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I Won $9 for Wasting Three Hours on a Mobile Game

Economically smart? Not really. Would I do it again? Maybe.

Generally speaking, games are a time- and money-losing proposition. You put both in and expect neither productivity nor money back.

A mobile gaming startup called Skillz, though, thinks players should reconsider the latter part of that. It, along with Prague-based competitor CashPlay, offers developers the ability to run real-money cash tournaments: Players make accounts and deposit real money, and then play against one another in a regulated category of “skill games,” with the winner making a small profit.

Skillz announced today that it had paid out $1 million to its players since launching last year. But note: That means $1 million in winnings was recorded by its tournament platform, not that players withdrew that amount of cash.

“While players can withdraw at any time, many of them choose to leave money in their account so they can use it to enter more tournaments,” a company spokesperson said.

Skillz CEO Andrew Paradise said in an interview with Re/code that the number of tournaments occurring has increased from 100 per day shortly after launch to 50,000 per day currently. Ten percent of the daily active users in the games that use Skillz play in the for-cash tournament mode, with a “high correlation” between cash tournaments and games based on real sports like golf and bowling, Paradise said.

About 60 out of Skillz’s 150 partnered games have cash tournaments enabled, with the rest letting players compete for virtual currency only. This is because the company must manually curate games to ensure they meet the legal definition of “skill game,” where mental or physical prowess, rather than chance, fairly determines the winner. For-cash skill tournaments are legal in 37 U.S. states.

“You’ve got to watch out for the term ‘betting’ in our games, because it’s illegal,” CashPlay CEO Jarrod Epps said in an interview. “We don’t allow betting in our games. These are cash tournaments like a golf tournament, where you register and pay a fee and go somewhere to play.”

Similar to Skillz, CashPlay reports that about 13 percent of its daily users play for cash, with the rest vying for virtual currency. Epps declined to share how much its games had paid out thus far.

At Paradise and Epps’ encouragement, I tried these definitely-not-betting games for myself, playing Strike! Real Money Bowling and Pocket Bowling 3D HD, which use Skillz and CashPlay, respectively.

Skillz offers virtual “bonus cash” to players for making a deposit, but honors withdrawals that include winnings from others’ bonus cash, which it calls a marketing expense. Over three days, combining bonus cash with a $5 deposit, I spent hours playing 36 money matches in Strike! until I reached a satisfactory $14.20 in the bank, for a profit of $9.20, which I withdrew via PayPal.

And then (sad trombone) I promptly lost it all. I deposited $10 into Pocket Bowling — unlike Skillz, CashPlay does not incentivize deposits — and my balance is currently a pitiful $0.27. That puts me down 53 cents on the whole week. I can probably just afford that on my online journalist salary.

The companies, meanwhile, have a bit more dough to play with. Last year, Skillz raised $10.3 million in venture funding. CashPlay said it has raised nearly $7 million to date.

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