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

from the hello-loophole dept

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 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.

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Companies: betcha

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Comments on “Court Says It's Not Online Gambling If You Can Renege On A Bet”

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Anonymous Coward says:

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.

Davis Freeberg (profile) says:

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.

Steven says:

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).

Dave says:

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.

Anonymous Coward says:

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.

Helter says:

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.

Anonymous Coward says:

Re: 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?

Tamara says:

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.

matt says:


“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.

Jo Alljackpots (user link) says:


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.

Casino Junkie (user link) says:

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.

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