• by Wendy Davis  @wendyndavis, September 8, 2010

Washington's state supreme court has ruled that the site Betcha.com violates anti-gambling laws, even though it allows users to back out of losing bets without paying.

The court said the site runs afoul of a state law that prohibits companies from engaging in "bookmaking" because Betcha.com charges users to place bets. "Betcha's entire business model was based on charging fees from those wishing to bet on its web site," the appellate court wrote. "It was unambiguously engaged in "bookmaking" as that term is defined under the gambling act."

The ruling reversed an appellate court's decision that gave the nod to the site on the theory that participants weren't really gambling because they weren't required to pay when their gambles proved wrong.

Betcha.com offered a platform for users to bet with each other about matters like the outcome of political elections and sports games. The terms of service spelled out that Betcha.com worked on the "honor system" and that "bettors are not obliged to pay when they lose." Players had up to 72 hours to decide whether or not to honor a bet. But the site also allowed users to give each other "honor ratings" based on whether they welched.

The site was only online for a few weeks in 2007 when authorities from the Washington State Gambling Commission demanded that founder Nicholas Jenkins shut it down. Jenkins then went to court to seek a ruling that the site was lawful. A trial judge ruled against him, but the appellate court cleared the site in 2009. The state gambling authorities then appealed to the Washington Supreme Court.