The term "Online Skill-Based Games" refers specifically to online skill games that are offered in a cash tournament model, in which players pay cash entry fees to play against other players in the hopes of winning cash or merchandise prizes.

Some of these games are directly head-to-head experiences (e.g. chess), and others are essentially single-player experiences where a player's score is compared against other players' scores to determine a winner or winners. This is compared to online gambling where consumers play against algorithm based casino type games.

Skill gaming is legal in most jurisdictions within North America, Europe and Asia, and is accepted by major banks and processors including MC, Visa, Diners, Amex and third party providers as PayPal, NETeller. While publicly traded companies in the skill gaming arena are processing through major US financial institutions, online casino processing is defined as illegal in North America. As well, online casinos are experiencing up to an 80% decline rate on North American credit card processing whereas the same processors are competing for the skill gaming business; even offering rates of less than 2.5% per transaction. Offshore casinos can expect anywhere from 6% to 10% (and up) from offshore based processors such as FirePay.

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Online skill gaming has been defined as a sector of the video game industry, which has been called "recession proof" by some Wall Street analysts and the video game industry is now larger than the entire film industry and is growing at a rate of between 10 to 20% per year. Combined with the emergence of consol-based gaming such as XBox and PS2 and the growing popularity of wireless games, this industry is expected to be the dominant form of entertainment on the Internet by 2010.