Internet Gambling Upheavals
Appellate rulings in Washington state and Kentucky offer encouragement to those favoring legalized Internet gambling. The Washington decision approved a non-binding betting exchange over the Internet, while the Kentucky decision halted efforts by that state's governor to block offshore Internet gambling sites.
In Internet Community & Entertainment Corp. v. Washington, No. 37079, the Washington Court of Appeals allowed betcha.com to host online wagering on sporting events and political elections. The court's decision was based on betcha.com's unique structure as a non-binding betting exchange. Bettors registered on the site place bets directly with other bettors, with the site itself taking a small piece of the action as a commission. But betcha.com makes very clear that the loser on a bet is under no compulsion to pay off. The only remedy available to the winner is to label the loser as a "welcher" in online ratings – much as ebay provides online ratings of its vendors.
Because losing bettors have no obligation to pay off, the court ruled by a 2 to 1 margin that no bettor makes "an agreement or understanding" to receive "something of value in the event of a certain outcome" – which is a required element of Washington's anti-gambling law. Betcha.com was closed down by state authorities within days of opening in 2006, so its viability as a business has not been tested. A similar UK-based betting exchange, Betfair, has been very successful in non-U.S. jurisdictions, but does not have betcha.com's non-binding feature.
Kentucky Gov. Steve Beshear met a setback in his efforts to use the state's gambling laws to confiscate the Internet domains of 141 offshore gambling Web sites. Reversing a trial court forfeiture order, the Kentucky Court of Appeals ruled by a 2 to 1 margin that an Internet domain address is not a "gambling device" under Kentucky law, and thus not subject to statutory forfeiture. Interactive Media and Gaming Association v. Wingate, No. 2008-CA-002000-OA. Accordingly, the court concluded, the trial court had no power to seize them.
Both the Washington and Kentucky rulings are likely to be appealed.
