Internet Community & Entertainment Corp. v. Washington State Gambling Commission

169 Wash. 2d 687
CourtWashington Supreme Court
DecidedSeptember 2, 2010
DocketNo. 82845-8
StatusPublished
Cited by5 cases

This text of 169 Wash. 2d 687 (Internet Community & Entertainment Corp. v. Washington State Gambling Commission) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Internet Community & Entertainment Corp. v. Washington State Gambling Commission, 169 Wash. 2d 687 (Wash. 2010).

Opinion

Chambers, J.

¶ 1 — Internet Community & Entertainment Corp., d/b/a Betcha.com, is an on-line, person-to-person betting web site that charges its customers fees for connecting them to other on-line users wishing to wager on various events. While customers are expected and encouraged to pay their bets if they lose, Betcha specifically gives bettors 72 hours to elect not to pay a losing wager with another customer. The primary issue before us is whether Betcha [689]*689has engaged in “professional gambling” within the meaning of Washington’s gambling act, chapter 9.46 RCW. We conclude that it has and reverse the Court of Appeals.

I

¶2 Started in 2007, Betcha describes its business as a “person to person betting platform” that “connect [s] people who like to bet.” Clerk’s Papers (CP) at 89. For a fee, registered Betcha users could post proposed wagers on the outcomes of certain events for other users to accept. Posted wagers on Betcha have ranged from sporting events, to political contests, to whether the moon would be full on a given night. Offerors were able to set the terms of the wager, including whatever stakes1 and odds they concluded were appropriate. Offerors were required to first fund an account with a credit card in order to ensure that offerors had enough money to “cover” their bets if they lost. Likewise, those accepting an offer to wager were required to have enough funds in their accounts to cover the bets before wagers could be successfully accepted. Once a bet was accepted, Betcha placed the wagered funds into escrow and froze the account pending the outcome of the wagered on event. Betcha earned money from these transactions by charging a fee whenever a bettor listed a bet, accepted a proposed bet, proposed a counteroffer to a bet, or posted an offer in a larger font size and a more prominent location.

¶3 Once a wagered event was complete, bettors submitted claims that they had either won or lost the bets or that the bets were ambiguous.2 If the losing bettor agreed to the [690]*690loss, Betcha would transfer the money from escrow to the winning bettor’s account. One of the most notable features of the Betcha platform, however, was that a losing bettor had up to 72 hours after a winning claim was made to choose not to pay the loss. In other words, losing bettors had the option to not pay what they owed by simply clicking a button on their computer screens. If a bettor did not affirmatively exercise the option not to pay within 72 hours of a winning claim, or otherwise respond to the claim, Betcha would transfer the money from escrow to the winning claimant’s account.

¶4 Refusing to honor a bet did not come without consequences. Every registered user on Betcha was given an “honor rating,” a number representing the relative trustworthiness of a bettor that gave an indication of how likely that bettor was to not pay a losing bet. The theory behind the honor rating system was that a member of Betcha who proposed bets would be less likely to engage in betting with another member with a low honor rating, thus making it more likely that the loser would make good on losses. Honor ratings were based on various factors including, among other things, the size of a user’s bets, negative feedback from other users, and the promptness with which a bettor paid losses.3

¶5 Soon after Betcha’s launch, agents from the Washington State Gambling Commission (Commission) met with Nicholas Jenkins, Betcha’s founder and principal. The Commission had determined that Betcha was engaged in professional gambling and ordered Betcha to cease operations. Jenkins disputed the Commission’s claim that Betcha was engaged in professional gambling, arguing that because [691]*691bettors are not compelled to pay their losses, they are not gambling. Betcha filed an action for declaratory judgment and injunctive relief, seeking a ruling that its operations did not violate state gambling laws. Both Betcha and the Commission filed motions for summary judgment, which the trial court granted in favor of the State. The trial court ruled that bettors on Betcha were engaged in “gambling” as defined in RCW 9.46.0237, that Betcha transmitted and received “gambling information” under RCW 9.46.240, that Betcha engaged in prohibited “bookmaking” as defined in RCW 9.46.0213, that Betcha’s activities were illegal “professional gambling” as defined in RCW 9.46.0269, and that Betcha used “gambling records” as defined in RCW 9.46.217. Verbatim Report of Proceedings at 57-59.

¶6 In a split decision, the Court of Appeals reversed. Internet Cmty. & Entm’t Corp. v. Wash. State Gambling Comm’n, 148 Wn. App. 795, 811-12, 201 P.3d 1045 (2009). Applying principles of strict construction and the rule of lenity, the court held that Betcha users had not “gambled” because bettors did not have an understanding that they “will” receive something of value, only that they might, if the losing bettor decided to actually honor the bet. Id. at 809. The court also held that Betcha did not engage in “bookmaking” because that crime involves “accepting bets,” which the court found to be ambiguous and construed in favor of Betcha. Id. We accepted review. Internet Cmty. & Entm’t Corp. v. Wash. State Gambling Comm’n, 166 Wn.2d 1019, 217 P.3d 335 (2009).

II

¶7 We review a trial court’s grant of summary judgment in a declaratory judgment action de novo. Simpson Tacoma Kraft Co. v. Dep’t of Ecology, 119 Wn.2d 640, 646, 835 P.2d 1030 (1992). We also interpret statutes de novo. In re Estate of Kissinger, 166 Wn.2d 120, 125, 206 P.3d 665 (2009). “Statutes which define crimes must be strictly construed according to the plain meaning of their words to [692]*692assure that citizens have adequate notice of the terms of the law.”4 State v. Shipp, 93 Wn.2d 510, 515-16, 610 P.2d 1322 (1980).

Ill

Professional gambling

¶8 As the Court of Appeals noted, resolution of this case depends in large part on whether Betcha was engaged in “professional gambling,” as that term is defined under Washington’s gambling act, chapter 9.46 RCW. Under the gambling act, a person is engaged in “professional gambling” when, among other things:

(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

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Bluebook (online)
169 Wash. 2d 687, Counsel Stack Legal Research, https://law.counselstack.com/opinion/internet-community-entertainment-corp-v-washington-state-gambling-wash-2010.