Betcha.com was a very short-lived experiment in peer-to-peer betting, founded by Nicholas Jenkins, in of all places, Seattle, Washington. Betcha existed for less than a month in the summer of 2007, closing after a raid from Washington state authorities shut down the operation, seizing the computers. Within a few weeks, Louisiana jailed its founder. This week a reversal in the online gambling case came down from the vaunted state of Washington, where online gambling is a felony offence.

The original court’s ruling that Betcha violated the Washington State Gambling Act, was overturned for two simple reasons: Betcha was not engaged in “gambling” as defined in the Gambling Act, and the listing of bets for a fee was not “bookmaking” because bookmaking rests upon Betcha engaging in “gambling.”

As far as the first basis, it appears to be just a loophole in the existing state laws, that undoubtedly will be closed quickly. Apparently, players were not obligated to pay losing bets – Betcha was the world’s first ‘honor-based’ betting exchange. In the ‘description of service’ section of the Betcha website was the line where “bettors are not obliged to pay when they lose.” After a game or event was finished, bettors would go to the claim page, and could choose and click on a button indicating: “I won”, “I lost,” “I can’t decide,” or “I’m gonna welch.” The fact that players could get out of paying losing wagers is the main reason that this whole case went down the tubes for state prosecutors.

Now many would lead you to believe that this is a victory for internet gambling. But, when the entire reversal is based on the fact that a player can “welch”, it is really only a victory for scammers. Still, I have to wonder if this opens the doors for sportsbooks that allow you to play on credit. After all, if losing bettors don’t pay, there is no gambling according to this recent ruling. It also makes me wonder if scam books like Cascade or Ultimate-Odds, who operate under a long history of stiffing players, are really accepting illegal bets. If I were playing there, I would wonder if I am going to get paid….

However, this ruling does give some optimism for betting exchanges. Betcha contended that because it did not “accept bets” (as a player or stakeholder with an interest in the outcome), it was not “bookmaking” as statutorily defined. Applying that rule in Betcha’s favor, the definition of bookmaking requires one to “accept bets,” meaning to take a position in the bet. Betcha did not actually take bets, as a traditional bookmaker does and thus was not a bookmaker. This may open the door for any betting exchange as all exchange websites simply put two bettors together and charge a fee from each participant.

Still, Betcha’s founder does not plan on re-opening anytime soon. But, exchanges around the globe are keeping an eye on the state to see if they will appeal the ruling. If not, perhaps one of them will open in the U.S. and test the waters. Surely, any gambling site that does look to capture Betcha’s market share will certainly keep their legal team well staffed.