Palmer skirts this pesky problem by banking his customers. Three elements have to be present to violate most state gambling laws--namely "prize, chance and consideration," says attorney Chuck Humphrey, a gaming-law specialist and author of the Gambling Law U.S. blog. Because Centsports.com doesn't allow users to bet their own stash, no "consideration" is involved, and thus all is kosher. Quips Palmer: "Congress assumes if you’re dumb enough to give away money, then go for it."
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.
Cashing out is not exactly straight forward. To ensure he can always pay the electric bill, Palmer puts the breaks on payouts (talk about having a house edge). Users compete with each other to snag their winnings from a community pot; big winners get preference.
Users can also earn money by referring friends to Centsports.com. The incentive: 5% of any winnings their friends rack up.
Saturday, June 14, 2008
Legal, advertiser supported Online "Gambling"
Posted by Ben Cunningham at 8:21 PM