<human>: Location: Kansas, USA

I work as a web developer for a small firm in Kansas. We recently developed a site for a client which had the following characteristics:

- Fantasy sports gaming site
- Organizations, targeted at but explicitly not limited to non-profits, create an account on the site. They create fantasy sports tournaments, and charge users a "donation" to play in the fantasy sports game
- The entirety of the "donation" does not go to the organization. The majority of it does, but a portion goes to the owners of the site who are a for-profit company.
- Users who sign up and play in these fantasy sports tournaments have the chance to win a prize, which include both items and cash, if their fantasy sports team performs well.
- The game functions like any other fantasy sports league: users sign up, pay a "donation", and choose from a pool of players to create their own fantasy team.
- Apparently, this client has never consulted with a lawyer about this business. 
- Apparently, the business I work for also never consulted with a lawyer about this client.
- The servers this is hosted on are shared servers, and in our host's acceptable use policy it says the following: "Conducting any gambling activity in violation of any required licenses, codes of practice, or necessary technical standards required under the laws or regulations of any jurisdiction in which your site is hosted or accessed; or
Any action that is otherwise illegal or solicits conduct that is illegal under laws applicable to you or to us"

I've been thinking all along that this is illegal online gambling, but I've had multiple people tell me it's fine because the money from "donations" is mostly going towards these organizations which are mostly charities and that it exists in a "gray area".

I've been warning other people in our company that we need to protect ourselves because our host could just decide to shut down our whole hosting account if this client gets into legal trouble as we'd be in violation of the AUP. [Fantasy sports games have even been getting some heat from the KS Gaming Commission lately](

So,

Can you succinctly summarize the text in 1-3 sentences?
<bot>: is this online gambling? Does it matter that they choose to call it "donations"? If we're in jeopardy here, what can I tell my boss to convince him that we need to lawyer up?