Nick Jenkins:

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 &#8220-I refuse to pay,&#8221- there was no guarantee that any money would actually change hands, the court said. &#8220-Accordingly, there is nothing risked, which is the essence of both the common law and statutory definition of &#8216-gambling,&#8217- &#8221- wrote Judge C.C. Bridgewater for the Court of Appeals Division II.

PDF file of the court&#8217-s decision.

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Midas Oracle archives on Betcha

Background on the Betcha case

Nick Jenkins&#8217- LinkedIn profile

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The copy of the original Betcha website:

Betcha.com

Betcha.com is the world&#8217-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 &#8212- 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 &#8212- all rolled into one. [1]

Betting on Betcha offers several advantages over betting with a bookie or on an illegal offshore gambling site &#8212- not the least of which is that you aren&#8217-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&#8217-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 &amp- Entertainment Corp., a privately-held corporation. We are located in Seattle, Washington and began matching bettors in June 2007.

[1] &#8220-The Golden Rule&#8221- refers to the idea that you should do unto others as you&#8217-d have them do unto you. It is the fundamental principle behind most of the world&#8217-s major religions. And while we aren&#8217-t here to push religion on anyone, doing well by others is a principle we&#8217-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&#8217-s not run by shady characters in the Caribbean. Most online betting sites are run by expats hanging out in the Caribbean. Betcha&#8217-s location &#8212- out in the open, Seattle, Washington. It&#8217-s legal. Because betting on Betcha operates on the honor system, it does not meet the legal definition of gambling. No gambling &#8212- n
o orange jump suits.

Overview:

There are two types of bets on the Betcha Platform: person-to-person bets &#8212- the ones where bettors bet at arms length against other bettors &#8212- 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&#8217-t &#8212- it isn&#8217-t &#8220-gambling.&#8221- Although there are a few variations in [syntax] depending on the jurisdiction, the legal (and common sense) definition of &#8220-gambling,&#8221- 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&#8217-t have all of these elements may be betting, but it isn&#8217-t &#8220-gambling&#8221- and, therefore, isn&#8217-t illegal.

You are already familiar with some betting that isn&#8217-t gambling. For example, if you run a race against a friend for $100, you control the outcome, so while you&#8217-re betting, you aren&#8217-t gambling. (Element [3] is not met.) When you make a handshake gentlemen&#8217-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 &#8220-risking&#8221- anything. No &#8220-risk&#8221- means no &#8220-gamble.&#8221- (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&#8217-t as though some Almighty Power came down from the heavens and deemed us &#8220-legal.&#8221- That&#8217-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&#8230-

[…] This one &#8212- an objection to the Betcha Platform from my oldest, dearest friend. Let&#8217-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&#8217-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 &#8220-The eBay Phenomenon&#8221- (2000), they said the same thing about eBay &#8212- 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 &#8212- their money. In the case of p2p betting, a stiffed bettor loses only something he never had in the first place &#8212- the win on his wager.

Second, most customers think there&#8217-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&#8217-s fun. If we do it right, Betcha will be fun, too. (Indeed, we view &#8220-fun&#8221- as our top selling point.)

Third: there are many places on the Betcha Platform where bettors can be assured they&#8217-ll get paid on a win. They&#8217-re called &#8220-Pools.&#8221-

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