by Hillary LaClair, Senior Editor
February 12, 2009
The online casino industry as well as Nick Jenkins, who founded the person to person internet betting exchange Betcha.com, celebrated a victory on Tuesday when a Washington appeals court ruled that the website was not a gambling operation. Betcha management had never classified the website as a gambling facility, as it does not require its players to pay any losses incurred. A lower court did not agree, however, having ruled to the contrary of Tuesday’s victory in 2007.
Judge C.C. Bridgewater elaborated on the 2-1 majority decision, saying, “Because Betcha.com customers agreed in advance that participants were not required to pay their losses, Betcha.com was not engaged in ‘gambling’ as defined in the Gambling Act. Also, the listing of bets for a fee was not ‘bookmaking’ because bookmaking rests upon Betcha.com engaging in ‘gambling.’”
Since the implementation of the Unlawful Internet Gambling Enforcement Act, the online casino industry has had a number of websites looking to provide U.S. citizens with a loophole in order to legally accept wagers from them. In addition the Betcha, there have been such strategies as providing gamblers the funds with which to gamble, omitting the element of luck from the game and even charging a monthly subscription fee in place of a wagering system.
Bridgewater had also written in a statement that since the website required that its users “acknowledge and agree” that all wagers taken were “non-binding,” betters would not be under the impression that they would “receive something of value” when winning.
“Accordingly, there is nothing risked, which is the essence of both the common law and statutory definition of ‘gambling,’” the Judge continued.
Buffalo State busness law professor, Joe Kelly, says he was not at all surprised by the ruling, and its interpretation of what U.S. law considers gambling. “Criminal law must be strictly interpreted,” he said. “Any ambiguity is resolved in favor of the accused.”
In the 2-1 vote, both Judge Bridgewater and Judge David Armstrong ruled for the majority opinion, while Judge Elaine Houghton expressed her disapproval in writing. Some were taken aback by her dissent, as it seemed that she might favor the majority ruling and agrees with the basic premise.
“I respectfully dissent from my colleagues’ decision that allows Betcha.com to operate as it intends. And although, in my usual judicial course, I follow the majority’s cited statutory construction principles, I cannot do so here,” she writes. “Certainly the legislature did not intend that Betcha.com, while running its operation on foreign-based servers, could provide an unregulated platform for internet wagering that undoubtedly will result in unpaid wagers being collected through unlawful means. Most certainly this is not the result the legislature intended when it set forth its strong declaration of public policy against unregulated gambling. Thus, I dissent.”
Jenkins, along with Josie M. Imlay and Peter M. Abrahamsen, both employees at Betcha.com, were arrested and charged with violation of internet gambling laws in Louisiana after a state trooper accepted four bets under permission of the Washington State Gambling Commission. Jenkins served four days in a jail cell, until he was released and his case was dropped because he had complied with a set of conditions.
Jenkins had launched Betcha.com in June of 2007, calling it the “world’s first honor-based betting exchange.” It operates as a strictly person to person betting platform, and while users are to provide a credit card upon registration, they are not obligated to pay when they lose.
“We hope they will, of course,” reads a segment in the website’s Terms of Service. “Not because they have to, but because they should. In any case, bets made on Betcha carry no term, express or implied that winning bettors will be paid when they win.”
The website generated a revenue by placing a fee on every wager made, based on the amount that was wagered. Jenkins argued in court that because the company did not actually accept real money bets and that the bets were “non-binding,” it was legal to operate the gambling website in the U.S.
“That the criminal element can get involved in something like Betcha.com is a bit bizarre,” said Kelly.
Betcha.com will continue to operate, after having been shut down in July of 2007 – one month after opening its doors. It accepts virtually any wager from its users, ranging from sports and politics to weather and television shows. Betcha.com is not yet back up and operational, and it is uncertain when and if Jenkins will reopen his doors to the U.S. gaming public.