. judgment against the company in a different country in order to force any payment. Such efforts can again be costly and require engagement of foreign attorneys to pursue the enforcement procedures.

U.S. judgments are not automatically recognized in foreign countries. This stage of the proceedings may require additional hearings in the foreign jurisdiction to determine whether the judgment is valid and consistent with local law. Assuming the judgment is recognized where the company is located, the company may not have sufficient assets to pay the judgment. In such case, the claimant is left with a “paper judgment” but no actual recovery.

Claimants are understandably upset when they fail to receive winnings shown on gaming sites or are faced with account closures without payment of remaining balances. Often, the claimant has screenshots, emails, and other proof of their side of the story. However, in some instances, gaming sites impose contractual restrictions on prizes, payouts, or play-through requirements before any cash can be withdrawn.

In other cases, prize displays may be the result of computer errors or software defects. However, there are certainly instances where players are simply not paid due to fraud, greed, or breach of contract by a rogue gaming operator. Claimants should carefully consider whether any particular claim is worth the legal fees, time, and effort of formal legal proceedings in light of the applicable agreement, law, and practical considerations.

So what are the options?

First and foremost, research any gaming site where you invest time or money. Look at where the operator is located and whether it holds a gambling license. Companies that are based in the United States are more likely to respond to legal action in this country if a valid dispute arises. Licensed gambling sites are regulated by governmental gaming commissions and typically follow the law.

State or federal law enforcement may provide assistance in cases where an operator is violating criminal laws. Since partaking in online gambling activity is, itself, illegal in some jurisdictions, claimants should ensure that their own actions are not unlawful before involving the criminal justice system. Even if a company is offering gambling in violation of applicable law, this does not mean that players can automatically recover losses, as such rights vary from state to state.

Consumer protection agencies can also be consulted for assistance with deceptive or unfair trade practices. Alternatively, consumers can consider reporting unlawful or unethical conduct to the Better Business Bureau or online review sites to warn other individuals.

While small losses are typically not worth pursuing in court, large losses caused by obviously illegal behavior by a solvent U.S.-based operator may be pursued by some law firms on a contingency fee basis.

By considering the practical implications of pursuing formal legal action, claimants can make informed decisions in any individual case.

Lawrence G. Walters operates Walters Law Group and has decades of experience representing online gaming companies. If you are a player seeking legal assistance with a claim against an online gaming company, please contact your state bar association for a referral to a consumer protection attorney. Nothing in this article is intended as legal advice. Mr. Walters can be reached through www.firstamendment.com or on social media @walterslawgroup.

Free Speech and Free Press in the Age of Disinformation

Wed, 09 Oct 2024 14:26:56 +0000

By Bobby Desmond – October 09, 2024

The Importance of First Amendment Protections

The First Amendment’s protections of religion, speech, the press, assembly, and petition are not only essential to the pursuit of happiness by each person, individually, but also to the proper functioning of a republic governed by the people as a whole.

Concerns Regarding Free Speech

Admittedly, speech can have negative consequences. The following is a non-exhaustive list of concerns commonly raised by lobbyists and legislatures when attempting to restrict speech:

The unintentional spread of false information, also known as “misinformation.”
The intentional use of false information to mislead, also known as “disinformation.”
The intentional weaponization of false information to cause harm, known as “defamation.”
The unintentional disclosure of private information, such as data leaks.
The intentional and unauthorized access of private information, such as data breaches and intrusion upon seclusion.
The intentional disclosure of private information to cause harm, such as nonconsensual dissemination of intimate images and public disclosure of private facts.
The intentional and unauthorized use of name, image, and likeness rights and intellectual property.
The use of speech that is integral to illegal activities such as extortion, conspiracy, and solicitation.
The recordation of illegal activities such as child sexual abuse materials.
The disclosure of government secrets.
The incitement of or threatening to engage in imminent violence, such as urging a mob to attack a nearby building or threatening the life of an elected official.
The intentional obstruction of government actions such as filing false elector certifications.

Government Restrictions on Free Speech

Undoubtedly, in some instances, the government may have a compelling interest to use the least restrictive means necessary to prevent the harms of certain historically unprotected areas of speech. In other instances, the government should more finely distinguish between thought, expression, and action to carve out suitable space where only specific criminal activities are prosecuted, while the mere exercise of religion and speech rights is left uninhibited. It is the government’s constitutional obligation to ensure that its means are sufficiently narrowed, its interests sufficiently compelling, and its restraints sufficiently distinguishable and clear.

Civic Responsibility in Countering Harmful Speech

As citizens of this great nation, it is our civic duty to take whatever additional measures may be necessary to further reduce the adverse influences of false information and other forms of harmful speech on our own lives rather than relying on the government to constrain protected speech that we disagree with or otherwise disfavor. It is high time that we return to the principled doctrine of counter-speech and resume curtailing misinformation, disinformation, and other harmful speech by speaking our piece rather than by passing laws that require others to hold their peace. Speech should never be compelled or confined if further discourse would expose falsehoods or otherwise remedy the harm caused by that speech.

The Spread of False Information by Traditional Media

It is no secret that false information is often included in print, online, broadcast, and cable news—whether by accident, mistake, misunderstanding, negligence, recklessness, or intention. In an ideal world, the news would be completely objective, and there would be a clear delineation between reporters, commentators, and entertainers. However, people are deeply flawed and inherently imperfect.

Defamation Law and Media Accountability

Defamation law currently provides a reliable (though not always satisfactory) check when reporting includes misinformation or disinformation. For example, defamation claims have been successfully brought in recent years against:

InfoWars host Alex Jones for his lies about the Sandy Hook shootings.
Fox News for the lies of its anchors, reporters, and pundits about the reliability of certain voting machines in the 2020 election.
CNN for its portrayal of high school student Nicholas Sandmann engaged in a March for Life rally as a racist.

Challenges with Defamation Law

Proving the elements of a defamation claim for disinformation is fairly straightforward because the false information is published with the intention to mislead. A defamation claim for misinformation is somewhat harder to prove because the false information is spread unintentionally, but the elements may still be proven by showing a lesser mens rea. Most plaintiffs must show that the speaker was at least negligent as to the falsity of the statement, but public figures must show that the speaker had actual malice—that is, knowledge of or reckless disregard for the falsity of the statement.

Exercising Free Speech Rights on Social Media

Social media is not a haven for free speech. While the First Amendment prohibits the government from restricting speech, social media platforms can freely choose what speech to solicit or ban, what posts to promote or demote, and whether to allow or deactivate comments on posts. Platforms are given free rein to determine whether certain users should be included in lists of suggested accounts, given access to the platform without special promotion, or deplatformed entirely.

Political Viewpoint and Social Media Moderation

Many prominent influencers have criticized various platforms for making discriminatory moderation decisions based on political viewpoints. Advocates of government regulations for social media platforms support plans requiring political neutrality, conspicuous disclosure of content policies, and transparent appeals processes.

The Special Case of Sexually Oriented Speech

In recent years, there has been a resurgence of legislative constraints on websites allowing users to post sexually oriented speech. Laws such as FOSTA and SESTA were intended to fight online sex trafficking but have had a chilling effect on protected speech. Platforms have preemptively banned sexually oriented speech to avoid liability, stifling free expression in the process.

Conclusion

Politics are inarguably creating a schism across the country, and our ideological differences are magnified by the traditional media we consume and the social media platforms we visit. Nonetheless, Americans agree that a thriving democracy requires freedom of thought, freedom of expression, and freedom of the press. While we celebrate our founding fathers for enshrining protections of these rights in the First Amendment, we must challenge laws that limit these rights and foster a free and fair marketplace of ideas.

Legal Gaming Business Models

Mon, 10 Jun 2024 09:41:31 +0000

January 31, 2025

1. Introduction

The American public has a fascination with gaming. Numerous online gaming business models can be found on mobile app marketplaces, websites, and social media platforms. Potential gaming business operators often seek information on the legality of their proposed services. So, what gaming businesses are legal? The answers can be complicated but start with a distinction between “gaming” and “gambling”.

Gaming is a general term that covers a multitude of entertainment platforms that incorporate some type of user engagement to win a prize. Those prizes can be limited to in-game credits or items, but sometimes involve merchandise or real money. Gambling activity is a sub-set of gaming, which involves the following 3 essential elements: 1) a prize of value; 2) chance; and 3) consideration (i.e., a bet).

2. Prize

To qualify as a prize, for purposes of the gambling analysis, the winner of the game must receive something of value. Clearly, money is a “thing of value” in such instance. However, any merchandise, gift card, cryptocurrency, or cash equivalent typically qualifies as well. In general, any in-game digital prize or credit is not considered a prize. However, this is where things get tricky. In some states, an in-game prize or credit can be considered a valuable prize if it allows the player the opportunity to extend the game or if the prize can be readily exchanged for money on a secondary market. Take, for example, an online social casino that allows users to win credits which may not be exchanged for money or any thing of value on the platform. Those credits are generally not considered a prize since they have no value in the real world. However, if the credits can be re-wagered to play another game, the laws in some states will treat the credits as a prize for purposes of gambling since they allow the users to play more games. This is known as the “right of replay.” Alternatively, in some states, the ability to easily sell a digital item on a third party marketplace can give the item sufficient value to be deemed a prize. While this is the minority view in the U.S., operators must be aware of the jurisdictions that treat such items as prizes in the gambling context.

3. Chance

In order to qualify as gambling, the gaming activity must determine the winner by means of chance. Therefore, if the winner is determined by methods such as a card flip, slot machine reels, or a roulette wheel, the game is one of chance. What if skill determines the outcome of the game? Skill gaming is unregulated – and therefore legal – in the majority of U.S. states. However, some states restrict skill gaming, in addition to gambling, through statutes or case law. A separate question that arises in this part of the gambling analysis is: how much skill? The outcome of many games is determined based on a mixture of chance and skill. The courts in the U.S. have developed various tests to determine whether the skill element has been satisfied. For more information on that issue, see our post here. As a result of the different tests, some skill games may be legal in one state, but illegal gambling in another. Careful attention must be paid to the tests used by the courts, and the statutory restrictions, when considering a skill gaming business model.

Another factor that may come into play with the chance analysis is “risk of loss.” In order for the chance element to be present, there must be both an opportunity to win a prize and a risk of losing the staked bet. This issue is best illustrated with business models that offer purchases of “mystery boxes” or trading card packets. The “player” purchases an item for an agreed amount but does not know exactly what the item will be. The player could “win” an expensive pair of sneakers or a mixture of smaller items and/or digital prizes. To eliminate the risk of loss, the player must always receive items that equal the amount paid. The player may receive something more, in such a gamified shopping experience, but cannot receive less than the amount paid to participate. Using the trading card analogy; one purchases a pack of Pokémon or baseball cards for $5.00, not knowing if the pack will contain commonly distributed cards or possibly a card of great value. Either way, there is no risk of loss if the buyer receives the number of cards purchased.

4. Consideration

The final element to evaluate when deciding if an activity constitutes gambling, is consideration. This is commonly referred to as the bet or wager – meaning the amount paid to play the game. If no consideration is paid, real world prizes can be awarded by chance without running afoul of gambling prohibitions. The element of consideration is commonly eliminated in a prize giveaway, sweepstakes, or a raffle.

Prize giveaways are simple. A business or charitable organization decides to give away various prizes to certain users who register for the chance to win. No money changes hands for any goods, services, or donations. Giveaways may be used for various purposes to call attention to a new business, a political campaign, or a charitable cause.

In a sweepstakes, prizes can be awarded by chance (or skill), but entries cannot be purchased. Instead, entries may only be given away in connection with the sale of goods and/or services, or awarded for engaging in some alternative method of entry such as mailing a postcard or registering for a new account. Sweepstakes are commonly offered throughout the U.S. by large companies such as McDonalds and Pepsi. However, sweepstakes are regulated in certain states. For example, some states require that sweepstakes promoters who offer prizes which exceed certain limits must register with the state, obtain a bond to secure payment of prizes, and keep various records regarding prizes and winners. Other states prohibit the use of casino-style games in a sweepstakes, or the award of cash prizes. Various disclosure requirements can be imposed on sweepstakes operators as well, in relation to the amount of prizes or odds of winning. The goods and services sold in connection with a sweepstakes must be legitimate, and not merely be used as a ruse or sham to avoid gambling prohibitions. More information about sweepstakes requirements can be found here.

Raffles can typically only be offered by established charitable or civic organizations. In a raffle, a qualified operator offers chances to win a prize in exchange for a donation to the organization. Generally, donations cannot be required, but suggested donations are allowed. In this way, the entry into a raffle eliminates the element of consideration, since any payment is deemed a donation to the organization, and the raffle entry is a bonus.

5. Conclusions

For many years, creative entrepreneurs have sought to eliminate one of the three elements of gambling discussed above, to avoid the onerous restrictions on gambling activity or licensure requirements in the U.S. Courts are sensitive to these efforts and will punish abuse when detected. However, if any of the elements are not present, the activity is not gambling. It may be something else, such as skill gaming or sweepstakes, which are subject to their own restrictions. By understanding the essential elements of gambling, operators can be careful to avoid inadvertently straying into this highly regulated activity.

Lawrence G. Walters heads up Walters Law Group and has represented clients involved with online gaming for over 30 years. Nothing in this article is intended as legal advice. Mr. Walters can be contacted through the firm’s website, www.firstamendment.com, or on social media @WaltersLawGroup.