I have a question about creating a business. Basically my concept is to create a tournament for a video game (requires skill cannot be won off of luck). Where each team pays an entrance fee, and there are cash prizes for winners and runners-up. People would sign up on the website and compete against each other to win. The business would profit by subtracting the prize value from the revenue received from the players in the tournament.

Would this be permissible? If not, what would make it halal?

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So it’s a registration fee that will be used to run the tournament. This would be no different to how sporting leagues are run.
However it is important for me to point out. Working isn’t only for making money, as this guaranteed from Allah. Working is to provide people with a good or service; something that is beneficial to humanity. A gaming tournament is hardly that, this only will encourage people to remain slothful in acquiring their sustenance. That being said, I don’t see where it is forbidden.