Lessons Learned From the Betcha.com Debacle

This is the second of a two-part entry on Betcha.com. (The first.) It was not easy to write.

Life’s a waste if you’re not learning lessons along the way. And with the Betcha.com matter, I learned many, none of which were good:

1. The promise of blind justice is an empty one — at least in Washington State.
At every level of the Betcha litigation, at least one judge went out of his/her way to rule against us, making up law, facts or both without even the State’s urging. Judge Gary Tabor ruled that the rule of strict construction did not apply to our case because it was, at the time, a civil proceeding. The State’s silence on this point wasn’t surprising: every court in the nation that had ever considered the argument had rejected it — including the United States Supreme Court. Judge Tabor came up with this argument on his own, with no legal authority whatsoever. He actually committed about seven errors of law in his verbal ruling — no easy feat, that.

Washington courts may not be as notorious as Roland Freisler's infamous Nazi courts, but in terms of their willingness to pick the winner and reason backwards, they are every bit as unfair.

Appellate Judge Elaine Houghton dissented in our win because, inter alia, we hosted our servers in Vancouver, BC. How the location of our servers has any bearing on the meaning of criminal statutes is beyond me. (More.)

The Washington State Supreme Court ruled that I was a “professional gambler” even though no one was actually gambling. In doing so, it literally rewrote the definition of “bookmaking” by changing “accepting bets … in which a fee is charged” to “charg(ing) fees for the opportunity to place bets”; made up facts that the State did not allege and that weren’t in the record; and ignored entire chunks of our briefing if not all our briefing altogether. (More here and here.)

It would be easy to chalk this up to bad judging, and while there was some of that going on, it was actually worse. Bad judges misapply fact to law and don’t consider the parties’ arguments. They don’t make up facts and law without the parties’ invitation and rewrite statutes to include words that aren’t there. That’s the sign of judging where the winner is picked first, regardless of the law. That’s not how blind justice is supposed to work.

An anomoly? Perhaps. The Betcha case was in the news and had the State lost, lots of folks in Olympia, including Governor Chris Gregoire, would have had some ‘splaining to do. Embarrassing or not, judges are supposed to apply fact to law and the judges involved in the Betcha case clearly did not.

2. All the constitutional rights in the world are basically worthless unless you’re willing to litigate.
No doubt we’re supposed to have constitutional rights. But they are basically worthless unless you’re willing to litigate. For example, the First Amendment clearly gives us the right to petition the government for redress of grievances. That right includes the right to stand up to the government and, if need be, take it to court. That didn’t stop the Washington State Gambling Commission from retaliating against me by calling in their buddies from Louisiana when I stood up to them. That cost me a bundle, and my only redress was to file a subsequent civil rights action years later which, in turn, invited even more retaliation. In other words, rights are well and good, but they aren’t worth a hill of beans when you actually need them.

All well and good in theory -- but that's about it.

3. Don’t stand up to the government. REPEAT: do not stand up to the government.
In the Betcha case the government treated our constitutional rights like toilet paper. The judges had their back. When we sued we were greeted with a body of law that says government officials cannot be held financially liable for their mistakes. What constitutes a “mistake” is, of course, open to debate, but that body of law alone gives government officials at least somewhat of a license to do whatever they want: judges are notoriously reluctant to make government pay, especially when that government already has multi-billion dollar budgetary shortfalls. In other words, if you want to stand up to the government, watch out. Which brings me to my next lesson:

4. Hell hath no fury like a bureaucrat scorned.
What the bureaucrats did in response to Betcha is well chronicled in this blog (most thoroughly here), and with the judges having their backs, who can blame them? But bureaucrats really have no shame — at one point in 2009, the Washington State Gambling Commission actually tried to change the law to cover Betcha.com via the state budget — while we were still litigating the very same law! I gave myself an “A” for my willingness to stand up and fight. Gotta give the bureaucrats the same mark.

Celebrating an empty promise? As of now, I think so.

All of these lessons are hard ones to learn for a guy who believed, above all, in standing up for what’s right, and who used to be the only one on his block who flew an American flag. But these are the lessons I learned. Above all, the Betcha matter taught me that the foundation of America — the rule of law — is a big fat lie, at least in Washington state. I always thought that the rule of law mattered, and that at the end of the day, no matter how long it would take to get to that day, I’d get a fair shake in a court of law.

It never got it. And if the judging in the Betcha case is even remotely indicative of judging in Washington generally, I doubt I’m the only one.

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The Final Death Throes of Betcha.com — and a Recap of “Justice,” Washington Style

This is the first of a two-part entry on Betcha.com (the second). If you believe in silly things like blind justice and the rule of law, you may want to skip them both.

Today probably marked the closing of a very dark chapter in my life. (“Probably” because I still may be indicted.) The goods news was that Ronnie and I spent the better part of the day cleaning out the garage. The bad news was that the vast majority of material that went to the dump was the old Ikea office furniture from Betcha.com.

All that remained of a once-promising dream.

I held on to it all these years in the faint hope that we’d be able to get things going again, but the Washington State Supreme Court’s debacle of a decision in September put those hopes to rest.

My dump run marked what is probably the final chapter in what must have been the most broad-based travesty of justice in Washington state history. (By “broad-based,” I mean all three branches of government got involved.) To review:

(Ed. note. Warning. Seriously. If you believe in the Constitution and the rule of law, stop reading here.)

In 2006 I came up with the idea of an Ebay for bets — Betcha.com. I researched the law of all fifty states — most thoroughly Washington’s — before developing the concept in full. I concluded that gambling required that persons risk their money. My solution: eliminate the risk. Basically, bettors were not obligated by the rules of the site to pay their losses, but if they didn’t they risked receiving negative feedback. It was that feedback system that would, in theory, give the site its liquidity.

I raised $540,000 from friends to build The Site. We spent roughly a year developing it. We launched on June 7, 2007.

On June 21, officials from the Washington State Gambling Commission showed up at our offices. They said the powers that be disagreed with my legal theory, which I’d posted on the site for all the world to see. Their instructions: shut down or else.

The next week, lawyers representing Betcha contacted the WSGC to request a meeting. Soon thereafter, WSGC officials were on the phone to their colleagues with the Louisiana State Police Gaming Enforcement Division about Betcha.com. (Comm: The right to petition the government is right there in the text of the First Amendment.)

When I asked the Washington State Gambling Commission to reconsider its position, they called in friends with the Louisiana Police. When I sued, they started betting. When I took our fight public, three of us were suddenly 'fugitives' from a state we hadn't set foot in.

On July 6, we met with officials at the WSGC in Lacey, Washington. They again ordered us to shut down. In response, we served them with a declaratory judgment complaint — basically, we sued them. Minutes later, WSGC official Mike Burt was back on the phone with Matt Sinanan, the WSGC’s LSPGED contact. Minutes later, Burt and Sinanan were betting against each other. In total , Sinanan made four bets for $35 — Betcha grossed exactly seventy cents. Sinanan was the first and only customer we’d ever had out of Louisiana. (Comm: First Amendment retaliation, anyone?)

The following morning, WSGC officials obtained a warrant ex parte from Thurston County (Wa.) Judge Paula Casey to search our Green Lake offices. (“Ex parte” means they didn’t bother telling us.) In applying for the warrant, the WSGC mentioned the word “gambling” no fewer than thirty-five times. They did not spell out our legal theory nor mention the fact that we had sued them just hours earlier. Instead, they buried a reference to our suit at the bottom of the ninth page of a thirteen-page, single spaced warrant application. Not surpisingly, Judge Casey granted the request.

On July 9, WSGC officials raided Betcha’s offices, taking with it the vast majority of our computer hardware and business records. I was not present, but Ronnie showed up for a visit. When she told WSGC official Rick Herrington that it looked like a judge would ultimately decide Betcha’s fate, he replied “it doesn’t matter what a judge says. He’s still breaking the law.”

Thereafter I took Betcha’s battle public. I blogged about developments in the case, criticized WSGC officials for their heavy-handed tactics, and appeared on two prominent local radio programs, The Dave Ross- and Dori Monson Shows. The WSGC officials involved in the Betcha case were reading and listening the entire time.

On or about August 14, 2007, Herrington notified Betcha’s attorney that me and two other Betcha employees were wanted as felony fugitives from justice in Louisiana. The other two employees, a 24-year old server administrator and 24-year old development manager, were arrested shortly thereafter. (The LSPGED official mentioned above got their identities from Betcha’s WhoIs listing.) I turned myself in at King County Jail within a few hours of learning I was a wanted “fugitive.”

The following day we were released on our own recognizance over the State’s demand for $50,000 bail.

Three days later, we appeared in court again for a status conference. This time, King County Assistant Prosecutor Staci Connole represented to a different judge in writing that I had been in Louisiana “on or about July 23, 2007″ and “thereafter fled” the Bayou State, thereby making me a fugitive. This was a bald-faced lie — I had not been to Louisiana since 1994, before Al Gore invented the Interent. The lie worked — Judge Arthur Chapman ordered me arrested on $50,000 bail. (Comm: I have no idea how or why Connole came up with this tale. My gues is that the Louisiana prosecutor fed her this lie to get me incarcerated again, the goal being to get me to waive extradition.)

The next day, Betcha filed its motion for summary judgment in Olympia. The following week, the WSGC moved to strike it. Its stated reason: it needed more time to better understand Betcha.com and the very law they insisted we violated. (Comm: They could have written “Your Honor, if we lose this motion before the extradition paperwork gets here, it could put Governor Gregoire in a very akward position, so we need to buy some time here.”) Judge Gary Tabor granted the WSGC a sixty-day continuance, pushing the September 21 summary judgment hearing back to November 9. Meanwhile, the LSPGED’s extradition paperwork sat collecting dust on the desk of then-Louisiana Governor Kathleen Blanco.

On or about September 4, 2007, Governor Blanco signed our extradition warrants. In the supporting paperwork, the prosecutor seekeing our extraditions admitted that what the King County Prosecutor had told Judge Chapman wasn’t true; in truth, I’d never actually been in Louisiana. (Comm: The last time I was in Louisiana was 1994, before Al Gore had even invented the Internet.)

On October 4, 2007, WSGC Director Rick Day met with several officials in Governor Gregoire’s office. The next day, Governor Gregoire signed our extradition papers. Three Washingtonians, extradited to a state they’d never set foot in, over seventy cents, while an action in re: the legality of Betcha.com was pending. (Governor Gregoire used to be Washington’s Attorney General. The AG’s Office was handling the case for the WSGC.)

The day after her staff met with Washington State Gambling Commission Director Rick Day ...

Washington Governor Chris Gregoire extradited three Evergreen state citizens to Louisiana -- just three weeks before a hearing on the legality of Betcha.com was scheduled. This, over seventy cents worth of bets made between two police officers.

Immediately upon learning Governor Gregoire had signed us out, and to avoid a lenghty stay in King County Jail while we waited for LSPGED officials to mosey their way up to Seattle, we fled to the state we had allegedly fled from. We were released from Ascension Parish Jail on a $7,200 cash bond.

The following month, our fate in Louisiana already sealed, Judge Tabor ruled that Betcha bettors were gambling and that Betcha was bookmaking as defined by Washington. In reaching that conclusion, Judge Tabor first ruled that the rule of strict construction, which applies to the reading of criminal statutes, did not apply here because the case was, at that point, a civil matter. Judge Tabor made this rule up on his own: the WSGC did not raise the argument, and every court that had ever considered the idea rejected it because it would allow for the possibility that a criminal statute could have two different meanings — one in criminal cases, the other in civil ones. With no reasoning whatsoever, Judge Tabor ruled that gambling and betting were synonyms and that the opt-out right was “a cute side statement.” As for “bookmaking,” Tabor concluded that, while he understood we insisted we did not “accept” “bets” and thus could not be engaged in bookmaking as defined by Washington law, we nevertheless were enanged in bookmaking because we charged fees for people to place bets. (Comm. The text of Washington’s definition of bookmaking clearly requires, first and foremost, that a person “accept” a bet, regardless of whether fees are charged.)

Judge Gary Tabor ruled against Betcha based upon arguments the state didn't even raise.

In February 2009, a Washington Court of Appeals reversed — and not in ambiguous terms. (More.) Judge Elaine Houghton dissented (my analysis), reasoning, inter alia, that Betcha bettors were “gambling” because we hosted our servers in Vancouver, British Columbia. (Comm: would they not have been gambling if we hosted our servers in Vancouver, Washington?)

Court of Appeals dissenter Elaine Houghton ruled that Betcha customers were gambling, inter alia, because we hosted our servers in Canada.

Over the next several months, the WSGC lobbied hard to get the legislature to change Washington law to specifically cover Betcha.com. (My earlier commentary: 1I2I3). The legislature declined. At one point, state Senator Margarita Prentice and the WSGC’s Day tried to have the legislation shoved into the state budget. That didn’t work, either.

In May 2010, the Washington State Supreme Court heard oral argument in the case. It did not go well — from the sounds of it, not a single justice had read any of our briefs except perhaps our opposition to the State’s Petition for Review — and I predicted a 7-2 loss.

In September, the Court reversed and held that it didn’t matter whether Betcha bettors were gambling because Betcha itself was bookmaking. The Court made the same mistake that Judge Tabor had: it concluded that we were engaged in bookmaking because we “charg(ed)” “fees” for people to list offers for bets. To get to that result, the Court literally had to rewrite the very statute I designed The Site to comply with. It also concluded that we “accepted” bets because we preapproved them before publishing them on the site. This was pure fiction; bettors posted their bet offers directly to The Site without any preapproval whatsoever. (More full analyses of the Court’s opinion are available here (lengthy) and here (condensed).)

Chief Justice Barbara Madsen's Washington State Supreme Court ruled that Betcha engaged in PROFESSIONAL gambling even though no one was ACTUALLY gambling.

As one of the people on Governor Gregoire’s staff said upon learning we had won in the Court of Appeals, you cannot make this stuff up.

Next up: lessons learned.

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Column: “The Supreme Court’s Betcha.com Decision: Judging At Its Worst”

Last week, the Washington State Supreme Court ruled that Betcha.com, a Seattle-based person-to-person betting platform I founded, violated the very state Gambling Act I designed it to comply with. The Court’s opinion didn’t pass the giggle test.

Betcha was a social networking site where people offered and accepted bet propositions. (Think Ebay meets Facebook in Las Vegas.) We charged people to offer and accept those propositions. The Site was honor-based: bettors could opt out of their losses (read: no gambling), but if they did they risked receiving negative feedback. The Washington State Gambling Commission shut us down in 2007 — we’ve been in court since. In 2009, a Washington Court of Appeals held that there was “no logical basis” to conclude Betcha bettors were “gambling” under state law. It also held we were not bookmaking as the State had alleged.

The Supreme Court didn’t reach “gambling.” Instead it held that Betcha, which lets individuals bypass bookmakers by connecting them personally, was itself a bookmaking operation and thus engaged in “professional gambling.” How it got there was jaw dropping.

“A person is engaged in ‘professional gambling’ … when (t)he person engages in bookmaking.” RCW 9.46.0269(1)(d). “(B)ookmaking” means “accepting bets, upon the outcome of future contingent events, as a business or in which the bettor is charged a fee or ‘vigorish’ for the opportunity to place a bet.” RCW 9.46.0213. The Court read the first “or” as separating two independent clauses – everything from “accepting” to “business” on one side, “in which” to “bet” on the other. Since Betcha charged fees, the Court reasoned, it violated the second clause.

The problem: statutory definitions are meant to be read in context. “(B)ookmaking” appears in the definition of “professional gambling,” and when you plug the Court’s second definition of bookmaking into that provision, its error is obvious:

“A person is engaged in professional gambling … when (t)he person engages in (in which the bettor is charged a fee or vigorish’ for the opportunity to place a bet).”

Two consecutive “ins”? Even Microsoft Word’s grammar check knows that’s wrong. The correct read – ours – was that, fees charged or not, one must “accept” bets to be a bookie. By adding an active verb – “charging” — to the statute, thereby making two independent clauses where two dependent ones are written, Justice Tom Chambers (or his law clerk) literally rewrote the law by which I tried to abide. Reasonable people can quibble about what it means to “accept” a bet – although I wonder what it is the bettor who accepts the bet did if Betcha “accepted” it. (“Super-accept” it?) They cannot quibble about grammar or the order and tense of words in a statute.

There’s more. We argued that implied in the term “bets” was that they be gambling bets: to read “bets” as including non-gambling ones would make the statute both unconstitutional and nonsensical. We should have been safe: “bet” appeared on both sides of the “or,” and the State didn’t address our points. No matter. The Court brushed them aside, too, concluding that we were asking them to read words into the statute. So the Gambling Act covers even betting that isn’t gambling. Wow. Having decided that Betcha was bookmaking, the Court didn’t consider whether Betcha bettors were “gambling” – thus, “professional gambling” without actual gambling. All in a criminal statute, where doubts about coverage are supposed to be resolved against the State. Not a single justice doubted such an odd result. Hmm.

I knew we were in trouble at oral argument, when the justices raised objection after objection we’d knocked down in our supplemental brief. (I wonder if a single justice even skimmed it.) I really knew we were toast when Justice Jim Johnson asked whether Betcha would compete against tribal casinos. But I didn’t think a state supreme court – or traffic court — would airmail in an opinion that so evidenced a pick-the-winner-first approach. If it didn’t mean I’ll almost certainly go to prison, the Court’s earth moving would be comical. So blatant were the Court’s errors that I wonder whether it was the law or the identity of the litigants that mattered at the Temple of Justice. I would have preferred a one-line opinion that said “look, dude, you can’t beat the State.”

At least there’d have been no pretense of objectivity.

Nicholas G. Jenkins is a 1991 graduate of the University of Washington, a 1994 graduate of the Georgetown University Law Center, and the founder of Betcha.com. He blogs at JenkinsFamilyBlog.Wordpress.com.

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The Supreme Court’s Betcha Decision: What a Disgrace

The Betcha.com adventure is over. The Washington State Supreme Court issued its opinion today, and we got creamed.

To be frank, the Court’s opinion didn’t pass the giggle test.

A Question of Grammar
To cut to it, the State of Washington alleged that Betcha.com (and specifically me) engaged in what the state calls “professional gambling.” State law defines “professional gambling” as follows:

(1) A person is engaged in “professional gambling” for the purposes of this chapter when:

(a) Acting other than as a player or in the manner authorized by this chapter, the person knowingly engages in conduct which materially aids any form of gambling activity; or

(b) Acting other than in a manner authorized by this chapter, the person pays a fee to participate in a card game, contest of chance, lottery, or other gambling activity; or

(c) Acting other than as a player or in the manner authorized by this chapter, the person knowingly accepts or receives money or other property pursuant to an agreement or understanding with any other person whereby he or she participates or is to participate in the proceeds of gambling activity; or

(d) The person engages in bookmaking; or

(e) The person conducts a lottery; or

(f) The person violates RCW 9.46.039.

RCW 9.46.0269. Thus, in order for us to have engaged in professional gambling, either of two things had to have happened. Either Betcha bettors had to themselves be “gambling,” or we had to be engaged in “bookmaking.” Do that and you violate a number of state laws, all of which were at issue in the Betcha case. Violate those state laws and you also violate federal law — most particularly the Racketeer Influenced and Corrupt Organizations Act (“RICO”). (That’s the law the feds use to go after the mafia.)

Justice Tom Chambers's opinion won't go down as a high point in the Court's history.

The Court never reached the question of whether Betcha bettors were themselves “gambling.” (The Court of Appeals not only said they weren’t, but that there was “no logical basis” to believe they were and that “the essence of gambling” was missing from Betcha.com. [More.]) Instead the Court focused on “bookmaking,” which state law defines as follows:

“Bookmaking,” as used in this chapter, means accepting bets, upon the outcome of future contingent events, as a business or in which the bettor is charged a fee or “vigorish” for the opportunity to place a bet.

RCW 9.46.0213. The Court reasoned that we were engaged in “bookmaking” because we charged fees for people to list offers for bets and accept bets. Therefore, it didn’t matter whether people were gambling.

The Court was so wrong it almost defies belief.

The problem with the Court’s reasoning is that statutory definitions aren’t meant to be read in vacuums. They are meant to be read in the context of the statutes in which they appear — and which the State alleged I violated. The term “bookmaking” appears in RCW 9.46.0269 (above). When you consider the term in context, it is clear that the phrase “accepting bets” was meant to be the subject and the verb, so subsection (d) would read as follows:

A person is engaged in “professional gambling” for the purposes of this chapter when (t)he person engages in (accepting bets, upon the outcome of future contingent events, as a business or in which the bettor is charged a fee or “vigorish” for the opportunity to place a bet.)

That’s at least decent grammar. We argued it was the bettor who “accepted” the bet in a non-bookmaking way, not us. (Basically, a guy who comes along and accepts someone else’s bet offer and makes no money for doing so ain’t a bookie.) The Supreme Court, however, fixated on the fees part and said it didn’t matter whether we were “accepting bets” because we were charging fees. According to the Court, the “or” in the definition of “bookmaking” left the verb (“accepting”) and noun (“bets”) on one side — so “accepting bets as a business” OR “in which the bettor is charged a fee …” Thus, according to the Court, RCW 9.46.0269 reads as follows:

A person is engaged in “professional gambling” for the purposes of this chapter when (t)he person engages in (in which the bettor is charged a fee or “vigorish” for the opportunity to place a bet.)

That can’t be right. Two “in’s” in a row? It doesn’t take a fancy law degree to know that’s wrong. Heck, I’m writing this in Microsoft Word now and even it says the two in’s in a row is wrong. But it was right enough for the Washington State Supreme Court. That person-to-person betting platforms are considered the main competitive threat to bookmakers (more) — that didn’t register.

Maybe it’s just me, but when your analysis leads you to conclude that a Hatfield is a McCoy, shouldn’t you rethink your analysis?

There’s some reason to believe that Justice Tom Chambers – or whichever of his clerks authored the opinion – knew he was pulling a fast one. Consider the following sentence from page 7 of the 11-page opinion:

The fact that the statute defines “bookmaking” as either accepting bets as a business or charging a fee for the opportunity to place a bet indicates that bookmaking encompasses both readings espoused by the Court of Appeals.

Rather unremarkable on its face until one considers that that is not what the statute says. It does not say “charging a fee.” If it did, the Court’s read would at least make sense – “charging a fee” at least has a verb and a subject and if that’s what the statute said there wouldn’t be a double “in” problem. But it says “in which a fee is charged,” leading me and the Court of Appeals to believe that it was a dependent clause — dependent on “accepting bets.” (See above.) Apparently I was supposed to comply not only with the statute, but an erroneous paraphrasing of the statute.

All of this, by the way, in the context of a criminal statute, where all doubts about coverage are supposed to be resolved against the State. Heck, even the State had doubts. When we filed our initial summary judgment motion back in 2007, the State moved to strike it because it needed more time to understand both the facts and the law it alleged Betcha violated.

The Court never reached the question of whether Betcha bettors were “gambling.” Thus, the Court held that I was engaged in professional gambling even if no one was actually gambling.

Amazing.

Too Much Work
We had a second argument on “bookmaking.” We argued that the term “bets” as it appeared in the definition of “bookmaking” meant gambling bets, not bets of any kind. This was admittedly somewhat of a nuanced point, but our arguments weren’t without merit:

Like other words relevant here, RCW 9.46 does not define “bets,” so the court must look to other sources to ascertain its meaning. Black’s Law Dictionary defines “bet,” as:

“(a)n agreement between two or more persons that a sum of money or other valuable thing, to which all jointly contribute, shall become the sole property of one or some of them on the happening in the future of an event at present uncertain, or according as a question disputed between them is settled in one way or the other. A contract by which two or more parties agree that a sum of money, or other thing, shall be paid or delivered to one of them on the happening of not happening of an uncertain event.”

(Emphasis added.) Webster’s New World College Dictionary defines “bet” as “an agreement between two persons that the one proved wrong about the outcome of something will do or pay what is stipulated.” (Emphasis added.) The Court may also refer to the title of the act — “gambling” — as a source of legislative intent in ascertaining the meaning of the law. E.g., Shoop v. Kittitas County, 108 Wn.App. 388, 392 (2001); State v. Lundell, 7 Wn. App. 779, 781, 503 P.2d 774 (1972).

Betcha bets are not “bets” within the meaning of RCW 9.46.0213. As explained above, Betcha bets are not “agreements/understandings” that losers are obligated to pay (“shall”) when they lose, so not only are they not gambling bets, they do not meet the dictionary definition of what constitutes a “bet.” This reading makes sense: after all, the title of the definition in question is “professional gambling,” and it is reasonable to conclude, therefore, that the legislature did not mean to reach transactions other than gambling bets when it wrote “bets.” See State v. Prevo, 361 P.2d 1044, 1049-1050 (Hawaii 1961)(holding that phrase “any other game” in gambling statute referred only to gambling games, not all games).

Plaintiffs admit it is tempting to conclude on a superficial level that Betcha transactions are “bets.” They are, after all, called “bets,” and The Site is called Betcha.com. The court should resist the temptation. First, courts are not bound by labels, especially in the context of a criminal statute. In In re: Mastercard International, the Fifth Circuit Court of Appeals held in the context of an online gambling case that a site’s nomenclature is, without underlying facts to substantiate a legal violation, “irrelevant.” 313 F.3d 257, __ fn 21 (5th Cir.2002). This rule is sensible enough: a person who sells marijuana online cannot avoid prosecution by calling it “parsley.” Conversely, a person cannot be prosecuted for selling parsley if he, to increase his product’s popularity, refers to the parsley as “marijuana.”

Second, insofar as “bets” in RCW 9.46.0213 can be interpreted to include all bets, including non-gambling ones, RCW 9.46.0213 is unconstitutional. Consider: Article II, Section 19 of the Washington Constitution provides that “no bill shall embrace more than one subject, and that shall be expressed in the title.” Charron v. Miyahara, 950 P.2d 532, 535 (Wash.App.Div.2 1998); Rourke v. Department of Labor and industries, 249 P.2d 236, 237 (1938). Here, that subject is gambling, and that subject is accounted for in the title of the statute. To read “bet” so broadly as to include gambling bets and non-gambling ones, as the court would need to do here to cover Betcha’s bets, would violate the single subject rule, inasmuch as the gambling act would be read to cover gambling transactions and non-gambling transactions. As it is well-settled that a court should “not ascribe an intention to the legislature that will place an act in conflict with the Constitution,” the Court should avoid the temptation to do so here. State v. Hanlen, 193 Wash. 494, 76 P.2d 316, 317 (Wa.1938).

Finally, a reading that “bets” meant to cover all bets of any kind is nonsensical. Consider: if “bets” means any bets, it must include bets where the participants bet for no money – the proverbial “gentlemen’s bet,” which are not “gambling” bets because there is no “thing of value” at stake. See RCW 9.46.0237. Under a reading that “bets” means all bets, and not just gambling bets, the statute precludes gentlemen’s bets where the gentlemen pay some third party a fee to make the bet – even though no money is involved. Plaintiffs respectfully submit that no two gentlemen have ever done such a thing, so it’s unlikely that that’s the sort of bet the legislature had in mind when it wrote “bets.” Given, therefore, that the legislature didn’t mean to proscribe all bets, the only reasonable conclusion is that it meant to proscribe only gambling ones, as the title of the statute, and indeed the title of the definition (“professional gambling” [emphasis added]) suggest.

In truth, Betcha “bets” are closer to risk-free trials in retail sales than they are to “bets” within the meaning of Washington’s gambling laws. Like the retail buyer (and unlike a gambler who bets at a casino or with a bookmaker), a Betcha bettor bets knowing the rules of the game give him the right to his money back. Between bettors, Betcha bets are illusory promises and, when paid, become gifts to the winning party. The only thing “bet” about Betcha bets, however, are their descriptor, but in criminal law, labels don’t matter. (Supra.) Indeed, calling Betcha transaction “bets” no more makes them “gambling” transactions than calling a carbonated beverage “root beer” makes it alcohol.

Apparently confident that it would win on “gambling,” the State never addressed this point at any stage of the litigation. No matter. The Court brushed it all aside, concluding instead that to read “bets” to refer to gambling bets and not any bets would be to write words into the statute that weren’t there.

So according to the Court, the Gambling Act covers bets — even if the bets don’t constitute gambling.

Unreal.

The Court's holding that there was professional gambling even if there was no gambling in sight was simply breathtaking.

It’s hard to say what to take from all this, but it’s pretty clear there was no way we were ever going to win. I was pessimistic after the oral argument, where it was pretty clear the justices had not read our brief and where I knew we were in trouble when a justice asked whether Betcha competed against tribal casinos. I predicted a 7-2 loss but was assured by many that the justices would at least read the briefs before they issued their opinion. Never in a million years did I expect an opinion like this one. The Court’s error is so obvious that I wonder if a single justice even cracked our brief, let alone the Revised Code of Washington. (I’m not kidding. The Court so ignored our arguments that I will always wonder if our brief got lost in the Court’s interoffice mail.)

The Court's reasoning was so breathtaking you really have to wonder if justice was blind.

Non-incumbent candidates for office in Olympia — and the state Supreme Court in particular — ought to take note of this one. It was bad enough to have been summarily shut down by a state agency only to be told two months later that it couldn’t reply to our summary judgment motion because it needed more time to understand both the facts and the law it said we violated. It was even worse when Governor Chris Gregoire extradited me and two of my Betcha colleagues to Louisiana as fugitives from a state we’d never been in — all while our hearing on the merits was scheduled for just a few weeks away and while her office was issuing press releases about her own betting. All over four bets made by a Louisiana state trooper against an employee of the Washington State Gambling Commission for which Betcha grossed exactly seventy cents. But this might be the worst blow of all. So clearly was our goose cooked that I wonder why they didn’t just write “Look, we want the State to win.”

At least then they’d have been intellectually honest.

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A Few Betcha Predictions for the U.S. Open

Tomorrow’s U.S. Open has me thinking about Betcha.com — as if I needed another reason (1I2). Mostly what could have been, and what would have been if I had a place to hook up with fellow golf enthusiasts. I have a few bets in mind:

“BETCHA: Either Luke Donald, Phil Mickelson, Zach Johnson, Steve Stricker, Padraig Harrington or Jim Furyk will win.”

“BETCHA: Tiger Woods will not finish higher than 10th place.”

“BETCHA: Brian Davis will finish in the top 10.”

“BETCHA: Brian Gay will finish in the top 15.”

“BETCHA: Bo Van Pelt will finish in the top 20.”

“BETCHA: Camillo Villegas will miss the cut.”

“BETCHA: Vijay Singh will miss the cut.”

“BETCHA: Tom Watson will finish in the top 20.”

“BETCHA: Tom Watson will be within five shots of the lead as late as Saturday.”

“BETCHA: Sergio Garcia will miss the cut.

Steve Stricker (shown here in a shirt I own) is my pick to win.

So those are my gut calls. The idea behind Betcha.com was to give guys like me a place to post non-binding bet offers like these or anything that came to mind in hopes that some golf fan elsewhere would find the offers interesting. No such site existed. So long as they liked the opposite side and thought the chances of me exercising my opt-out right were small, they’d take the chance of nonpayment and bet anyway. Alas I cannot and, if my prediction proves out, never will. Because by offering such nonbinding bet offers I would be a professional gambler and thus, a federal racketeer.

I’ll have to be content to record my predictions for posterity’s sake and see how they shake out.

Back on Monday to see how I did.

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Predictions for the Future of Obamacare

President Obama just signed the health care reform bill into law a few hours ago and already people are wondering what’ll happen next. My predictions:

The lawsuit filed by thirteen state attorneys general challenging large swaths of the health care bill will be a loser. I’ve perused the complaint (click here for a link) and it reads like a gripe-fest. The AG’s are basically ticked off that the states will be forced to foot much of the bill for the federal government’s folly. But that happens all the time. The states’ strongest argument is a Tenth Amendment one — namely, that the federal government lacks the constitutional authority to require people to purchase a good or service. Big problem there is that the Tenth Amendment is basically a dead letter. The states’ best hope is that Justice Anthony Kennedy — who will likely be the deciding vote if/when this case makes it to the Supreme Court — will be sufficiently PO’ed about President Obama’s less-than-tactful criticism of the Supremes at the State of the Union that he’ll side with Alito, Roberts and company just to send a message.

Republicans will not win either the House or the Senate in the ’10 elections. That’s because most premium changes don’t happen until the beginning of the year, so people won’t be feeling the effects of Obamacare when they cast their ballots. The Republicans will pick up several seats in both chambers, but not enough to take charge.

When insurance companies adjust their rates next year, they’re going to adjust them upward, and way upward. That’s so for two reasons. First, millions of people will be required by law to purchase their product. Second, the cost of coverage will go up as insurance companies will now be required to insure the heretofore uninsurable. Given both, it should hardly be surprising that carriers will increase their rates.

Increased insurance rates will provide the impetus Democrats need to take Obamacare to the next level. You can almost hear President Obama now: “We (in Washington) passed the greatest insurance reform package in history. We helped cut medical costs for the American people. The insurance companies took advantage of our hard work by sticking it to American businesses and families, yada yada yada.” A Democratic Congress will then go to work on another health insurance reform bill, but this one will go where President Obama wanted to go in the first place — single payer health care or, at the very least, the nationalization of the health care industry.

Some of this may not happen immediately. The nationalization of the health care industry, for example, may have to wait until after President Obama gets reelected in 2012 (a very safe bet, that). But rest assured it will happen.

Change is coming -- big time.

I predicted in 2008 that America as we know it was done for. After this last week, I’m pretty sure I’m right.

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Does the State Really Care About the Mob’s Connection to Gambling?

Sometime this spring or fall, the Washington State Supreme Court will hear oral argument in two gambling-related cases — the Betcha case and the dormant Commerce Clause challenge brought by Seattle lawyer Lee Rousso. In both cases, the State’s lawyers are going to argue that the State should win, inter alia, because of its historical interest in regulating gambling.

According to Professor I. Nelson Rose, the state is more concerned with protecting its share than its citizens when it comes to regulating gambling.

I’ve always wondered why the State cares so much about clamping down on gambling, especially when it pushes so much of its own (see the Washington State Lottery). Today I received an e-mail newsletter from Professor I. Nelson Rose that speaks to that very issue. Professor Rose’s column was about a casino in Missouri that regulators are shutting down not because it’s crooked, but because it doesn’t make enough money. In the column he shed some light on just why it is that states are so concerned about regulating gambling, and it ain’t all about protecting players from organized crime:

Why do we regulate casinos?

Historically, the main – if not only – reason was to keep out organized crime.

Although the laws include grand statements about protecting the general public, we don’t really need background checks and fingerprinting of a corporate C.E.O. to prevent a dealer from cheating a player.

The state does have a financial interest in keeping out the bad guys. “O.C.” (organized crime), as they call themselves, like legal gambling because it is primarily a cash business, ripe for skimming – money that is supposed to go for tax revenue. And tourists might stop coming to casino resorts if gaming’s reputation dropped from merely risqué to patently corrupt.

But taxes and jobs were always secondary reasons for states regulating casinos like nuclear power plants, and not, say, like used car dealers.

…..

Public safety is still job number one. But regulators, and the market, have driven O.C. so far away that regulators can now focus on income.

So according to Professor Rose, the State’s interest isn’t so much in protecting players from cheating casino operatives as it is protecting the State from skimmers, lest it lose part of its take.

Regrettably the state legislature didn’t get Professor Rose’s memo. As late as last week a state legislator was lecturing me on the state’s interest in protecting citizens from the mob’s influence in the gambling industry. The state’s interest was so great according to Rep. Steve Conway that the state must change the very definition of gambling to cover conduct that, according to the Washington Court of Appeals, lacks gambling’s “essence.” (That’s the Betcha case.)

Anyone wonder why the state is running a $2.8 billion annual deficit?

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So Important, We Can’t Wait for the Supreme Court to Rule …

Today I headed down to the state capitol to testify against yet another Kill Betcha.com Act. This was my fourth appearance in the last eleven months before a legislative committee, the third before Rep. Steve Conway’s House Commerce and Labor Committee. A video of the hearing is available here — our portion of the hearing starts about an hour into it. (If you aren’t one of my two regular readers, SB 6103, one of three Kill Betcha.com Acts in Olympia right now, would expand Washington’s definition of gambling to include Betcha.com, thereby making it illegal and giving Washington the broadest definition of gambling, I believe, in world history.)

To date, Betcha’s opponents have been unsuccessful in rallying enough support for any of the many Kill Betcha.com Acts. Last year the House Commerce and Labor Committee refused to support SB 6103 after we appeared before them. The Senate Ways & Means Committee then refused to support SB 6152 after Senator Margarita Prentice, the committee’s chair, introduced it in the wake of SB 6103′s defeat. Commission Director Rick Day asked Rep. Gary Alexander to include SB 6152 in the 2009 state budget — apparently that did not happen. Last month the House Commerce & Labor Committee refused to support HB 2355, another Kill Betcha bill sponsored by Rep. Geoff Simpson — like Sen. Prentice, an ex officio member of the Gambling Commission. SB 6103 passed the Senate last week, however, because Sen. Prentice got it straight to the Senate floor without bothering with a committee hearing.

This time we might not be so fortunate.

The Commission brought in representatives from three different tribes to support the bill, one of whom, representing the Muckleshoot tribe, testified. This was somewhat ironic: these bills have been floating around Olympia for almost a year now, and to date the tribes have not said word one. And last month, the Commission’s Amy Hunter testified that a change in the law was necessary to prevent the tribes from getting into the honor-based, betting exchange business. Call me naive, but it isn’t often that a political interest testifies in support of a bill allegedly being directed against it.

The Muckleshoot tribe joined the State of Louisiana in the coalition the Commission has aligned against Betcha.com.

Commission Director Rick Day insisted that, inasmuch as he’s been a government regulator for years, he’s the authority on gambling law. I wish someone would have asked him how it was that, on his watch, a state court held that the Commission had interpreted one of its own rules in an arbitrary and capricious manner. (That’s the ZDI case.) Or that a state court of appeals ruled that there was “no logical basis” to believe Betcha met the definition of gambling; that the Commission’s position was rebutted by the Gambling Act’s “plain language”; and that the Commission’s read led to an “unlikely, absurd and strained” result. (That’s the Betcha case.)

Rep. Steve Conway says he is concerned that families may be ruined if the legislature doesn't pass a Kill Betcha.com Act before the Supreme Court hears the State's appeal.

Director Day testified that the bill is urgent and cannot wait until the Washington State Supreme Court hears oral argument and issues its opinion(s). If the legislature waits, he argued, evil companies may come out of the woodwork and open honor-based online betting exchanges in the time before the Court rules — presumably only to shut them down once the Supreme Court rules unanimously against Betcha. Never mind that none have done so in the year since Division Two issued its Betcha opinion, or that the Commission’s Hunter testified last month that all these evil entrepreneurs are waiting to see how the Supreme Court rules. Director Day cited with great favor Judge Elaine Houghton’s dissent in the Betcha case. He must not have cared much for my criticism thereof. He also said the legislation is not about stopping Betcha.com, which I invented as a legal way to access the heretofore untapped half trillion dollar market in casual wagering in the United States (can you say “tax revenue?”). Perhaps he should have read the Commission’s own talking points on the bill; they were all about Betcha and, more specifically, me.

Gambling Commission Director Rick Day thinks companies will crawl out of the woodwork if the legislature doesn't act now.

My testimony was not uneventful. Chairman Conway and I got into it a bit both on the timing and the merits. The Chairman was concerned that if the legislature doesn’t act now entire families could be wiped out by Betcha.com, which hasn’t been live since the summer of 2007. That we’re-worried-about-the-families point was tough to take seriously given the State runs a lottery, has a Powerball game, and allows tribal casinos to advertise with impunity — none of which, unlike Betcha, give losers the right to opt out of their losses. He seemed troubled, too, about gambling’s connection to organized crime. Of course, gambling does not attract the mafia like excrement attracts flies — the mob is not connected to tribal casinos. Illegal gambling makes an easy shakedown target for the mob because, inasmuch as they’re running illegal businesses, the shakedown victims (usually bookies) can’t turn to law enforcement for help. Oh, and Betcha.com is not gambling — that’s the point.

Troubling, too, was the Chairman’s insistence that the people of Washington are against gambling — so against it, apparently, that the legislature has to change its definition to cover a platform that, according to the Court of Appeals, lacks gambling’s “essence.” To my knowledge, there isn’t a single citizen in the state who has called their legislators in support of this bill — and I’ve asked every committee member I’ve appeared before.

Most troubling of all, though, was the chairman’s insistence that this bill pass post haste. The progressive chairman appeared undaunted that this would not only deny Betcha our day in court, but would also give the Commission an additional tool to solicit a prosecutor to take me out — the argument being that the new bill merely “clarified” what existing law actually means. Back in 2007, Governor Gregoire could not wait three weeks for us to have our day in court before signing our Louisiana extradition papers — it turns out, at the behest of Director Day, whose agency solicited the Bayou State in the first place. Chairman Conway appears similarly impatient.

Whatever happens, I’m feeling more and more pessimistic about achieving my dream of building an American icon in my hometown. As I mentioned above, Director Day tried to have the Kill Betcha.com Act added into the budget last April. There’s no reason he won’t push for that again until, one day, he gets his wish.

Meanwhile, actual gambling continues unabated in the Evergreen State, starving children notwithstanding. Today’s Washington Lottery jackpot is $7.5 million. For the Powerball drawing it’s $44 million.

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Apparently Seattle Isn’t the Only Town With Garbage Nazis

Last year, I complained loudly in this column about Seattle’s garbage Nazis.

Seems the Emerald City isn’t the only town so plagued.

Audi ran an ad during yesterday’s Super Bowl that mocked the country’s enviro police. No doubt it was the best ad of the day. So good, in fact, that I’m posting it here:

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Did Tiger Just Catch His First Break?

I hate to use the Jenkins family blog as an avenue to ruminate — that’s what Facebook is for. But given how much time is spent in the Jenkins household talking about Tiger these days — that is, lots — I can’t resist. My latest thought is that the report out of Florida that officials from the Florida Department of Children and Families visited the home of Tiger and Elin Woods this morning may prove to be Tiger’s first break in a while. Because no matter how much of a scoundrel he was/is, the world public is not going to have much patience for government bureaucrats sticking their nose into his mansion. Tiger may not be much of a husband, but there is no particular reason to believe either he or Elin are lacking as parents. If the FDCF sticks around, the story goes from “What Tiger did to Elin” to “What government bureaucrats may do to the Woods family.” And if the latter is the storyline, Tiger the perpetrator becomes Tiger the victim.

Reports that state bureaucrats have their noses in the Woods mess may turn Tiger the Cheetah into Tiger the victim.

Of course, this potential break might be a double-edged sword. If Elin or the Nordegrens thinks there’s even a snowballs chance in hell that she could lose Sam or Charlie to the State of Florida, she’ll be Stockholm bound faster than Cheetah can get laid — and for good.

POSTSCRIPT: As of 1 pm on Monday, this story really hasn’t caught on at all. So I guess the answer to the question posed in the title is a big fat “no.”

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