Why is this is referred to as a bet? To me, I would view this as a contract of suretyship. I don't know all of the details involved with the specific individuals that contracted with this guy but there seems to be sufficient evidence that this guy created a contract Which meets all of the statute of frauds for most jurisdictions. When reading through these posts, I was literally shaking my head at his own postings since they could destroy him if someone sued him. He has noted that he is naive. Is he ever.
Then those who think that all this betting business holds legitimacy should run Matthew to a court of law. Seriously, I don't think anyone would ever get to that point, and they wouldn't even win. It would had to be proven without reasonable doubt. Impossible.
The posts at this forum doesn't even hold any kind of legitimacy. If it was matthew in person who wrote all the posts, or someone hacking his account, impossible to prove. By IP-adress ? What if there was a trojan on his computer ? Not plausible, yes - but impossible ?
To me, this is just similar to 'bar-talk'. You know that guy you know ocassionally from somewhere, and meets you at the bar and he goes on and on about the great business you're going to create togheter, or how he's going to visit you with his wife and kids, or how he's going to donate to your chairty of choice. We all know that by the end of the weekend, all that is forgotten, it was only drunk talk. No intentions to ever go through with the promises. Same here. Who could expect that somebody in a distant part of the world, actually would have the financial means, and the will to actually pay foreigners with whom he had no formal contract ?
Sure, some people may put in a legit bet of 10 BTC, or whatever they can afford, but it isn't stopping anyone from claiming that they want to bet 500 BTC. Then if they lost, we'd never see any payment at all. There simply was no downside, apart from damaging the rep of a forum account.
Now, if proper betting was to be done, the full amounts would have to be paid in advance by both parties and held in escrow till the bet is settled, and of course it could not be declared void because of some technicality. You didn't want to put 500 BTC in escrow ? Ok, then that's not a amount you wanted to bet then, bet something you can afford to lose, or don't bet at all!
As much as Matthew have been a drama queen, he's under no obligation at all to pay to anyone. Perhaps some would say he's under a moral obligation, but the legal resposibility and moral obligation usually doesn't sit together. If anyone is 100% sure that Matthew is legaly obliged to pay, then by all means sue him. The court will just laugh the case off. Hi, what - a stranger gave him his word on the internet ? Yeah, sounds like a legally binding contract.
I do not defend his actions, as I think they were just as idiotic as anyone else thinks, but I'm just being realistic here. And if Pirate actually did pay up, how many would honour their bets ? 10%-20%, I'm not sure, but I think the percentages would've been very low.
So - sue or shut up!