BETCHA.COM CALLED BY WASHINGTON AUTHORITIES

13 July 2007

Founder disputes claims online betting site violates state gambling ban as Washington state becomes embroiled in another legal issue

Reader may remember recent news stories emanating from the Betcha.com website, claiming that the nature of its activities and business was legal. This week the founder's claims were put to the acid test when Washington State Gambling Commission investigators seized computers from the new Seattle-based Internet site Monday, claiming the business violated the state's 2006 online gambling ban.

The Seattle PI newspaper reports that agents armed with a search warrant confiscated laptops and computer monitors before Betcha.com's seven employees arrived for work at the company's North Seattle office.

The newspaper reports that founder and Chief Executive Nick Jenkins (38) found out about the raid from his wife, who had stopped by the North 56th Avenue workplace before business hours and found investigators inside.

"This is ridiculous," Jenkins told reporters. "I'm going to fight it. I don't like the heavy-handed state coming down on entrepreneurs."

Jenkins is seeking a restraining order against the state, with a hearing in Thurston County scheduled for today (Tuesday). Susan Arland, the commission's spokeswoman, confirmed that the company's computers were seized but declined further comment.

The dust-up comes three days after Renton attorney Lee Rousso filed a lawsuit claiming the state's effort to suppress online gambling such as poker was an illegal breach of the Constitution's interstate trade protections (see previous InfoPowa report). The disputes are among several in the nation as state and federal regulators struggle to limit or ban popular, elusive Internet-based gambling sites.

Jenkins' fight with the state takes a different approach. He is not challenging the legality of the state ban; instead Jenkins says Betcha.com simply isn't governed under the ban approved by the Legislature last summer.

Modeled, in part, after eBay, Betcha.com provides a forum for people who want to make bets against each other on almost any topic, such as who will hit the first All-Star game home run or who will win an Oscar.

Bets are not guaranteed. Similar to the popular online auction site, individual bettors receive customer ratings based on payouts. Because there is no guarantee of payment upon winning -- Betcha.com does not accept or back bets -- it doesn't meet the legal definition of gambling and thus isn't illegal, Jenkins, who is a 1994 Georgetown Law School graduate, said.

"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?"

With both his own and investor capital, Jenkins executed a soft launch of the site three weeks ago, "to work on the bugs." Soon after, he was contacted by the state gambling authorities. 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.

Online Casino News courtesy of InfoPowa