Would a poker buyin share voucher be a &quot;security&quot;?
<p>Hello I am trying to learn more about securities and really confused by the laws regarding unregistered securities in the US. NJ state if that helps too. I made a scenario and I am needing help to understand if this would be legal or not.</p>
<p>In online poker you play poker and when you win the tournament against other players then are granted a entry ticket into the next event. As you may know you can win money in poker.</p>
<p>I am having trouble understanding the Howey Test which is &quot;investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.&quot; Which is used to deem what is and isn't a security.</p>
<p>Here's my thought experiment from my thinking into this concept:
If you were to play a poker tournament, win it and be issued a ticket that gave you access to a percentage of all the money paid into the NEXT tournament by other players (let's call it a &quot;money ticket&quot;) as a prize would this &quot;money ticket&quot; be a security? Why/why not?</p>
<p>The &quot;money ticket&quot; would basically be a revenue share voucher.</p>
<p>Edit: What if you only got the profits if you won the second tournament as well? Would the ticket still be a security?</p>
<p>Thank you!</p>

<h4>Almost certainly yes.</h4>
<p>As you say, the test is indeed the <a href="https://www.investopedia.com/terms/h/howey-test.asp" rel="noreferrer">Howey Test</a>, which, as you say, asks if it is an &quot;investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.&quot;</p>
<p>Here, the &quot;efforts of others&quot; would be running the poker tournament.  The &quot;expectation of profits&quot; is to be derived from the proceeds of their efforts running the tournament, advertising it, etc.  It's basically pretty similar to receiving something like equity in the tournament, and equity is of course well-established to be a security.</p>
<p>To avoid running afoul of laws against unregistered security offerings, they would likely need to either limit the people who could win such a ticket to <a href="https://www.sec.gov/education/capitalraising/building-blocks/accredited-investor" rel="noreferrer">accredited investors</a> or go to the trouble of formally registering the securities.  The latter isn't impossible: banks routinely register a wide variety of securities that they sell to their various customers.  But it is a lot more process, and banks who do this are set up to be able to do it with as little process overhead as possible.  Whether that would be practical for a company running poker tournaments would probably depend a lot on the details of the situation.</p>

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