This week, the state House of Representatives is considering a bill that would broaden the legal definition of gambling to make the company I founded, Seattle-based Betcha.com, illegal. Supported by the Washington State Gambling Commission and Sen. Margarita Prentice, SB 6103 flew through the state Senate in less than two weeks. The House of Representatives can put a stop to this latest chapter in the state government’s persecution of its own. It should.

Betcha’s story to date would bring a smile to the face of any Third World despot. A few years ago I came up with the idea of a social betting network – think Ebay meets Facebook in Las Vegas. All wagering was honor-based; bettors were not obligated to pay their losses, but if they didn’t they risked receiving negative feedback. I researched the law for months, raised capital, opened an office, and hired employees to develop a website. Thirteen days after we launched, the WSGC told me to shut down or else. When I sued for the right to operate, the WSGC enlisted authorities in Louisiana to teach me a lesson in who’s boss. Two months later, Governor Gregoire, who yesterday wagered very publicly on the Gonzaga-North Carolina game, extradited me and two Betcha employees to Louisiana as felony fugitives, even though she knew or should have known we’d never been to the Bayou State and had a lawsuit pending over the legality of the very action for which we were being extradited. Three trips to jail and sixteen months later, a state Court of Appeals ruled I was right all along; that there was “no logical basis” to believe Betcha bettors were gambling; that the WSGC’s position was contradicted by the “plain language” of the Gambling Act and its own literature; and that Betcha lacked “the essence” of gambling. The WSGC is appealing its loss to the state supreme court.

SB 6103 pushes an already gruesome story into Pulp Fiction territory, and for no reason. Betcha’s upside is extreme. According to a 1999 estimate, Americans casually wager roughly $400 billion annually amongst themselves on sports alone. Betcha would tap into that money pot as well as the billions now being bet on pop culture staples like American Idol and the Academy Awards. People will continue to wager; all 6103 would do is keep Washingtonians from capitalizing on it. No doubt some enterprising entrepreneur in a free state will steal the idea, thanking the Washington legislature all the way to NASDAQ. The tax dollars that would flow into Washington’s treasury will flow to some other state.

There’s no need for SB 6103, either. Given Betcha’s story to date, no entrepreneur considering a business that even rhymes with online gambling would stay here. Tribal interests don’t need protecting: Betcha offers none of the games their casinos offer, and since our focus is global, the customer overlap is minimal. SB 6103 is not needed to prevent an increase in bookmaking: as a person-to-person betting exchange, Betcha cuts out the bookmaker. Because Betcha’s customers may opt out of their bets (that’s the “honor-based” part), they won’t lose the rent money. And judging by the public support for the 2006 law that turned online gamblers into Class C felons – that is, none (1I2I3) – the people of Washington wouldn’t support SB 6103 if they knew about it.

If nothing else, the legislature should back off 6103 to keep from making dubious history. To my knowledge, no state legislature has ever changed the law specifically to put one of its own out of business, at least not without the urging of either the competition or the public. Lawmakers can at least wait until the judicial process runs its course. Governor Gregoire couldn’t wait. The legislature need not repeat her mistake.

Previously:

What the Washington Court of Appeals ruled:

Because losers always had the right to click a button marked “I refuse to pay,” there was no guarantee that any money would actually change hands, the court said. “Accordingly, there is nothing risked, which is the essence of both the common law and statutory definition of ‘gambling,’ ” wrote Judge C.C. Bridgewater for the Court of Appeals Division II.

PDF file of the court’s decision.

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Midas Oracle archives on Betcha

Background on the Betcha case

Nick Jenkins’ LinkedIn profile

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The copy of the original Betcha website:

Betcha.com

Betcha.com is the world’s first honor-based, person-to-person betting platform. We connect people who like to bet. Betcha works like an auction site, minus the hassles and inventory. As a Betcha bettor, you: (a) offer and accept bet propositions on anything that comes to mind; (b) negotiate and counteroffer odds with would-be betting partners; then (c) settle your bets when the time comes — shipping, handling, and trip to the post office not required. For bettors who prefer to just place their bets and be done with it, we offer Pools. As an open, honor-based betting platform, Betcha is like an auction site, Las Vegas, a marketplace of ideas, and The Golden Rule — all rolled into one. [1]

Betting on Betcha offers several advantages over betting with a bookie or on an illegal offshore gambling site — not the least of which is that you aren’t limited to our odds, spreads and subject matters. And in contrast to gambling venues, we like to think Betcha does our bettors (and society) some good. About the only way Betcha resembles gambling venues is its requirement that bettors must fund their accounts to obtain betting privileges. [2]

Our founder [Nick Jenkins, a former lawyer], a non-gambler but eager social bettor (click here to view his blog, here to view bets he’s offering), conceived of Betcha as a place to meet other people who like a friendly wager (in his case, mostly wagers on the PGA Tour). Betcha is owned by Internet Community & Entertainment Corp., a privately-held corporation. We are located in Seattle, Washington and began matching bettors in June 2007.

[1] “The Golden Rule” refers to the idea that you should do unto others as you’d have them do unto you. It is the fundamental principle behind most of the world’s major religions. And while we aren’t here to push religion on anyone, doing well by others is a principle we’d like to see more of. (Read more about our social mission.)

[2] This requirement guarantees that your betting opponents actually have the money they bet. It also protects you from getting into financial trouble: unlike betting with your local bookmaker, you can never bet more than you have.

Betcha FAQ:

[...] It’s not run by shady characters in the Caribbean. Most online betting sites are run by expats hanging out in the Caribbean. Betcha’s location — out in the open, Seattle, Washington. It’s legal. Because betting on Betcha operates on the honor system, it does not meet the legal definition of gambling. No gambling — no orange jump suits.

Overview:

There are two types of bets on the Betcha Platform: person-to-person bets — the ones where bettors bet at arms length against other bettors — and Pools, in which one host(ess) lets bettors take any of a number of positions on a given proposition.

Is this legal?

Yes. There are at least five reasons why the Betcha Platform falls outside legal [prohibitions] against gambling. While most of them are technical legalese, one isn’t — it isn’t “gambling.” Although there are a few variations in [syntax] depending on the jurisdiction, the legal (and common sense) definition of “gambling,” at bottom, requires that you (1) risk (2) something of value (3) on the result of a future event beyond your control. Betting that doesn’t have all of these elements may be betting, but it isn’t “gambling” and, therefore, isn’t illegal.

You are already familiar with some betting that isn’t gambling. For example, if you run a race against a friend for $100, you control the outcome, so while you’re betting, you aren’t gambling. (Element [3] is not met.) When you make a handshake gentlemen’s bet for no money on a football game, you are betting, but not gambling, because nothing of value is at stake. (Element [2] is not met.)

Bets on Betcha are a third type. Unlike any other betting venue on the planet, Betcha bettors always retain the right to withdraw their bets and, for up to three days, not pay their losses. (Try that at a casino.) Therefore, they are not “risking” anything. No “risk” means no “gamble.” (This last reason, we think, is why mayors and governors can bet with impunity on the outcomes of Super Bowls and World Series and not get themselves arrested.)

Please note: This is our opinion only. Although (1) we spent thousands of man hours analyzing this and point and related ones, (2) our analysis encompassed U.S. federal law and the law of all 50 states, and (3) we are betting our very freedom that our analysis is spot on, it isn’t as though some Almighty Power came down from the heavens and deemed us “legal.” That’s not the way the law works.

Will bettors/speculators abide by an honor system?

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Nick Jenkins sends me the link to his earlier blog post…

[...] This one — an objection to the Betcha Platform from my oldest, dearest friend. Let’s call him Cole Sparrow. (Name changed to protect the innocent.) Mr. Sparrow, not an investor, informed me over a Christmas family dinner that no one will use Betcha because they’ll never know for sure whether their betting opponent(s) will welch on them.

Three problems. The first is that, as David Bunnell pointed out in his excellent “The eBay Phenomenon” (2000), they said the same thing about eBay — and then some:

The odds against the success of this venture would have seemed substantial back in 1995 ad 1996. The market for the sale of goods over the Internet, particularly through person-to-person trading, was new, and did not enjoy widespread acceptance. Buying something of [substantial] value, often sight unseen, from a total stranger thousands of miles away did not fall into the category of [natural] acts. Further, the growth of Internet use would have to continue if the auction market hoped to gain real size. And there was no assurance that it would. (Emphasis mine.)

Suffice it to say, these concerns of 1995-96 are concerns no more. Moreover, the p2p trading market caught on despite the fact that innocent parties in fraudulent trades usually end up out something real — their money. In the case of p2p betting, a stiffed bettor loses only something he never had in the first place — the win on his wager.

Second, most customers think there’s more to life than metaphysical certainty of, in effect, order fulfillment. For example, despite the fact that they may get stiffed by sellers, people still use eBay. Reason: it’s fun. If we do it right, Betcha will be fun, too. (Indeed, we view “fun” as our top selling point.)

Third: there are many places on the Betcha Platform where bettors can be assured they’ll get paid on a win. They’re called “Pools.”

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That’s what the Washington Court of Appeals has just ruled:

Because losers always had the right to click a button marked “I refuse to pay,” there was no guarantee that any money would actually change hands, the court said. “Accordingly, there is nothing risked, which is the essence of both the common law and statutory definition of ‘gambling,’ ” wrote Judge C.C. Bridgewater for the Court of Appeals Division II.

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Comments on TechDirt.

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PDF file of the court’s decision.

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Legal analysis.

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Thanks to Deep Throat for the tip.

And best wishes to Nick Jenkins. We wish we could re-connect with him.

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APPENDIX:

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Midas Oracle archives on Betcha

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Background on the Betcha case

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Nick Jenkins’ LinkedIn profile

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An old news story about the Betcha case:

Seattle Pi:

Washington State Gambling Commission investigators seized computers from a new Seattle-based Internet-betting site Monday, claiming the business violated the state’s 2006 online gambling ban — a contention the site’s founder strongly disputes. [...] “This is ridiculous,” Jenkins said. “I’m going to fight it. I don’t like the heavy-handed state coming down on entrepreneurs.” [...] “This is an honor-based betting platform,” he said. “How can you be gambling under a legal definition if you don’t have to pay when you lose?” [...] After assembling a team of investors and putting his own money on the line, he did a soft launch of the site three weeks ago, “to work on the bugs.” Soon after, he was contacted by the state. Two weeks ago, he explained his legal rationale to commission attorneys. On Friday, the Gambling Commission summoned Jenkins to Lacey to talk about his Web site. The meeting was quick. “They said shut it down or else,” Jenkins said. “I told them the law doesn’t apply to us. They said the law is a matter of interpretation.” The same day, Jenkins filed his lawsuit seeking to stop the state from applying the Internet gambling law to Betcha.com. The search warrant came three days after Jenkins and the state failed to reach agreement on the site’s legal status. He said the commission has lost perspective on which laws it should enforce and upon whom. “When you are a hammer, I guess everything looks like a nail,” he said.

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A 2007-circa legal analysis:

Law professor Tom W. Bell on Betcha.com.

Betcha.com recently began offering a U.S.-based, P2P, honor-based betting service. Its FAQ claims that Betcha.com avoids the reach of domestic state and federal anti-gambling laws because, “Unlike any other betting venue on the planet, Betcha bettors always retain the right to withdraw their bets . . . . Therefore, they are not ‘risking’ anything. No ‘risk;’ means no ‘gamble.’” Will Betcha’com’s hack of anti-internet gaming laws work?

Betcha.com has given that question a lot of thought. Its FAQ explains “(1) we spent thousands of man hours analyzing this and point and related ones, (2) our analysis encompassed U.S. federal law and the law of all 50 states, and (3) we are betting our very freedom that our analysis is spot on . . . .” As Betcha.com’s management realizes, however, even that effort cannot guarantee certainty; the quoted passage continues “. . . . [but] it isn’t as though some Almighty Power came down from the heavens and deemed us ‘legal.’ That’s not the way the law works.” (I have to think that Betcha.com’s founder, Nick Jenkins, wrote that bit. He describes himself as a “journeyman lawyer,” after all.)

Query whether Betcha.com can avoid the fate of the P2P betting service, BetBug.com, the owner of which at one time touted it as “the only legal way to offer online sports betting in the US.” Now, of course, BetBug has gone on hiatus, explaining that “[w]hile we continue to believe that BetBug’s true peer-to-peer software does abide by all major Federal gaming laws in the United States, the current legal environment seriously deters our chances of success.”

Betcha.com would doubtless argue that its honor-based payment system distinguishes it from BetBug.com. “If you don’t absolutely have to pay,” Betcha.com would explain, “it’s not gambling.” Note, however, that to say you don’t “absolutely have to pay” on a losing bet is not to say that you would risk nothing by so doing. To the contrary, you would risk seriously hurting the “Honor Rating” that Betcha.com assigns its users.

As Betcha.com’s FAQ explains, “A person’s Honor Rating is a measure of his trustworthiness on the Betcha Platform. Think of it as akin to a cross between a credit rating and a reputation score.” We might likewise analogize it to commercial goodwill—an asset that, while intangible, can be worth quite a lot. Someone with a poor Honor Rating on Betcha.com would, like someone with a low reputation score on eBay, effectively end up out of business.

The chink in Betcha.com’s legal armor thus lies in how authorities regard the Honor Rating. If they think it constitutes an intangible asset, one lost by customers who don’t pay off their bets, then Betcha.com might lose its gamble against the law. I’d regret that, naturally; we all lose when the law prevents us from peacefully disposing of our property as we alone see fit. But I have to say that, were I betting on legal hacks, I’d favor BetZip.com’s over Betcha.com’s.

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The copy of the original Betcha website:

Betcha.com

Betcha.com is the world’s first honor-based, person-to-person betting platform. We connect people who like to bet. Betcha works like an auction site, minus the hassles and inventory. As a Betcha bettor, you: (a) offer and accept bet propositions on anything that comes to mind; (b) negotiate and counteroffer odds with would-be betting partners; then (c) settle your bets when the time comes — shipping, handling, and trip to the post office not required. For bettors who prefer to just place their bets and be done with it, we offer Pools. As an open, honor-based betting platform, Betcha is like an auction site, Las Vegas, a marketplace of ideas, and The Golden Rule — all rolled into one. [1]

Betting on Betcha offers several advantages over betting with a bookie or on an illegal offshore gambling site — not the least of which is that you aren’t limited to our odds, spreads and subject matters. And in contrast to gambling venues, we like to think Betcha does our bettors (and society) some good. About the only way Betcha resembles gambling venues is its requirement that bettors must fund their accounts to obtain betting privileges. [2]

Our founder [Nick Jenkins, a former lawyer], a non-gambler but eager social bettor (click here to view his blog, here to view bets he’s offering), conceived of Betcha as a place to meet other people who like a friendly wager (in his case, mostly wagers on the PGA Tour). Betcha is owned by Internet Community & Entertainment Corp., a privately-held corporation. We are located in Seattle, Washington and began matching bettors in June 2007.

[1] “The Golden Rule” refers to the idea that you should do unto others as you’d have them do unto you. It is the fundamental principle behind most of the world’s major religions. And while we aren’t here to push religion on anyone, doing well by others is a principle we’d like to see more of. (Read more about our social mission.)

[2] This requirement guarantees that your betting opponents actually have the money they bet. It also protects you from getting into financial trouble: unlike betting with your local bookmaker, you can never bet more than you have.

Betcha FAQ:

[...] It’s not run by shady characters in the Caribbean. Most online betting sites are run by expats hanging out in the Caribbean. Betcha’s location — out in the open, Seattle, Washington. It’s legal. Because betting on Betcha operates on the honor system, it does not meet the legal definition of gambling. No gambling — no orange jump suits.

Overview:

There are two types of bets on the Betcha Platform: person-to-person bets — the ones where bettors bet at arms length against other bettors — and Pools, in which one host(ess) lets bettors take any of a number of positions on a given proposition.

Is this legal?

Yes. There are at least five reasons why the Betcha Platform falls outside legal [prohibitions] against gambling. While most of them are technical legalese, one isn’t — it isn’t “gambling.” Although there are a few variations in [syntax] depending on the jurisdiction, the legal (and common sense) definition of “gambling,” at bottom, requires that you (1) risk (2) something of value (3) on the result of a future event beyond your control. Betting that doesn’t have all of these elements may be betting, but it isn’t “gambling” and, therefore, isn’t illegal.

You are already familiar with some betting that isn’t gambling. For example, if you run a race against a friend for $100, you control the outcome, so while you’re betting, you aren’t gambling. (Element [3] is not met.) When you make a handshake gentlemen’s bet for no money on a football game, you are betting, but not gambling, because nothing of value is at stake. (Element [2] is not met.)

Bets on Betcha are a third type. Unlike any other betting venue on the planet, Betcha bettors always retain the right to withdraw their bets and, for up to three days, not pay their losses. (Try that at a casino.) Therefore, they are not “risking” anything. No “risk” means no “gamble.” (This last reason, we think, is why mayors and governors can bet with impunity on the outcomes of Super Bowls and World Series and not get themselves arrested.)

Please note: This is our opinion only. Although (1) we spent thousands of man hours analyzing this and point and related ones, (2) our analysis encompassed U.S. federal law and the law of all 50 states, and (3) we are betting our very freedom that our analysis is spot on, it isn’t as though some Almighty Power came down from the heavens and deemed us “legal.” That’s not the way the law works.

Will bettors/speculators abide by an honor system?

-

UPDATE: Nick Jenkins sends me the link to his earlier blog post…

[...] This one — an objection to the Betcha Platform from my oldest, dearest friend. Let’s call him Cole Sparrow. (Name changed to protect the innocent.) Mr. Sparrow, not an investor, informed me over a Christmas family dinner that no one will use Betcha because they’ll never know for sure whether their betting opponent(s) will welch on them.

Three problems. The first is that, as David Bunnell pointed out in his excellent “The eBay Phenomenon” (2000), they said the same thing about eBay — and then some:

The odds against the success of this venture would have seemed substantial back in 1995 ad 1996. The market for the sale of goods over the Internet, particularly through person-to-person trading, was new, and did not enjoy widespread acceptance. Buying something of [substantial] value, often sight unseen, from a total stranger thousands of miles away did not fall into the category of [natural] acts. Further, the growth of Internet use would have to continue if the auction market hoped to gain real size. And there was no assurance that it would. (Emphasis mine.)

Suffice it to say, these concerns of 1995-96 are concerns no more. Moreover, the p2p trading market caught on despite the fact that innocent parties in fraudulent trades usually end up out something real — their money. In the case of p2p betting, a stiffed bettor loses only something he never had in the first place — the win on his wager.

Second, most customers think there’s more to life than metaphysical certainty of, in effect, order fulfillment. For example, despite the fact that they may get stiffed by sellers, people still use eBay. Reason: it’s fun. If we do it right, Betcha will be fun, too. (Indeed, we view “fun” as our top selling point.)

Third: there are many places on the Betcha Platform where bettors can be assured they’ll get paid on a win. They’re called “Pools.”

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Last month, after fairly regular updates to this Nick Knacks blog, I pulled it altogether. My blogging was getting me into more trouble than any alleged gambling I was supposedly encouraging. I was thrown in jail on $50,000 bail for writing about a hypothetical drive through Oregon, and authorities in Louisiana are none too pleased about a certain word I used in a past entry.

The blog is officially back.

I figure I can’t get into much more trouble than I’m already in, so might as well blog about it.

NOTE TO THE MIDAS ORACLE READERS: My “content deleted” blog post from August 2007 had to do with Nick Jenkins’ legal problem.

Photo Credit: Gilbert W. Arias / P-I

Betcha.com

Previously: Betcha’s Continuing Legal Struggles, Updated

The article discloses that “Louisiana authorities became involved in the prosecution after a state trooper there placed a small bet as part of a joint investigation into online gambling.”

A local betting Web site entrepreneur faces possible extradition to Louisiana after authorities there charged the Seattle man with running an illegal gambling operation.

Nick Jenkins said he is awaiting Gov. Chris Gregoire’s decision on whether or not to sign the extradition release requested by Louisiana prosecutors, who say Jenkins’ now-defunct site, Betcha.com, violated federal and state laws against Internet-based gambling.

Jenkins, whose Seattle-based startup was raided by Washington State Gambling Commission investigators in early July, said his attorneys are trying to negotiate with the Governor’s Office to delay any move until his Washington state case is heard.

A status hearing on the case and possible Louisiana charges is scheduled for Wednesday morning.

Betcha.com offered internet-enabled matching of honor-based betting. Because Betcha did not accept bets or enforce payoffs, they hoped to avoid entanglement with U.S. state and federal gambling restrictions.

An earlier update was posted on Midas Oracle in August, Betcha’s Continuing Legal Struggles, and that update includes links to earlier Betcha discussion’s here. But contrary to the claim in that update, you can no longer follow Betcha’s legal problems on the Betcha blog. All posts back to July 9, about the time the Washington State Gambling Commission intervened, have been removed and no more recent posts added. (In that July 9 post Jenkins cited approvingly the efforts of Renton, WA lawyer Lee Rousso to have the state’s internet gambling law declared unconstitutional. The PI news article mentions that Rousso is now Jenkin’s attorney.)

One of the things speculated upon in some now-missing Betcha blog posts was the source of the state of Louisiana’s interest in the small Seattle-based internet start up. The article discloses that “Louisiana authorities became involved in the prosecution after a state trooper there placed a small bet as part of a joint investigation into online gambling.”

NEXT: So, what has become Betcha’s Nick Jenkins?

Founder Nicolas Jenkins has the latest update: Now We Know Why That Search Warrant Came So Easy:

We just found out yesterday that — surprise! — the Commission wasn’t exactly forthcoming with the judge when it applied for the warrant. In its answer to our complaint, the Commission admitted that, when it made its application to Judge Paula Casey, it did not mention that we had filed suit against it the day before. In the answer they referred to it as an “alleged suit,” but it’s hard to see what was “alleged” about it. I was at the Commission’s office when our counsel handed Deputy Commissioner Sharon Reese a copy of the complaint, and we notified her again later in the day by e-mail that we had filed it.

Also recently recently posted: Now Louisiana Wants Us — For Seventy Cents.

Jenkins said that he has heard that the state of Louisiana has filed arrest warrants for him and two of his employees, and is seeking extradition to Louisiana. As of the posting the specific charges were unknown, but he speculates the allegations concern the state’s law against “gambling by computer.” Jenkins comments in response that the Louisiana law won’t apply to Betcha for the same reason that the Washington law doesn’t: the Betcha service doesn’t meet the legal requirements for gambling.

As it turns out, Jenkins reports that in the 30 days the betting platform was in operation, it took exactly 4 bets from a single Louisiana resident. Revenue after Betcha’s promotional credits? 70 cents.

The Louisiana Gambling by Computer law is available from the website of the state legislature.

UPDATES from the Betcha blog:

• The Betcha Three Is Out of Jail — Barely
• More Reason to Think the WSGC Is Behind Louisiana’s Push For the Betcha Three

PREVIOUSLY on Midas Oracle:

• Nick Jenkins welcomes you to Betcha.com, America’s first person-to-person betting site posted by Chris F. Masse.
• Meet the cocky Nick Jenkins of Betcha by Chris F. Masse.
• Betcha.com’s Hack of Anti-Internet Gaming Laws by Tom Bell.
• The BetZip/Betcha plot thickens by Chris F. Masse.
• IT DIDN’T TAKE LONG. NICK JENKINS’ BETCHA.COM GETS BUSTED THREE WEEKS AFTER LAUNCH by Chris F. Masse.
• Betcha.com: On Steamroller Justice and Reports of our Demise by Nick Jenkins.
• REPORTS OF THE BETCHA.COM DEMISE HAVE BEEN GREATLY EXAGGERATED cross posted from the Betcha blog.
• Justice, Washington State Gambling Commission Style by Nick Jenkins.

Some background: on July 6, Betcha.com filed a declaratory relief action against the Commission — we’re asking a court to rule on the legal propriety of the Betcha product. The Commission knew this, but raided our office on July 9, anyway. During the raid, Rick Herrington, the Commission’s Chief Enforcement Officer, told my wife he didn’t know what they’d do with the confiscated items, but didn’t rule out selling them. He also told her that a court’s subsequent decision didn’t matter because he’d already determined that Betcha was breaking the law.

He wasn’t kidding.

On Saturday, I received notice (postmarked July 13) that the Commission was instituting forfeiture proceedings against the property they confiscated in the office raid — several computers, a multi-function printer/fax machine, blank compact discs, computer programming manuals and the like. The Commission is going to sell our stuff.

This is all quite troubling. First, unless you count Mr. Herrington’s “they’re committing a crime” assertion, neither I nor Betcha has been charged with one. No indictment, no judge, no jury, nothing other than Mr. Herrington’s “they’re guilty.” Second, the Commission knows there’s a civil action pending against them. Rather than wait for the court’s determination, however, they’re proceeding unwavered. (If that’s not contempt for the judicial process, I don’t know what is.) Finally, there’s no nexus here between the alleged illegal activity and the property in question. As to the computers, the Commission knows or should know that we purchased them months before we launched Betcha.com, so there’s no chance they were purchased with proceeds from our alleged illegal activity. Nor does the Commission seem to care whether the property was used in the commission of a crime. It’s very difficult to argue, for example, that blank compact discs were used in illegal activity. They are, after all, blank.

(If you’re wondering whether there’s anything we can do about this, the answer is “no.” Under Washington law, the Commission has immunity from liability for any actions they take in furtherance of enforcing the law. That’s not their fault: the Washington legislature created a system that all but invited a Gestapo. The current crew just took the invite.)

This isn’t particularly surprising given the way they’ve played fast and loose with the law. At a hearing on Tuesday, for example, Assistant Attorney General Jerry Ackerman argued in open court that the law entitled the Commission to a liberal interpretation of its laws vis-a-vis Betcha. (The AG’s office does the Commission’s prosecutorial bidding.) Not quite. Insofar as the Commission is entitled to the liberal construction of anything, it is memorialized in RCW 9.46.010, which states that “(a)ll factors incident to the activities authorized in this chapter shall be closely controlled, and the provisions of this chapter shall be liberally construed to achieve such end.” The Commission, however, has argued to the roof tops that Betcha is not authorized by law. How that liberal construction provision applies to Betcha, then, is beyond me.

The Commission’s contempt for the judicial process is rivaled only by its disregard for constitutional rights of Washington citizens. Last year, they busted a Bellingham man for running a web site that included articles about online poker — First Amendment be damned. The bust was based on a law that has been criticized on First Amendment grounds (1|2) and is now being challenged in court on other constitutional grounds. In an article written about that law, Commission Director Rick Day is alleged to have suggested that people who are unsure about putting gambling-related information on their Web site should write the Commission to ask permission.

Citizens asking the government for permission to speak: is that how it’s supposed to work?

None of this compares to the contempt in which they’ve held the rights of Betcha’s investors and employees. They’ve disregarded the well-established constitutional principle that citizens are entitled to read criminal statutes narrowly so that they can determine what conduct is and is not permissible in favor of a principle that amounts to “whatever we say goes.” They’ve shown up at the homes of Betcha employees. They’ve, to be kind, played fast and loose with both the facts and the law. And now they’re going to sell the property they seized from our offices — all purchased with our investors’ cash — without even charging us with a crime!

All of this should be of great concern to Washington residents as well as anyone who has even the slightest fondness for liberty. If the Commission is entitled to a “whatever we say goes” approach — and at least one Commission officer, a foot soldier named Lee Streitz, has told me they are — then we truly have a roving Gestapo on our hands. The Commission makes the law, they adjudicate it, and they mete out the punishment. Today Betcha’s in its crosshairs. Tomorrow it could be anyone in Washington who plays online poker.

All this has we wondering: why bother even having gambling laws in Washington? If the Commission is free to make up its own definitions of the law, and act as though the court system does not exist, then why not just scrap existing law in favor of a simply worded new one: “Whatever the Commission says goes.”

The world has seen such regimes before. The most notorious one ended in 1945.

NOTE: This entry was originally posted on the Nick Knacks blog on Betcha.com. The author can be contacted at nickj at betcha.com.

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Yesterday, the Seattle Post-Intelligencer ran a story entitled “Betting web site’s computers seized.” Within hours, bloggers and other news outlets picked up the story and translated it into something akin to “Betcha shut down.”

Problem: the translation isn’t true. (WARNING: if tails of government bureaucrats running roughshod over its citizens turns your stomach, stop reading here.)

What’s Happening

What happened was this. Last Friday, Betcha’s attorneys and I met with the state Gambling Commission to address their concerns. They had us drive to their offices in Lacey, WA, about an hour from Betcha’s offices. The meeting lasted all of about five minutes, with it ending in a deputy commissioner handing us a pre-printed Cease and Desist order. I’ll attached a PDF copy of it later, but the gist of it was “shut down or else.” Why she couldn’t have told us this over the phone I am not sure — I suspect it had something to do with making my Friday afternoon a very expensive one. (Tax dollars hard at work.) At almost the exact same moment, Seattle lawyer Lee Rousso was, coincidentally, filing a lawsuit in state court asking the court to declare the state’s anti-Internet gambling ban unconstitutional. Although the law has previously been criticized on First Amendment grounds, and the Commission has taken positions in the past that appear pretty tough to square with any notion of free speech [], Mr. Rousso’s challenge is based on the Commerce Clause — that is, the law seeks to protect the in-state Native American casinos from out-of-state competition, and is therefore unconstitutional.

On Monday, I arrived to the offices early to unlock the doors so the raiders wouldn’t bust them down. (Not cheap to replace a busted down door.) A few hours later, Commission enforcers, indeed, showed up and took everything. Our books, our posters, my business cards — everything. (The warrant wasn’t limited – among other things, it included “stamps,” “printers,” “scanners,” “jewelry,” “envelopes”, “napkins”, “cardboard coasters” and “keys.”) No one from Betcha was there — not a good way to start the week, being on the business end of a roving commission. Ironically, my wife stopped by during the raid and chatted up Rick Herrington, the chief Raider (read: head of Commission enforcement.) When my wife asked Mr. Herrington whether they’d be selling our equipment on eBay, he shrugged his shoulders, as if to say “maybe yes, maybe no.” He then told her “Nick should have come to us first about this.” This exchange I find revealing: it seems that the Commission is more interested in ruining me and Betcha than anything else. Why? Because we’re near their turf.

As troubling was how the conversation continued. According to my wife, Mr. Herrington repeated several times “he’s breaking the law, he’s breaking the law.” When she told him that that was a judge’s decision, he replied “doesn’t matter, he’s still breaking the law.” (If that’s not guilty until proven innocent, I don’t know what is.)
On Tuesday, we petitioned a state court in Olympia to enjoin the Commission from this “seize and threaten now, ask questions later” approach. It almost never happens that a court will enjoin law enforcement from enforcing its version of the law, no matter how warped that version may be. This is an extraordinary remedy and we didn’t get it yesterday, although it wasn’t for lack of fantastic work by our lawyer.

The hearing wasn’t without substantial incident and irony. Apparently, although several people at both the Commission and Attorney General’s office had been served with our papers via fax, e-mail, and PDF, someone at the Commission did not receive an original copy of one of the documents, as required by the state service statute. As a result, we could not proceed until we could prove someone at the Commission had been served with an original copy of this document. We then had to race across Olympia to the Commission’s office in a nearby town to serve the Commissioner himself — personally. (Not a single person in the legal department was working on that glorious 94-degree Tuesday — go figure.) The irony — exactitude matters big time to the Commission when it comes to serving paperwork that they already had. But precision in reading a criminal statute that may result in me doing years in the Gray Bar Hotel, not to mention wiping out a fair bit of investor capital and no less than seven years of man work — nah.

What’s Next

In terms of next steps, the situation is this. We are pursuing an action to get a court to declare Betcha legal. If the law and/or the Constitution matters in Washington (open question, that), I am confident Betcha will prevail. In the meantime, however, we face a Cease and Desist Order from a Commission that appears hell-bent on destroying Betcha at all costs. We’re going to review it in detail later today and decide on a course of action. We may have to take the betting-for-money part of the site down until we get on the other side of the steamroller.

You can rest assured, however, about our resolve. The government bureaucracy has been running roughshod over the citizens of this country for far too long. [] Prosecutors make up facts, legislators make it a crime to play poker in your own home, bureaucrats rewrite the laws, logic and the dictionary — and we’re all left at their mercy. The frog is boiling and the water’s getting hotter every day. I pledge to the friends and users of Betcha.com that I will do my part to turn the heat down. If that means rotting in jail, so be it.

The text above appeared on Nick Jenkins’ blog at Betcha.com. Visit the original blog post to see all the links inserted in his text, and which don’t appear above.

Previous: IT DIDN’T TAKE LONG. NICK JENKINS’ BETCHA.COM GETS BUSTED THREE WEEKS AFTER LAUNCH.

Problem: the translation isn’t true. (WARNING: if tails of government bureaucrats running roughshod over its citizens turns your stomach, stop reading here.)

What’s Happening
What happened was this. Last Friday, Betcha’s attorneys and I met with the state Gambling Commission to address their concerns. They had us drive to their offices in Lacey, WA, about an hour from Betcha’s offices. The meeting lasted all of about five minutes, with it ending in a deputy commissioner handing us a pre-printed Cease and Desist order. I’ll attached a PDF copy of it later, but the gist of it was “shut down or else.” Why she couldn’t have told us this over the phone I am not sure — I suspect it had something to do with making my Friday afternoon a very expensive one. (Tax dollars hard at work.) At almost the exact same moment, Seattle lawyer Lee Rousso was, coincidentally, filing a lawsuit in state court asking the court to declare the state’s anti-Internet gambling ban unconstitutional. Although the law has previously been criticized on First Amendment grounds [1|2], and the Commission has taken positions in the past that appear pretty tough to square with any notion of free speech (an example), Mr. Rousso’s challenge is based on the Commerce Clause — that is, the law seeks to protect the in-state Native American casinos from out-of-state competition, and is therefore unconstitutional.

On Monday, I arrived to the offices early to unlock the doors so the raiders wouldn’t bust them down. (Not cheap to replace a busted down door.) A few hours later, Commission enforcers, indeed, showed up and took everything. Our books, our posters, my business cards — everything. (The warrant wasn’t limited – among other things, it included “stamps,” “printers,” “scanners,” “jewelry,” “envelopes”, “napkins”, “cardboard coasters” and “keys.”) No one from Betcha was there — not a good way to start the week, being on the business end of a roving commission. Ironically, my wife stopped by during the raid and chatted up Rick Herrington, the chief Raider (read: head of Commission enforcement.) When my wife asked Mr. Herrington whether they’d be selling our equipment on eBay, he shrugged his shoulders, as if to say “maybe yes, maybe no.” He then told her “Nick should have come to us first about this.” This exchange I find revealing: it seems that the Commission is more interested in ruining me and Betcha than anything else. Why? Because we’re near their turf.

As troubling was how the conversation continued. According to my wife, Mr. Herrington repeated several times “he’s breaking the law, he’s breaking the law.” When she told him that that was a judge’s decision, he replied “doesn’t matter, he’s still breaking the law.” (If that’s not guilty until proven innocent, I don’t know what is.)

On Tuesday, we petitioned a state court in Olympia to enjoin the Commission from this “seize and threaten now, ask questions later” approach. It almost never happens that a court will enjoin law enforcement from enforcing its version of the law, no matter how warped that version may be. This is an extraordinary remedy and we didn’t get it yesterday, although it wasn’t for lack of fantastic work by our lawyer.

The hearing wasn’t without substantial incident and irony. Apparently, although several people at both the Commission and Attorney General’s office had been served with our papers via fax, e-mail, and PDF, someone at the Commission did not receive an original copy of one of the documents, as required by the state service statute. As a result, we could not proceed until we could prove someone at the Commission had been served with an original copy of this document. We then had to race across Olympia to the Commission’s office in a nearby town to serve the one of the Commissioners himself — personally. (Not a single person in the legal department was working on that glorious 94-degree Tuesday — go figure.) The irony — exactitude matters big time to the Commission when it comes to serving paperwork that they already had. But precision in reading a criminal statute that may result in me doing years in the Gray Bar Hotel, not to mention wiping out a fair bit of investor capital and no less than seven years of man work — nah.

What’s Next
In terms of next steps, the situation is this. We are pursuing an action to get a court to declare Betcha legal. If the law and/or the Constitution matters in Washington (open question, that), I am confident Betcha will prevail. In the meantime, however, we face a Cease and Desist Order from a Commission that appears hell-bent on destroying Betcha at all costs. We’re going to review it in detail later today and decide on a course of action. We may have to take the betting-for-money part of the site down until we get on the other side of the steamroller.

You can rest assured, however, about our resolve. The government bureaucracy has been running roughshod over the citizens of this country for far too long. (Check out this book or BoilingFrog.com, among other sites, for some examples.) Prosecutors make up facts, legislators make it a crime to play poker in your own home, bureaucrats rewrite the laws, logic and the dictionary — and we’re all left at their mercy. The frog is boiling and the water’s getting hotter every day. I pledge to the friends and users of Betcha.com that I will do my part to turn the heat down. If that means rotting in jail, so be it.

Cross-posted from the Betcha.com blog