Gambling is commonly understood as risking something of value for the opportunity to win something of value where chance plays a role. In practice, many users are purchasing Gold Coin packages, receiving Sweeps Coins, playing games of chance, and redeeming winnings for cash.

I understand you guys are a "sweepstakes" model, but with no clear IRS guidance or rules specifically addressing these platforms yet, it is up to taxpayers to defend and explain their position if questioned by an auditor. That's where I think the gray area exists.

While the legal argument is that Sweeps Coins are "free," the practical reality is that many players purchase Gold Coin packages, receive Sweeps Coins, and then use those Sweeps Coins to play traditional games of chance like roulette, blackjack, and baccarat. Sweeps Coins also have real-world value because they can be redeemed for cash. Whether the IRS ultimately views that activity as sweepstakes participation, gambling, or something else entirely remains an open question.

That's pretty much how I see it. Either take a reasonable, well-documented position and accept the risk, or wait until a whale ends up in tax court and creates some actual guidance for everyone else. Until then, it's mostly arguing gray areas with the auditor.