Jul 24, 2007 2:45 AM

Staff & wire reports

Just a few weeks after setting up an Internet bet handling site patterned after eBay, was shut down by the Washington State Gambling Commission.

Two weeks ago, investigators seized computers from the Seattle-based Internet-betting site, claiming the business violated the state’s 2006 online gambling ban — a charge the site’s founder strongly disputes.

Founder and Chief Executive Nick Jenkins found out about the raid from his wife, who had stopped by the workplace before business hours and found investigators inside.

"This is ridiculous," Jenkins said. "I’m going to fight it. I don’t like the heavy-handed state coming down on entrepreneurs."

Jenkins is seeking a restraining order against the state. Susan Arland, the commission’s spokeswoman, confirmed that the company’s computers were seized but declined further comment.

Unlike other crusaders who are trying to legalize online gambling, Jenkins’ fight with the state is a different one: He is not challenging the legality of the state ban; instead Jenkins says simply isn’t governed under the ban approved by the Legislature last summer.

Modeled, in part, after eBay, provides a forum for people who want to make bets against each other on almost any topic, such as who will hit the first All-Star game home run or who will win an Oscar.

Bets are not guaranteed. Similar to the popular online auction site, individual bettors receive customer ratings based on payouts. Because there is no guarantee of payment upon winning — does not accept or back bets — it doesn’t meet the legal definition of gambling and thus isn’t illegal, Jenkins said.

Jenkins, a 38-year-old 1994 Georgetown Law School graduate, said he spent months researching gambling laws in each state and at the federal level.

"This is an honor-based betting platform," he said. "How can you be gambling under a legal definition if you don’t have to pay when you lose?"

The idea for came to Jenkins in 2003 when a friend declined to pay after losing a golf wager. Jenkins wondered if it would be possible to set up an online community with like-minded bettors and a rating system to identify the safe bettors.

After assembling a team of investors and putting his own money on the line, he did a soft launch of the site three weeks ago, "to work on the bugs." Soon after, he was contacted by the state. Two weeks ago, he explained his legal rationale to commission attorneys.

A few days before his office was raided, the Gambling Commission summoned Jenkins to talk about his Web site. The meeting was quick.

"They said shut it down or else," Jenkins said. "I told them the law doesn’t apply to us. They said the law is a matter of interpretation."

The same day, Jenkins filed his lawsuit seeking to stop the state from applying the Internet gambling law to

The search warrant came three days after Jenkins and the state failed to reach agreement on the site’s legal status.

He said the commission has lost perspective on which laws it should enforce and upon whom.

"When you are a hammer, I guess everything looks like a nail," he said.