The legality of a business model for a betting exchange company that was closed in 2007 under pressure from Washington state officials is still the subject of court actions as the owner and the state gambling authorities wrestle through appeal and counter appeal actions.
The dispute is rooted in the legality of a business model where the loser of a bet is subject to an honour system but is actually not obliged to pay the other party. Erstwhile operator Nick Jenkins contends that this does not constitute gambling because an essential element in the definition - the fact that the winner will receive something of value - is absent.
Jenkins, a Seattle lawyer who rather bravely founded the betting exchange Betcha.com in a US state notorious for the most draconian anti-Online Gambling laws yet seen, openly consulted with a wide range of opinions before launching his site. It was almost immediately the subject of warnings, and was then raided by Washington state gambling officials. Jenkins was arrested, along with two employees, and his computer hardware was confiscated.
In an initial lower court hearing both Betcha.com and the Washington State Gambling Commission moved for summary judgment. The facts were not in dispute, but a queston of legality was, with each side claiming to be in the right. Round one to Washington state.
Jenkins then took the issue on appeal, arguing "...there can be no understanding that a bettor will receive something of value where the website stresses that all bets are non-binding." The Court of Appeals agreed. Round 2 to Jenkins.
In September last year the Washington State Gambling Commission launched a counter appeal with the Washington Supreme Court, a decision from which is now awaited on what is really a point of law...and one which could subsequently be addressed by the state legislature introducing more specific wording to its definition of gambling.