Online gambling is illegal in the state of Washington (as opposed to Washington, D.C.) so much so that it is regarded as a Class C felony, legally equivalent to armed robbery and punishable with jail sentences.

But Betcha.com won a victory courtesy a ruling from a state appellate court.

Betcha.com, which was live only for a short period in 2007, was essentially a betting exchange that allowed players to bet against one another on a number of topics ranging from politics to sports, a violation of Washington state law, or was it?

According to mediapost.com, Betcha.com was let off the hook by the said court in Washington.

"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.' But the site also allowed users to give each other 'honor ratings' based on whether they made good on their bets," said a mediapost.com report.

"Because Betcha.com customers agreed in advance that participants were not required to pay their losses, Betcha.com was not engaged in 'gambling,'" the court said.

The Washington state gambling commission says it will appeal the decision to the Supreme Court.