Hmm, from some brief research it does seem a bit of a gray area.
I guess the part that makes me think it would be OK would be the lack of "consideration" involved in playing (You're not required to pay or buy anything to play and there's no potential to lose money).
"For example, if the consideration component is eliminated and no fee, buy-in or other money is required or solicited from the participants in a poker tournament, then prizes may be awarded to the player(s) who perform well in the tournament."
IANAL so take any of this with a salt mine worth of salt :)
I guess the part that makes me think it would be OK would be the lack of "consideration" involved in playing (You're not required to pay or buy anything to play and there's no potential to lose money).
Just for reference: http://www.ago.state.co.us/FAQ/illegal_gambling_FAQ.cfm.html
"For example, if the consideration component is eliminated and no fee, buy-in or other money is required or solicited from the participants in a poker tournament, then prizes may be awarded to the player(s) who perform well in the tournament."
IANAL so take any of this with a salt mine worth of salt :)