Betcha Loses Its Big Bet: Court Now Says It's Illegal Gambling

from the betcha-knew-that dept

Tue, Sep 7th 2010 6:08pm — Mike Masnick

Back in 2007, we wrote about a startup that was trying to sneak its way through anti-online gambling laws by trying to squeeze through a loophole. The site, called Betcha, would let people bet each other on various things, but which let bettors renege on any bet if they lost. Of course, doing so would give you negative feedback on your profile. However, the site argued that because anyone could bail out of a bet, it wasn't illegal gambling. Authorities in Washington State (who have one of the strictest anti-online gambling laws around) disagreed. A district court said the site was illegal... but an appeals court reversed, saying that the presence of the renege button mean there was "nothing risked" and thus, it did not meet the definition of gambling.

Like the ups-and-downs of gambling, however, the next roll of the dice hasn't been kind to Betcha. Eric Goldman is reporting that the state Supreme Court has reversed again and found the site guilty of illegal gambling by a unanimous 9-0 vote:

The court's opinion makes it clear that expansive anti-gambling laws leave almost no room for entrepreneurial yet legal Internet gambling enterprises. Here, Betcha is tripped up by the definition of "bookmaking," defined as "accepting bets, upon the outcome of future contingent events, as a business or in which the bettor is charged a fee or "vigorish" for the opportunity to place a bet." This strikes at Betcha's model of charging the parties to communicate with each other regarding betting. The court is not swayed by Betcha's formalist argument that because the loser could renege on the bet, the wager did not meet the statutory definitions for gambling. The court says the bookmaking definition applies whether the bets are made for money or not.

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Filed Under: betcha, gambling

15 Comments

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Anonymous Coward, 7 Sep 2010 @ 7:06pm

Awesome!
Yeah! I bet a ton of money on Betcha losing their appeal. Oh wait...damn.
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Christopher (profile), 7 Sep 2010 @ 7:11pm

Betcha should have argued that Congress and the federal government had NO RIGHT to make laws like this just because they were worried about 'not getting their fair share in taxes'.

We do NOT just make a business illegal because of that (including the drug trade). Unfortunately, the courts have punked out every single time this has come up in front of them, and the Supreme Court keeps on refusing to hear the cases.
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Anonymous Coward, 7 Sep 2010 @ 7:20pm

Re:
This was the State government though.
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Anonymous Coward, 7 Sep 2010 @ 7:20pm

Maybe they should have folded sooner. Or maybe they could have done a better job bluffing by raising and taking it to the U.S. supreme court under a constitutional measure.
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Lawrence D'Oliveiro, 7 Sep 2010 @ 7:33pm

How About Calling It A “Futures Market”?
Trade shares based on predictions of some future outcome; when the event happens, the wrong predictions become worthless, while the right one pays out.
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zegota (profile), 7 Sep 2010 @ 7:53pm

Re:
You can debate if it's moral or pragmatic, but states have every right to make laws like this.
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average_joe (profile), 7 Sep 2010 @ 8:18pm

Apparently the court didn't have any trouble reading through the defendant's BS claim of innocence. Good on 'em. Another idiot who thought he found a loophole goes down.
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inc (profile), 7 Sep 2010 @ 8:33pm

Funny how when the state does it, it's s good thing.

http://www.walottery.com/
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Sean T Henry (profile), 7 Sep 2010 @ 9:06pm

Online gambling is not illegal it just depends on what you are betting on like if you bet on GOOG at the beginning you did well.

Just set the sight up as an investment in futures where you can sell the futures at any time. I will but the Bengals going to the playoffs so the more games they win the more I can resell my future but if they keep loosing then the selling price drops. Just like when buying on margin.
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Anonymous Coward, 7 Sep 2010 @ 9:09pm

So instead of taking a fee up front he takes a fee when people pay out? Am I the only one who sees a new loophole?

Also the wording of the law is so crazy vague that a lot of normal internet business could also be marked as a gambling site. Dating sites are a crap shoot for instance but the site owner takes a cut before you can write any messages.
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Jesse, 7 Sep 2010 @ 9:36pm

They should charge users to have the option to renege, or even just when they reneged on the bet. Better yet, they could work on money for advertising. As long as they don't charge a fee to place the bet, it's all good.

Also, it looks like they just can't charge on the opportunity to place the bet...so does that mean they can legally take a cut of the winnings? So long as placing the bet is free?
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NAMELESS ONE, 7 Sep 2010 @ 9:44pm

so games with fake currency are illegal now?
if i make a website with a game that has you use currency of any kind is this gambling ? After all your in effect rolling the dice with virtual whatever to affect an outcome even if dice or cards are not sued and it was in fact a dungeons and dragons game.....

ya see the flaw here....if no money really changes hands and its say an investment game where you invest cash to pass time , they are in affect saying this is illegal cause your betting on an outcome because of your fake currency.

tired but someone will get the idea of the serious flaw in logic by not one judge not 3 or 5 BUT buy all 9.

it would be one thing to just say that they are trying to loophole it and use law to close the loophole, but to word it and the decision in a fashion that could potentially affect non gambling sites is to say the least disheartening.
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thornintheside, 8 Sep 2010 @ 3:59am

Is investing in stocks not gambling?
Can someone please explain to me the difference between gambling and investing in the stock market. Oh yes, the government get lots of $ from Wall Street, so that type of gambling is OK for them. America's shell game is about to come to an end anyway, so who cares. America's ratio of debt to GDP is over 95%, say hello to your new Chinese masters.
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Sean T Henry (profile), 8 Sep 2010 @ 6:36am

Re: Is investing in stocks not gambling?
regulation
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btr1701 (profile), 8 Sep 2010 @ 3:30pm

Sod Off
What business is it of the government whether I gamble my own money in the first place?
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