Legal issues in operating a gaming website that offers cash prizes

[sanchymike]

i just finished a website that people can play free games online and they can use points they earn while playing to enter for the daily weekly or monthly draw. they can also redeem the points with other prizes on the website.
I want to register my company name to operate this website.
My questions are
1. is it legal to do this
2. do i have to give out the names of the winners to IRS and what is the maximum amount or prize they can win.
3. is it legal to operate this website in the US and people all over the world can win cash prizes and is there any tax that will be paid by users outside united states.
4. is there any special tax that i will need to pay while operating this website
5. what are the other issues that i have to consider while operating this website and company so that i dont break the law

[AFFA]

I wish to inform you that you can operate website in USA if the winner depends upon the skill of the game. In this regard if the winner is through skill then your game is legal. If the end result is through luck then it is gambling. Further, the Wire Act does not prohibit Internet gambling on a game of chance.

AFF

[sanchymike]

Thanks for your reply..i actually need more clarification about this... i was wondering if i can get more answers if i pay for the service or you can still be able to answer my question.
thanks

[Friend In Court]

The IRS requires all winnings totally $600 or more to be reported. By both the awarder of the prize and by the recipient.

I believe you would file these under 1099, Miscellaneous earnings. With the social security number of the taxpayer and address, of course.

[Dkinglaw]

yes your process is quite legal just take No Objection Certificate from any partner if you have in making this website

[Lexus]

In the US, regulations for online gaming are fairly strict and as states enact their own local legislation, it becomes even harder to meet those regulations and still run a gaming business online. Several states have enacted regulations against online gaming, although some have specified particular types of gaming in their legislation.