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''' Vague descriptions of Clinkle have proliferated, but Duplan gave me the specifics on how his new app Treats will actually function:
You sign up for Treats, order its debit card, and add money to it. You swipe your Treats card to make purchases like normal, with no extra fee, though there are charges for ATM use, etc. After every seventh purchase you earn a Treat. You take a photo to create a virtual gift card, and send the Treat to a friend. You can’t redeem it yourself. Your friend is notified they have a Treat waiting to be unlocked. Other friends can see the locked Treat and its photo, and can “Boost” aka Like the Treat to increase the chance it will be a winner. The friend who received the Treat swipes their Treats card to make a purchase, unlocking the Treat. If the Treat is a winner, they immediately get refunded the entire price of the purchase they just made. Whether or not they win, they then see the photo gift card you sent them. '''
http://techcrunch.com/2015/01/13/social-slot-machine/
US law defines a contest as an illegal lottery if it has three elements: (1) chance, (2) a prize, and (3) 'consideration', which means value form the recipient. (see e.g. http://goo.gl/UdE8r4 (pdf))
Here, it looks like Clinkle is trying to say this isn't illegal gambling because the person receiving the treat doesn't have to do anything of value to get it - it's the treat earner who made the seven purchases and other friends who like the Treat to 'boost' it. The hope, obviously, is that recipients will be obliged to pay it back (or forwards) by _social_ obligations, but those are conveniently off the books as far as the law is concerned. The whole thing is an elaborate way to run a numbers racket without technically running an illegal lottery.
So, good luck with that.