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.
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.
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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