Interesting article in yesterday's Forbes outlining a company that recently launched in the US called Centsports.com that offers "a legal alternative to online gambling." Here's how the site works. Each user starts off with 10 cents in his or her account, provided by Centsports. (You need only register a name and password.) From there, they can bet on any event for which Las Vegas bookmakers set a line. Once users accumulate $20 in winnings--the equivalent of doubling your money eight times, or striking gold on a 200-to-1 long shot--they can cash out a minimum of $10 and receive an actual check in the mail. (In terms of "consideration," winnings on that initial 10-cent stake don't constitute ownership until actually cashed out.) Losers risk nothing--except perhaps a touch of pride--and get immediately restaked with fresh dimes.
To violate state gambling laws online, you need three major elements present - prize, chance and consideration. According to Forbes, "because Centsports.com doesn't allow users to bet their own stash, no "consideration" is involved, and thus all is kosher." While a very clever move on Centsports part, I tend to believe that the second that money is "yours" and you wager, you are making a bet and that money is now yours. This is a great company as it will most certainly attract the attention of the Department of Justice if more people keep betting on it. The DOJ has clearly been dormant these past few months, and it will be interesting to see how they react to Centsports operation. Hopefully, if the DOJ intervenes it should put more pressure on legislators to figure out the mess they have gotten themselves into.
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