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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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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.

Washington’s Gambling Act prohibits all sorts of “professional gambling.”  “A person is engaged in ‘professional gambling’ … when (inter alia) (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. The Court simply rewrote the law to make a necessary component — “accepting bets” — wholly unnecessary.  That we did not “accept” bets was our principle defense!  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, just as the word “races” in a hypothetical Bobsled Act would be limited to bobsled races and not, say, horse- or three-legged races.  We should have been safe: “bet” appeared on both sides of the aforementioned “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 or even thought about 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 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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I just can’t get Thursday’s debacle before the Washington State Supreme Court out of my head. The thought of losing what should have been a slam dunk is really starting to sink in — not to mention the reality of a long stint in jail, no doubt insisted on by a prosecutor in exchange for not going after everyone ever associated with Betcha.com. It doesn’t help that it’s been raining straight for about three days.

My crystal ball does not show good things.

My prediction: we lose 7-2 or worse. George Telquist, who argued the case, thinks we’ll win 6-3. Joel Aro, a buddy of mine who said he would never use Betcha.com precisely because he understood that he may not be paid if he won — and whose position was on the record at page 49 of the clerk’s papers — predicted a 9-0 loss after watching the hearing on tvw.

Hopefully it won’t be that bad, but right now I’m not feeling good. At least a few of the justices seemed persuaded by the idea that bets made on Betcha.com were no different than ones made in illegal gambling venues, at least in terms of their enforceability. The logic:

Illegal gambling debts are unenforceable.
Bets made on Betcha are unenforceable.
Therefore, bets made on Betcha are illegal gambling.

Or

If 1 then 2
2
Therefore 2 is 1.

Or

Giraffes are tall.
I’m tall.
Therefore, I’m a giraffe.

Or even better:

Illegal gamblers who don’t get paid are S.O.L.
Bettors on Betcha who don’t get paid are S.O.L.
Therefore, bettors on Betcha are illegal gamblers.

The giraffe logic (or illogic) still applies.

That isn’t the only problem with that reasoning. First, illegal gambling debts are nothing more than unpaid obligations — that is why they are called “debts.” It just so happens that the legislature has decided to make the court house unavailable to unpaid gamblers. Unpaid wagers on Betcha.com are not debts — that’s the point! Betcha bettors have no obligation to pay, just as patrons of these new pay-what-you-want-of-nothing-at-all coffee shops have no obligation to pay. So if the legislature changed the law tomorrow to make illegal gambling debts enforceable, it would benefit unpaid gamblers, but it still would not benefit bettors on Betcha.com: legislation does not alter business models. All of these points we made in our briefs — the first points at pages 15-16 and pages 19-20 footnote 50 of our supplemental brief, the second at page 30 of our appellate brief. I’m just not sure anyone actually read them.

The other problem is that said reasoning begs the question. It may be that illegal gambling debts are unenforceable. But the very question presented in this case is whether a loss on Betcha is an illegal gambling debt. If it isn’t, then losses on Betcha.com are enforceable as we insisted in our lower court briefs — it’s just that because there was no promise to pay there is nothing to enforce. (The good ol’ illusory promise.) If you just assume the answer to the question then of course it is. Never in a million years would I have thought judges would just assume the answer to the question.

I don’t feel much better about the bookmaking issue. There were no shortage of justices who seemed to think that the charging of nonrefundable fees was a “gotcha” point. Of course, as we explained ad naseum in our briefs, that’s wrong. As for the argument that it would be absurd to conclude that I could be a bookmaker even though no one was gambling — well, no one seemed to buy it. I know Washington state courts follow the absurdity doctrine — Judge Elaine Houghton invoked it in her dissent in Division Two. Maybe it doesn’t apply when it would make the State the loser.

I have to give Assistant Attorney General Jerry Ackerman a lot of credit for his performance. I do not like Mr. Ackerman and he does not like me. I’ve learned in the last year that he personally consulted with the Gambling Commission in connection with the Louisiana draw-and-quarter job on me — and told them how to properly bet so the trumped up charges would stick. All, by the way, while he was litigating the underlying dec action! Be that as it may, he did a nice job confusing the issue and basically ignoring just about every one of our arguments and rebuttals.

And much to what will undoubtedly be the Jenkins family’s eternal chagrin, no one called him on it.

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Editor’s note: No disrespect is intended by this entry. But I need somewhere to vent, and nowhere better than to my two readers.

Today was the Supreme Court oral argument in now almost three-year old case between Betcha.com and the Washington State Gambling Commission. (Video.)

It didn’t go at all as we expected.

It didn't appear our October 2009 supplemental brief got much attention before oral argument.

It was bad enough to lose before Judge Gary Tabor based on an argument that the Commission did not even raise and that had been rejected by every court in the country that had considered it. (I speak of his argument that the rule of strict construction does not apply in civil proceedings.) It was worse when Judge Elaine Houghton wrote in her Division Two dissent that we should lose because we located our servers in Canada — as if the words of the statutes at issue would admit to a different meaning if we had hosted our servers in Vancouver, WA rather than Vancouver, BC. But this was the Washington State Supreme Court. And the long and short of it is that, unless they were asking us tough questions and letting the State get by easy just to make us sweat (possible, I suppose), it seemed as though few if any of the justices had read our supplemental brief — or our earlier briefs, for that matter. (Click here to read any of them.) That may or may not have been by design. But it certainly was surprising — we filed the supplemental almost exactly seven months ago.

Did Anyone Read Our Briefs?
I knew things weren’t going to to go well the minute Assistant Attorney General Jerry Ackerman opened his mouth. He characterized our entire business model as nothing more than “a reminder” to our customers that their wagers were legally unenforceable. I expected someone to jump in and correct him — after all, we’d rebutted this characterization at page 17 and footnotes 48 and 50 of our supplemental brief. Instead we got crickets. The point is that wagers made on Betcha.com are enforceable — it’s just that because there was no promise to pay, there was nothing to enforce. This is fundamentally no different than a contract with a six year old (unenforceable) on the one hand, and a run-of-the-mill illusory promise (enforceable, but nothing to enforce) on the other. We made this point at pages 4 and 13 of our summary judgment brief. Apparently these chunks did not get read, either. (Frankly it’s insulting that Mr. Ackerman would think I’d be so stupid to make a reminder the business model, but I digress.)

Things didn’t improve when Betcha’s attorney, George Telquist, took his turn at the podium. The examples of the justices missing the points in our briefs are not insignificant in number, but here are a few.

  • Justice Mary Fairhurst thought she had us on the issue of a person’s Honor Rating constituting a “thing of value.” (She actually said we had an “honor roll.”) We addressed that point at page 19 of our supplemental brief and pages 2-4 of our summary judgment reply brief and page 6 of our appellate reply brief. Apparently not read.
  • Justice Fairhurst also wondered aloud why anyone would leave negative feedback if they did not bet “upon an understanding” that they would be paid. We addressed that point at length on page 18 of our supplemental brief. Apparently not read.
  • Justice Debra Stephens was concerned that, inasmuch as they are not legally enforceable, bets made on Betcha were no different than illegal gambling bets. Never mind that said point ignores the bettors who bet from jurisdictions where gambling debts are enforceable, a point we made on page 17 of our supplemental brief. We addressed the legal enforceability issue at page 19 of our supplemental brief, page 30 of our appellate brief, pages 4-5 of our appellate reply brief, page 4-5 of our summary judgment reply brief and, to a lesser extent, page 17 of our supplemental. Apparently not read.
  • Justice Stephens opined that no one who illegally gambles is technically “risking” anything because they can’t be hauled into court to pay if they bet on credit. We addressed that point at page 5, footnote 7 of our summary judgment reply brief and, somewhat tangentially, pages 3-4 of our supplemental. Apparently not read.
  • Chief Justice Barbara Madsen asked why anyone would come to Betcha.com if not to gamble. The site is, after all, called Betcha.com. By asking such a question she (1) implicitly made “betting” and “gambling” synonyms, and (2) equated “with an expectation” with “upon an agreement or understanding.” The very issue in the case is whether the breed of betting indigenous to Betcha.com constituted “gambling” – a point we made at page 28 of our appellate brief. Our position has long been that all gambling involves betting, but not all betting involves gambling — a point we made most recently in footnote 37 of our supplemental brief. Oh, and we addressed the expectation versus upon an understanding point at pages 13-16 of our supplemental brief. Apparently not read.
  • Chief Justice Madsen also seemed troubled by the fact that we were trying to circumvent the Gambling Act. She’s right. But we did so by eliminating the essence of gambling — that is, the risk and the requirement of payment, a point we’ve made ad nauseum in our briefs since Day One. Apparently not read. (By the way, saying that one is circumventing the gambling laws by eliminating risk is like saying one is circumventing the fraud laws by fully and truthfully disclosing the facts.) Chief Justice Madsen, no doubt the post powerful justice, was the most outwardly skeptical of our position. If the alliance numbers cited in this article are correct, then we’re down 3-0 minimum from the get go. Not good.
  • In our supplmental brief we actually ceded the most controversial territory -- 'will' in gambling (p.7), 'accepting' in bookmaking (p.20) -- to point out we should win even under the State's interpretation. Point apparently not seen.

  • Several of the justices seemed persuaded by the fact that, during the brief life of Betcha.com, only one person hit the “I wanna welch” button in 38 total bets. Never mind that, had we brought this action before we launched, no one would have hit the “I wanna welch” button (proof, I guess, that it would have been even more gambling then). We addressed that issue in full at pages 10-11 of our supplemental brief and pages 7-8 of our appellate reply brief. Apparently not read.
  • Justice Gerry Alexander — who at least did not seem outwardly hostile to our position — spoke to the issue of the word “will” in the definition of gambling and characterized it as an ambiguity. To date there’s been a lot of ink spilled on that word. The problem is that on pages 7-8 of our supplemental brief we ceded the State’s reading of “will” for the sake of argument and argued that even under their definition we still win. Apparently not read.
  • One of the Justices — Fairhurst if I’m not mistaken — asked whether, regardless of the opt-out provision, a person was “gambling” once he was paid. This was an argument the State raised a while back. We have long regarded it as laughable — either a person is gambling or he is not. We rebutted this point on page 13 of our appellate reply brief and reminded the Court of our rebuttal on page 14 footnote 35 of our supplemental brief in an abundance of caution. Apparently not read.
  • It wasn’t just that, from all outword appearances, it appears few if any of the justices read our briefs. At times it also seemed that they hadn’t read the statutes at issue, either — or if they had, not very closely. For example, several of the justices were concerned that we were charging non-refundable fees, as if that, in an of itself, was the “gotcha” fact on both “gambling” and “bookmaking.” That’s been the Commission’s argument all along, and it’s clearly wrong. We addressed that point on “gambling” at page 19 of our supplemental brief, which contained numerous citations to our rebuttals of that argument in the lower courts. Apparently not read. As for the fees and bookmaking, that’s also clearly wrong. RCW 9.46.0213 defines “bookmaking” as “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.” The term “bookmaking” appears in RCW 9.46.0269(1)(d), which provides that “(a) person is engaged in “professional gambling” for the purposes of this chapter when the person engages in bookmaking.” By focusing on the “or” in .0213 and not the “accepting” “bets,” they read the statute as follows:

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

    Without “accepting bets” before “in which,” .0269(1)(d) is grammatically incorrect, and badly so. But nevertheless, that is apparently the reading the Court gave the statute today — just like Judge Tabor did in 2007. Not even the State reads the statute that way — it just insists that our reading of “accepting” is incorrect. As for “accepting” “bets” — we briefed “accepting” at length at pages 20-22 of our supplemental brief, and there was no dearth of citations to earlier briefing therein. Apparently not read. We briefed “bets” on pages 19-21 of our summary judgment brief and cited to it at page 20 of our supplemental. Without “bets,” we could lose on “accepting” and still win on “bookmaking.” Apparently not read.

    The justices didn’t even pick at the lowest-hanging fruit of all — that is, the idea that it is difficult to get oneself worked up over what is at worst a close call when the State itself authorizes so many forms of gambling. This is a point we made at pages 9-10 of our summary judgment reply brief — and we did not lack for authority. Even the United States Supreme Court has recognized that the government’s interest in combatting unauthorized gambling is “decidedly equivocal.” Greater New Orleans Broadcasting Ass’n v. United States, 527 U.S. 173, 187 (1999). This is a bar stool point, we admit — but no one even brought it up. That opinion, authored by Justice John Paul Stevens, garnered eight members of the Court: only Justice Clarence Thomas, who concurred, did not join.

    What really has me worried is that virtually every one of the justices’ questions parroted arguments raised by the State in its brief. We rebutted them all by anticipation in our brief, but no one acknowledged our rebuttals. In our briefing we even ceded arguendo the most controversial words in the case — “will” in RCW 9.46.0237, “accepting” in -.0213 (and thus, -.0269(1)(d) — to show how we win even under the State’s reading. That is, if we take the State’s reading of “will” in .0237 and the statute still isn’t met, then we must also win on bookmaking: to hold otherwise would lead to the absurd result that I was a bookie (and thus a professional gambler and racketeer) even though the transactions I was facilitating weren’t actually gambling. A powerful point, we thought, but no one seemed to buy it.

    “Superfluous? Hey Man, That’s My Argument!”

    Things got so bad that at least one time Mr. Ackerman stole one of our arguments, made it his — and no one called him on it. To wit: in his rebuttal, Mr. Ackerman alleged that interpreting “bookmaking” as we did would make the bookmaker a “player.” That, he said, would make the statute superfluous, which obviously it cannot be. Two problems. First, he never explained how it would make the statute superfluous — and no one asked him to clarify. Second, and as we explained on pages 20-22 of our supplemental brief (apparently not read), the definition of “player” (RCW 9.46.0265) specifically contemplates that a bookmaker would be a player — and thus would qualify for the player exemption. See, e.g., -.0269(1)(a).

    AAG Ackerman pulled a Charles White on me.

    Since the legislature did not want bookies taking advantage of the exemption, they specifically carved them out of the definition of “player.” If a bookmaker wasn’t otherwise a player, the carve-out would be superfluous. Put another way, if .0269 read “acting other than as a player, the person engages in bookmaking,” Mr. Ackerman’s superfluous argument might have at least a leg (the statute would then be ambiguous for the reasons we explained on pages 20-22 of our supplemental). But this is not how the statute reads.

    Not the most obvious rebuttal to Mr. Ackerman’s error I admit, but right there in our brief. And no one said a word.

    The Tribes?
    Perhaps most troubling was a question asked by Justice James Johnson. He asked Mr. Ackerman whether tribal casinos offered any of the types of activities offered on Betcha.com. I don’t know why that is any more relevant to the issue of statutory interpretation at issue here than was the location of our servers, a point Judge Houghton made in her unfortunate dissent in the court of appeals. But the fact that he asked it tells me that at least one justice — possibly him, but my guess is someone else — is concerned that if Betcha wins we might bite into the tribes’ profits. That not only isn’t true, that’s not how blind justice is supposed to work. Especially when the result is that I’ll almost certainly go to prison for it.

    Former U.S. Sen. Al D'Amato, who was in town for the case that followed ours, opined that the Court was gonna 'screw' me. If the justices don't read the briefs, I fear he's right.

    By Design?
    All my angst might be misdirected. For all I know, this was all done by design: perhaps the justices hold oral argument before they read the briefs for a reason. That’s not how I’d do it, but then again I’m not a state Supreme Court justice. I hope that’s it, because we have all worked very hard on Betcha.com — developing The Site, formulating the legal arguments, lobbying the legislature to not pass any of the three bills the Commission pushed in the last legislative session to make us illegal (page 1-2 of our supplemental brief for those.) There is a lot riding on this — prison time for me, considerable investments by our shareholders.

    It is one thing to lose because the justices see our arguments and rebuttals and carefully and thoughtfully rejects them on the merits. They would be wrong, but at least they would be fair. But to lose based on Mr. Ackerman’s misleading descriptions or to lose as though the arguments and rebuttals were not even raised would be a tough pill to swallow — for me, for Betcha’s former employees and investors and, most importantly, for the beneficiaries of this blog (1I2I3.)

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    If the rules of the bet allow you to opt out of it even after you lose it’s still gambling — at least according to the Washington State Gambling Commission. That’s why Betcha.com is no more, and why Reese and Finn’s college funds are now in Louisiana.

    What if the rules of the bet don’t let you opt out, but instead of calling it a “bet” it’s called a “future”? Is it gambling then?

    We may soon find out but so far the answer appears to be “apparently not.”

    I woulda bet big against Avatar -- and I would have lost.

    A couple of buddies gave me the heads up on a new “futures exchange” being launched out of New York by folks from Cantor Fitzgerald. The Cantor Futures Exchange, billed by The New York Times as a “place to bet real money on movies,” is scheduled to launch next month. The site purports to be a place to bet real money on how well (or not) movies will do at the box office — basically by betting the over-under on a movie’s performance. ABC even covered it on this morning’s Good Morning America. A Chicago-based company, Trend Exchange, reportedly will be doing the same thing.

    To me and the author of this piece on Daily Finance, that “(s)ounds an awful lot like gambling on sporting events.” Funny — Betcha offered box office betting, but losers had the right to opt out after they lost (no losing the rent money there). But that, said the WSGC, was gambling. Hmm.

    I have no idea what the folks in Lacey will think about these sites, which hold great promise as additions to American competitive pop culture. Nor would I care to guess given the way they “interpret” Washington state gambling law. One thing’s for sure though — as much fun as it looks, I won’t be betting on box office returns. As much fun as it may be, something tells me they’d enforce it — and most publicly — against me.

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    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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