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Nick Loya

Negotiating the US Legal Morass the Gentlemanly Way

26 June 2007

A new online betting service called is trying to promote a form of peer-to-peer betting within the United States that it claims is fully legal due to the nature of all wagers as "gentlemen's bets." functions much like an online auction site, where users post their own wagers on everything from the outcome of particular sporting events to which movie will be number one on that weekend’s box office. The bets are accepted by other users either as individuals or in the form of pools organized by the site.

After the U.S. Unlawful Internet Gambling Enforcement Act (UIGEA) was enacted last October, however, the question remains: Is it legal? claims it is, owing to the fact that betting--its version of it, anyway--is based on an honor system. The site itself makes no effort to transfer funds and leaves the responsibility of settling losses to the players. This feature leaves open the possibility that some losers might never pay out, making the bets "gentlemanly," and the operation, according to its owners, perfectly legal due to its inability to meet the formal legal definition of gambling. Thus, the site is merely hosting bets--not facilitating gambling.

Nevertheless, in an effort to promote responsible betting that keeps with the honorable motif of the site, every user receives an individual honor rating, which is a cross between a credit rating and a reputation score, according to the site. The more bets a player takes and successfully pays off, the higher his or her honor rating will be. On the other hand, refusing to pay off a big loss or acting rude to other bettors can lead to a big drop in a player's honor rating, reducing the number of other users who would be willing to take that player's action. officials state that the site is legal so long as players don't absolutely have to pay off wagers. Nonetheless, it remains to be seen whether a drop in a player's honor rating will represent a similar item of value to federal or state authorities. states on its site that it is located in Seattle, Wash., and that customers can fund their accounts on the site using a major credit card. While the company has determined that its operation falls within the bounds of current state and federal law, it has yet to be determined if law enforcement officials will reach the same conclusion. is not the first Web site to attempt peer-to-peer style betting. organized its sports book operation in a similar manner until the pressures of the U.S. legal climate forced it to shut down in February 2007. Similarly, Garet Bradford's WagerFree attempted to act as a peer-to-peer betting club before the Nevada Gaming Commission ruled it an unlawful gaming operation--Bradford was subsequently charged with a pair of felonies.

Negotiating the US Legal Morass the Gentlemanly Way is republished from
Nick Loya
Nick Loya