Court Says It's Not Online Gambling If You Can Renege On A Bet

from the hello-loophole dept

Wed, Feb 11th 2009 3:25pm — Mike Masnick

The US has always had this odd hatred for online gambling -- but no state has been more aggressive about the issue than Washington state -- even to the point of threatening people with arrests for even talking about online gambling. So, you can imagine that the state didn't look too favorably on the launch of a person-to-person "wager" site called Betcha.com which claimed it had found a nice loophole that made it legal: you could renege on your bet. Yes, if you lost a wager, you could click a button saying "I refuse to pay." The catch, of course, was that the site had a rating system, and if you reneged, it was likely to harm your rating, and others might refuse to bet against you. Betcha claimed that the presence of the renege button meant that it wasn't actually gambling, because you never actually had to bet any money.

The state of Washington not only disagreed, it took a month or so until state authorities raided the company, arrested its founders and seized its computers. That seems pretty extreme for what does seem to be a rather open question in the law. And, in fact, a state appeals court found that the Betcha founder is right: the presence of the renege button means that the site is not a gambling site:

"Accordingly, there is nothing risked, which is the essence of both the common law and statutory definition of 'gambling.'"

Of course, that doesn't mean Betcha is coming back into existence. Since its founder (who has a law degree and had carefully researched gambling laws to make sure the loophole was legit) was arrested, thrown in jail, extradited to Louisiana, charged (in Louisiana) with gambling-related felonies finally forcing him to negotiate a plea bargain, dropping the charges if he agreed to certain conditions. With that experience in mind, restarting the site and risking it happening again just doesn't seem that appealing.

So, way to go Washington State -- you tossed a guy in jail for a completely legal web business.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: gambling, online gambling, renege, wagering, washington
Companies: betcha

33 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Joe Hunkins, 11 Feb 2009 @ 3:49pm

Betcha
I'll betcha $20 he'll be back....
[ link to this | view in chronology ]
- some other guy, 11 Feb 2009 @ 4:00pm
  
  Re: Betcha
  You're on. (I can always renege on it if I lose) :)
  [ link to this | view in chronology ]
Griffon, 11 Feb 2009 @ 4:00pm

be back with cash
Yeah, back with a lot of cash from freshly folded by the state of Washington in form of settlements for false arrest, imprisonment, destruction of property, willful harm yada yada. I certainly hope the days of out of control fascists in the government are drawing close, but that might to much to wish for.
[ link to this | view in chronology ]
- Anonymous Coward, 11 Feb 2009 @ 9:18pm
  
  Re: be back with cash
  I agree. Knowing how the legal system tends to work these days, if the dude has a law degree, he was probably just waiting for the final verdict before he let the lawsuits start rolling. If he's a really good lawyers, he'll likely even agree to have his settlement "reduced" in exchange for having his record expunged.
  [ link to this | view in chronology ]
Davis Freeberg, 11 Feb 2009 @ 4:22pm

Legalize it
If they legalized online gambling, you wouldn't have to worry about shady people welching on their bets. Hats off to him for finding the loophole, but why not legitimize the industry, put strong consumer fraud protections into place and then tax the profits instead of letting all that money flow into unregulated offshore businesses? Whether it's legal or not, a significant chunk of people are going to gamble no matter what. We can either turn our citizens into criminals for doing something that is allowed in some states but not others or we can use their behavior to help pay for schools, roads and social services that the rest of the population can enjoy.
[ link to this | view in chronology ]
- d. davis, 15 Aug 2010 @ 8:49pm
  
  Re: Legalize it
  Amen to that!
  [ link to this | view in chronology ]
Anonymous Coward, 11 Feb 2009 @ 4:32pm

Washington
Welcome to the greatest nanny-state in the nation. If it might be bad for the individual, those-who-know-best will take it away; either through outright legislation, or thinly-veiled attempts to socially engineer it out of existence.
[ link to this | view in chronology ]
- Steven, 11 Feb 2009 @ 5:35pm
  
  Re: Washington
  It's not about stopping gambling. It's about keeping the Indian reservation gambling a monopoly, and keeping that fat cash coming in from the tribes.
  
  The tribal casinos here in Washington are pretty close to what you'd see in my home town of Reno NV (not near what you'd see in Vegas though).
  [ link to this | view in chronology ]
  - Anonymous Coward, 11 Feb 2009 @ 10:39pm
    
    Re: Re: Washington
    Of course, it's not only the Indian casinos (many of which are larger than most Nevada casinos). It's the state's own lottery, which contributes over $100 million (net) into the state's coffers. And, did I mention horse-racing?
    [ link to this | view in chronology ]
Voice of Reason, 11 Feb 2009 @ 4:50pm

Cute
Yeah, he tried to be cute, didn't he?

Didn't work.
[ link to this | view in chronology ]
- Spectere, 11 Feb 2009 @ 7:09pm
  
  Re: Cute
  What he was doing was perfectly legal. It doesn't matter if he was trying to be "cute" or not.
  
  I don't know about you, but stories like this are scary as hell. They had no just cause for arresting him and they went ahead and did it anyway. That's not acceptable by any stretch of the imagination.
  [ link to this | view in chronology ]
- Dave, 12 Feb 2009 @ 6:43am
  
  Re: Cute
  I fully agree. Whether it was technically legal through exploiting a loophole it was clearly in violation of the spirit of the law.
  
  Now I don't necessarily agree that gambling should be illegal as long as the society is willing to help those who get addicted and lose everything (which in most cases the government is not) but I do agree that some guy using loopholes to get around the law is still a jerk.
  [ link to this | view in chronology ]
  - Anonymous Coward, 12 Feb 2009 @ 7:17am
    
    Re: Re: Cute
    I fully agree. Whether it was technically legal through exploiting a loophole it was clearly in violation of the spirit of the law.
    
    No, it was clearly a violation of neither the spirit nor the letter of the law. However, those who claim otherwise are clearly being dishonest.
    
    Now I don't necessarily agree that gambling should be illegal as long as the society is willing to help those who get addicted and lose everything...
    
    Just exactly how are you going to "lose everything" on a bet that you don't have to pay? Again, such a claim seems to be somewhat dishonest.
    [ link to this | view in chronology ]
  - Helter, 12 Feb 2009 @ 9:27pm
    
    Re: Re: Cute
    I hate the term "loophole".
    If the law says that gambling is illegal, and defines gambling as interactions that meet a set of criteria, then that is the law. Interactions that do not meet that criteria are not covered under law, and should be legal. It should not be the state's prerogative to harass you for their failure to craft laws that outlaw behavior that they feel to be undesirable.
    
    These issues would not be a problem if states did not constantly attempt to criminalize actions that their people want to engage in, that result in no victimization.
    [ link to this | view in chronology ]
Anonymous Coward, 11 Feb 2009 @ 5:09pm

The land of freedom and opportunity...

Muahahaha
[ link to this | view in chronology ]
Jesse, 11 Feb 2009 @ 5:16pm

I'm not understanding why he needed to make a plea bargain, if he didn't break the law? Isn't this false arrest? Why hasn't he made a lot of money on a false arrest lawsuit?
[ link to this | view in chronology ]
- Anonymous Coward, 12 Feb 2009 @ 7:16am
  
  Re:
  I'm not understanding why he needed to make a plea bargain, if he didn't break the law?
  
  You're right, you're not understanding the criminal justice system. Whether you are guilty or innocent often makes less difference than how much money you have. This guy probably didn't have enough money to fight. Without money you can either lay down and beg them not to hurt you too badly (plea bargain) or commit "suicide" by standing up and maintaining your innocence. Your choice. Is this a great country or what?
  [ link to this | view in chronology ]
ederd6048, 11 Feb 2009 @ 10:55pm

indian casinos
Why don't yall give the natine americans a break us the white man owes them a debt that can never b paid we stole their land then turned around & give it 2 the Darkies But the redman is getting back i token at a time and this white boy says about time they get something
[ link to this | view in chronology ]
pwb, 11 Feb 2009 @ 11:37pm

"there is nothing risked"

I'm surprised this obvious untruth made it into a court document.
[ link to this | view in chronology ]
Rob (profile), 12 Feb 2009 @ 12:54am

Washington State
I can not WAIT to leave this hell hole of a nanny state and start my own business only a few miles over the border. It'll be sweet throwing all this awesome taxed income to another government and watching Gregoire run up billions more in debt.

God, do I ever hate this state.
[ link to this | view in chronology ]
Tamara, 12 Feb 2009 @ 12:57am

Australia also has ridiculous on-line gambling laws. Sports betting before the event begins is the only legal online gambling allowed. Live sports betting (who'll win after the match starts, next person to ...), poker, etc. Australian owned sites are allowed to offer those services, but not to any Australian customers and the servers have to be based overseas. So that's jobs that go offshore. Also there is no way to stop overseas sites allowing Aussie customers. It's total bullshit.
[ link to this | view in chronology ]
matt, 12 Feb 2009 @ 7:20am

explanation
"So, way to go Washington State -- you tossed a guy in jail for a completely legal web business."

But you see, they don't LIKE it. And that means they can do pretty much whatever they want. We used to live in a nation of laws and now live in a nation chock full of laws to be manipulated against you in event of personal or moral disagreement.
[ link to this | view in chronology ]
Jo Alljackpots, 15 Apr 2009 @ 3:46am

gambling
Enter an online casino and play online slot machines with the look and feel of a Las Vegas casino. How long have you been looking for a reliable and safe casino? If you're like most people, then you probably did quite a bit of reading and searching on the web, trying to find not just the best online casino, but the perfect slots casino for you.
[ link to this | view in chronology ]
alex, 19 May 2009 @ 9:09pm

quesiton?
In google, i don't search safe casino
[ link to this | view in chronology ]
Anonymous Coward, 19 May 2009 @ 9:11pm

poker-du
Information about poker club in site.
[ link to this | view in chronology ]
Casino Junkie, 14 Jul 2009 @ 11:30pm

my opion is needed
No matter how the government will against on legalizing online casino still their are people who will push to make it legal. In some sense it can also help the economy of our nation because of the bigger taxes generated out from it. Let me draw an example. In Philippines they legalize PAGCOR it's a gambling company but then in return with that the PAGCOR contributed much on helping the economy of the nation because they also had some charity institutions that give assistance to those less fortunate people.
[ link to this | view in chronology ]
gamblig junkie, 5 Aug 2009 @ 8:43am

it might be bad for the individual
[ link to this | view in chronology ]
Jason Welsch, 7 Dec 2009 @ 6:35pm

That is strangely mean! What were they thinking? If I were the founder I'd sure them big time for jailing me and I'd collaborate with other sites outside the US like the Gamblux casino to put up another legit company.
[ link to this | view in chronology ]
Casino Fan (profile), 9 May 2010 @ 8:04am

Government
The legal system is a perfect tool for anyone, government or not, to harass someone you disagree with. It is especially pathetic when you run afoul of some government entity. They have unlimited money to pay lawyers to drive you down into the ground - not to mention the fact that they can toss you in jail.
[ link to this | view in chronology ]
Online Gambling, 19 Oct 2010 @ 7:09pm

Hire him instead
Why did the owner have to bargain when he did nothing illegal at all? The government could at least hire him for effectively discovering anti-online gambling law loopholes. He'll be the one to perfect each and every law. =))
[ link to this | view in chronology ]
Tobyka, 9 Dec 2010 @ 5:58pm

Gaming Club Casino - 30 Free Spins! No Deposit Needed! Visit: gamingclubfreespins.cjb.net !
[ link to this | view in chronology ]
situs resmi poker online, 10 Oct 2018 @ 5:01am

game poker online
nice for this article, very good
[ link to this | view in chronology ]
chippoker (profile), 10 Jan 2019 @ 12:38am

poker357
poker357 is one of the best online poker sites in Indonesia, with a variety of the best games. the game has 8 types of games in 1 account. The whole game does not use robots and guarantees a very fair game https://poker357.com/ .
[ link to this | view in chronology ]