INTERNET COMM. & ENTERTAINMENT CORP. v. State

201 P.3d 1045
CourtCourt of Appeals of Washington
DecidedFebruary 10, 2009
Docket37079-4-II
StatusPublished
Cited by2 cases

This text of 201 P.3d 1045 (INTERNET COMM. & ENTERTAINMENT CORP. v. State) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
INTERNET COMM. & ENTERTAINMENT CORP. v. State, 201 P.3d 1045 (Wash. Ct. App. 2009).

Opinion

201 P.3d 1045 (2009)

INTERNET COMMUNITY & ENTERTAINMENT CORP., d/b/a Betcha.Com, Appellant,
v.
STATE of Washington, a government entity, and the Washington State Gambling Commission, a Commission of the State of Washington, Respondents.

No. 37079-4-II.

Court of Appeals of Washington, Division 2.

February 10, 2009.

*1046 Lee Howard Rousso, Green & Rousso PLLC, Renton, WA, for Appellant.

Jerry Alan Ackerman, Assistant Atty. General, Olympia, WA, H. Bruce Marvin, WA State Attorney General's Office, Olympia, WA, for Respondents.

BRIDGEWATER, J.

¶ 1 Internet Community & Entertainment Corp., d/b/a Betcha.com, an Internet betting exchange, appeals from a summary judgment in its declaratory judgment action, ruling that it violated the Washington State Gambling Act, chapter 9.46 RCW, by providing a forum for person-to-person social wagering. We hold that because Betcha.com customers agreed in advance that participants were not required to pay their losses, Betcha.com was not engaged in "gambling" as defined in the Gambling Act. Also, the listing of bets for a fee was not "bookmaking" because bookmaking rests upon Betcha.com engaging in "gambling." We reverse and remand for entry of summary judgment in favor of Betcha.com.

FACTS

¶ 2 From June 8, 2007, until on or about July 11, 2007, Betcha.com operated a website that provided a patent-pending, person-to-person betting platform.[1] Internet users who registered and funded accounts on Betcha.com's website could offer betting propositions to other users and accept betting propositions from other users by paying nominal fees to Betcha.com for providing the forum services facilitating that activity.[2] The unique aspect of Betcha.com's business model was that users conducted their activities with the understanding that bettors were not required to pay if they lost a wager. Notably, users had to first agree that bets were "non-binding" in order to use the website. CP at 86. The website's page setting forth "Terms of Service" provided in relevant part:

1. ACCEPTANCE OF TERMS
Welcome to Betcha.com ("Betcha"), the world's first honor-based betting exchange. Betcha provides its service to you, subject *1047 to the following Terms of Service ("TOS")....
2. DESCRIPTION OF SERVICE
Betcha provides users with a global platform to list and accept bets (the "Service"). Bets made on Betcha are made on the honor system — that is, bettors are not obliged to pay when they lose. We hope they will, of course, not because they have to, but because they should. In any case, bets made on Betcha carry no term, express or implied, that winning bettors will be paid when they win.
You understand and agree....
The Service helps bring bettors together to make non-binding bets. You understand and agree that bets are made between you and fellow bettors, not Betcha. You are responsible for collecting on winning bets. You understand and agree that Betcha assumes no responsibility for bets that are unpaid or underpaid.

CP at 86. The website repeatedly made the point that bets were non-binding. On an informational page under the rubric "Why Betcha > Why Not," the webpage stated:

At Betcha we treat others as we'd have them treat us. That's the Golden Rule, and it's the basis of our unique honor-based betting platform. So we're duty-bound to be honest about why Betcha might not be for you:
Payments on wins are not guaranteed.
Betting on Betcha is between individual bettors and groups of bettors. Not us. Bettors always retain the right not to pay their losses. Your protection against that possibility is the Honor Rating system — i.e., you leave negative feedback when/if you run into a welcher, and that feedback makes it that much less likely that other people will do business with your welcher in the future. Betcha does not take a side in bets, one way or the other. And just like when you bet with your pals in the real world, there is no guarantee that losing bettors will pay their losses.

CP at 88. On the "Overview" page the website stated:

Betcha.com is a person-to-person betting platform. We connect people who like to bet.... For legal reasons, betting on Betcha is done on the honor system — bettors who pay build their reputations (called "Honor Ratings"), bettors who don't may find it tough to get action in the future.

CP at 89. The FAQ page included the question: "What if the person I'm betting against doesn't pay?" CP at 87. The website answered: "you are basically out of luck," explaining that although the Betcha.com website would "hold the purse" during the pendency of an active bet by escrowing the bettors' possible losses, "[n]evertheless, a losing bettor can decide that, for whatever reason, he just doesn't want to pay." CP at 87. See also CP at 90 ("Our Mission" page stressing the website's "honor-based betting platform"); CP at 92 (website's answer to FAQ: "Is this legal?," explaining that because bettors can withdraw their bets and not pay their losses, they are not risking anything, thus they are betting without gambling).

¶ 3 To place a bet on Betcha.com's website, a user had to first register, create a username, provide a mailing address, and fund an account with a credit card payment over the Internet. Upon registration, he received an honor rating of 250, which could then go up or down based on his payment record and feedback from other bettors with whom he had bet. He could then bet with other users, individually or in pools, by drafting a bet or using pull down menus provided on the website to assist in formulating the proposition, or he could select from lists of predrafted wagers on a variety of topics. He could also set parameters such as how long the bet was to remain open, and the minimum "Honor Rating[ ]" that the accepting bettor must possess. CP at 401.

¶ 4 When a bettor listed a bet, the website deducted a small fee from the bettor's account. When another bettor accepted the bet, the website deducted a matching fee from both bettors' accounts. When a user listed or accepted a bet, the funds being wagered were placed in escrow until the bet settled. After the event that was bet upon had occurred, the website sent an e-mail to the bettors telling them to return to the *1048 website to make their claim. Bettors then had 72 hours to make a claim. If a bettor did not respond, he agreed to be bound by his opponent's claim. On the claim page, bettors could choose and click on a button indicating: "I won", "I lost," "I can't decide," or "I'm gonna welch." CP at 47, 423. Once a bet had been resolved, each bettor could leave the other feedback, which affected their respective honor ratings.[3]

¶ 5 On June 8, 2007, Betcha.com opened its website to the public and began engaging in the activity described above. On June 21, 2007, agents from the Washington State Gambling Commission visited Betcha.com's Seattle office. The agents met with Jenkins, told him that commission personnel had determined that Betcha.com was engaged in illegal professional gambling and instructed him to stop operations, return all fees that Betcha.com had collected from its customers, and get legal counsel.

¶ 6 On July 6, 2007, Jenkins and his attorney met with commission personnel in Lacey.

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Related

Internet Community v. State Gambling Com'n
238 P.3d 1163 (Washington Supreme Court, 2010)

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Bluebook (online)
201 P.3d 1045, Counsel Stack Legal Research, https://law.counselstack.com/opinion/internet-comm-entertainment-corp-v-state-washctapp-2009.