Legally binding stake deal - possible?

[Orpheus]

I've long had an idea for such a contract. Here's an approach to run past your lawyer (you'd want a lawyer to draw up at least your first staking contract, even if you planned to reuse the language in later cases):

1)Establish a suitable Jurisdiction, J
This is done all the time. If SwissBank wants to do a French financial deal with CitiBank, they don't both fly a top exec to France. They stipulate a relevant jurisdiction in the contract itself (the details obviously vary according to the jurisdiction) If this were not possible, it would be a significant hindrance to modern international, or even interstate commerce.

2) Structure the deal as a basic loan with onerous terms
Since staking arrangements tend to be short term, with a potentially higher annual rate of return than allowed by the usury laws in many jurisdictions, the selected jurisdiction, J, should ideally not have usury laws, allowing you to write the basic contract as (e.g.) a 1000%/week loan, with penalties for delayed payment. Since it is likely that a case could take many months or years to clear the courts, you may find a much lower rate acceptable (e.g. 30%/yr is allowed in many states, and many states have specific examptions for SHORT TERM loans (aka "payday loans") because no company would be willing to issue a 1-week loan at the usual APR (e.g. 24% APR = 0.4145%/week) It simply wouldn't be worthwhile for a business: the paperwork alone would cost more than the loan would yield. You may also establish specicially allowed fees and other penalties to "load up" the aversive terms of the basic agreement. Specify the LENDER'S attorney fees (and other collection expenses) at the highest reasonable hourly billing rate (your lawyer will like the idea of being paid at F. Lee Bailey rates, and you won't lose a penny, due to condition (3) below)

3) Include an "escape clause", exercisable at the discretion of the borrower
The escape clause contains the actual intended arrangement, with the outcome of the desired gambling as an index. Since the "basic loan" has such onerous terms, the borrower would be a fool to go to court and contest it. The underlying loan is legal, so they could only contest the (cheaper) escape clause, and invalidating that would leave them subject to the much more costly underlying loan. (Invalidating one nonessential clause of a contract does not invalidate the entire contract).

True, opposing counsel could argue that the contract was a transparent fraud, but you'd almost certainly be awarded the return of your original stake plus legal fees and costs of collection -- which is more than you usually get from a welsher-- and by going to court, the borrower would be running the not-insubstantial risk that the underlying loan would be upheld. Again, careful choice of relevant jurisdiction is valuable. I have heard of jurisdictions with precedents that are decidely unfriendly yo such arrangements. "Inordinately shrewd" businessmen have been around a long time.

This is not legal advice, nor do I claim I'm qualified to provide such advice in your (or any) jurisdiction. It's just an idle notion, expressed solely to inspire discussion in the 2+2 internet community of poker hobbyists.