Competing in video games to win prize
26-1-2017 | IslamWeb
Question:
Assalaamu alaykum. What is the ruling on video game contests in which the winner gets a prize? No one has to pay any money to enter the contest, so it is not gambling. The people who enter the competition will either gain something or at least be safe and sound, and no one will lose anything.
Answer:
All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad, sallallahu ‘alayhi wa sallam, is His slave and Messenger.
The majority of scholars held that contests with a prize are impermissible - even if someone other than the contestants offered the prize money - except the contests mentioned in the religious text or what falls into their categories, which have been named in the hadeeth of the Prophet, sallallahu ‘alayhi wa sallam, "There should be no (money) prizes for competitions except in archery, camel-racing and horse-racing." [Abu Daawood and Ibn Hibbaan]
Hence, it is impermissible to compete for a prize in video games and the like, even if the prize giver is other than the competitors.
Dr. Khaalid Al-Muslih wrote in his dissertation Al-Hawaafith At-Tijaariyyah At-Tasweeqiyyah wa Ahkaamuha fi Al-Fiqh Al-Islaami (Commercial Marketing Incentives and their Rulings in Islamic Law):
"Regarding competition in lawful activities that do not fall in the category of those mentioned in the text (of the hadeeth), scholars held two different opinions regarding offering a prize for that kind of competitions:
The First: it is absolutely impermissible to offer prize money in such competitions. This is the view of the Hanafis, Maalikis, Shaafi‘is, Hanbalis, and Ibn Hazm from the Thaahiri school.
The Second: it is permissible to offer prize money for such competitions if the prize is offered by a non-competitor. This is reported as one of the views of the Maalikis in this regard."
Ibn ‘Uthaymeen 
said, "... However, if there is a third party offering a prize to the winner, I hope that there is no harm in that." [Liqaa' Al-Baab Al-Maftooh]
He also said:
"If someone from outside the contest offered a prize to the winner in the race, there is no harm in that, because the contestants are not harmed; they either win or remain safe (do not lose anything). However, do we say to the third party offering the prize that offering the prize is lawful or unlawful? The answer depends on the outcomes of the contest; if no unlawful outcome results from it, then it is permissible to offer the prize. If the outcome is unlawful, then it is impermissible to offer the prize." [Liqaa' Al-Baab Al-Maftooh]
Allah knows best.