I don't agree as the word 'device' used in the bet means to me a device like the one BFL has on the pictures on their sales page. All i see in the pictures is the same prototype device.
Another thing that bugs me is that Luke was put into service by BFL a while back so he could work on their product. During this time he stayed in a hotel. If the money was payed out of BFLs pocket i see this as a compensation for his involvement with the product and that would make him a BFL employee by my definition.
I would not confuse paying hotelling expenses for a client or business partner (which Luke-Jr is both) with being an employee. Every company I've ever worked at has expensed out visiting clients, and I myself have been expensed by other companies for various reason, for example Sun Microsystems for a Java product technology demonstration in 1996. If there was any kind of employee relationship in any of those cases, I would have been in violation of federal law, but I wasn't because paying expenses for a visit constitutes no such relationship.
As far as device goes, the bet is poorly worded and in general poorly formed. It too loosely defines device, and since this is the final device that Luke-Jr is getting to fulfill this order with BFL, it appears to be fulfilled.