Mrs Justice Foster DBE granted summary judgment yesterday (7 April 2021) in favour of an online gambling customer of Betfred.  That judgment (in the High Court case of Andrew Green v Petfre (Gibraltar) Limited t/a Betfred, in relation to which we originally reported in November 2018) can be accessed here.

Under other circumstances, such a Court judgment determining a longstanding contractual dispute between a gambling operator and one of its customers, might result in little need for much by way of additional commentary. However, as we explain below, very harsh criticisms by the judge of Betfred’s terms of business mean that all UK licensed online gambling operators should – in our view – be very carefully considering whether they need to review their own such terms as a matter of urgency.

The facts

The facts giving rise to the application for summary judgment were summarised as follows by Mrs Justice Foster at the beginning of  her judgment:

On 26 January 2018, just after midnight Mr Green began playing a game online called ‘Frankie Dettori’s Magic Seven Blackjack’ (“the Game”) via an online platform hosted by the Defendant (whom I shall refer to here as “Betfred”). In particular he played for about 5½ hours on a side bet feature within the Game. At the point when he finally stopped playing the Game, having left, and played elsewhere on the site for a short time, betting chips to the value of £1,722,500.24 were recorded on screen as his winnings. When he attempted to withdraw the winning chips into his cash account with Betfred he was unable to do so.

He contacted customer services at Betfred about his win, they congratulated him and asked him to ring back after 9:30 AM later that day to make arrangements for his chips to be cashed. The evidence differs as to what was said, but it is agreed that, subject to checks which they said had to be carried out, Betfred did not seek at this point to suggest other than that he was a big winner. Mr Green went out that night and celebrated with his family and friends spending some £2,500 in the process, expecting, as he says, to be credited with £1,722,500.24 in his account. When he was in touch with Betfred’s VIP team on the Monday he was told the win was so big it would have to be sent off to the Game provider, Playtech, to be double-checked, and that this was standard procedure. Two days later on Wednesday, 31 January 2018 a Mr Russell Young for Betfred informed Mr Green that Playtech had informed him there had been a glitch in the Game and he could not be paid out.

For the purposes of this application, the Claimant agrees, as is pleaded in Betfred’s defence, that, unknown to Betfred and to Mr Green, what appears to be a fault in the development of the Game meant that where play continued without a break, it gave much better odds of a player winning than Betfred intended. Betfred say that eventually at some point over time if play did not cease, the player would have held only winning cards.

Betfred said they were not obliged to pay Mr Green his winnings in the circumstances, and the terms of the contract between them excluded liability to him. Mr Green issued a claim for his winnings relying upon certain clauses in a Terms and Conditions document he had clicked to accept when he first accessed the site some years previously. The Game itself was first made available to players at 10:19 AM the day before it was played by Mr Green.

To expand on Betfred’s defence to Mr Green’s claim, it contended that:

• because there was a defect in the Game (that had been provided by and licensed from Playtech Software Limited):
• • clause 4.4 of Betfred’s Terms and Conditions (“Ts&Cs”) to which Mr Green had agreed meant that Betfred was not liable to pay his claim, and
  • clause 5 of the End-User Licence Agreement (“the EULA”), to which he had also agreed, also entitled Betfred not to pay out
• the rules of the Game (“Game Rules”) that were incorporated by reference in the gaming contract by means of clause 2 of the EULA (and/or by necessary implication) also excluded liability as they provided that bets and payments in the Game would be void as a result of “malfunction” and the above-mentioned fault constituted a malfunction and, alternatively, the parties were operating under a mutual mistake at the time when Mr Green played and that served to void the contract between them.

The judgment

Concluding that the Claimant (Mr Green) succeeded in his claim for summary judgment against Betfred, Mrs Justice Foster found that:

The wording of each of the clauses relied upon is inadequate as a matter of the natural meaning of the language in context to exclude liability to payout Mr Green’s winnings in the events which happened.

The manner in which the relevant clauses were presented and the failure adequately to draw them to his attention meant that the three purported exclusions, even had they been effective to exclude liability, were not incorporated in the contract between the parties.

Even if the words of the clauses relied upon by Betfred were adequate to encompass the fault in the Game and adequately brought to Mr Green’s attention so as to be incorporated in the contracts of gaming, they were not transparent or fair and Betfred were not entitled to rely upon them.

The doctrine of mistake is inapplicable to these facts.

The reaction by Betfred

Reporting on the judgment in an article entitled “Online gambler wins court case to claim £1.7m prize after Betfred refused to pay”, the Guardian has quoted a Betfred Spokesman as saying:

Mr Green won the jackpot three times whilst playing a game provided by one of our third-party suppliers. The supplier reported a software problem to us and advised that we should withhold payment. However, we will abide by the court’s decision and not appeal. We would like to apologise to Mr Green for the delay in receiving his money.

The consequence of the judgment for other UK licensed online gambling operators

The judgment of Mrs Justice Foster merits very serious and immediate consideration by all UK licensed gambling operators of their own customer contractual documentation in order to determine whether changes are required to ensure that their terms of business do not invite criticisms of a similar type to those made by the judge in this case.

If they fail to do so, they risk not only (a) running into the same sort of customer-related problems as those encountered by Betfred in this case, but also (b) potentially infringing requirements within the Gambling Commission’s Licence Conditions and Codes of Practice (“LCCP”) – summarised below – on the ground that their terms of business infringe consumer protection law.

Licence condition 7.1.1 requires that licensees must ensure that the terms on which they offer gambling are (a) not unfair and (b) transparent under the Consumer Rights Act 2015. They must also (a) make those same terms available to customers in an easily accessible way and (b) comply with those terms themselves. In addition, under LCCP Social Responsibility Code provision 4.1.1, they “must be able to provide evidence to the Commission, if required, showing how they satisfied themselves that their terms are not unfair”.

In November 2017, following a joint programme of work by the Gambling Commission and Competition and Markets Authority to tackle concern about whether consumers were being treated fairly by online gambling operators, the Commission issued a warning to such operators to review their terms and conditions before regulatory action was stepped in order to ensure that consumers are treated fairly.

Delivering that warning in 2017, the regulator’s then Executive Director Sarah Gardner (currently one of the two joint Acting Chief Executives of the Commission following Neil McArthur’s sudden departure from his role as CEO on 15 March 2021) stated:

Too often we have found that the terms and conditions have been complicated, one-sided and difficult to understand. Addressing this is a priority in our recently launched strategy – a roadmap for a fairer, and safer gambling market. Our work over the next three years will include ensuring greater transparency from gambling firms in the information they make available to their customers and we’ll be working with the industry to ensure that consumers can make decisions about their gambling more confidently.

What did the judge find wrong with Betfred’s contractual terms of business?

The judgment records that Betfred’s Ts&Cs extended to 32 pages (or, when printed, 24 pages of “closely typed” wording), its Game Rules to six pages and the EULA to nine pages of “closely typed material”.

The judge considered that, having accessed the Ts&Cs and then the EULA, it was “quite unreasonable to expect [Mr Green] would have found and noted the importance of the key clauses relied upon” by Betfred, adding that “the unhelpful, often iterative presentation in closely typed lower-case or numerous paragraphs of capital letters meant that the relevant clauses were buried in other materials. These features are exacerbated by the fact that the player must click through and scroll online, searching out what appears to be relevant to him”. 

The judge did not hold back on other criticisms of the wording contained within Betfred’s contractual documents in force at the time Mr Green’s claim arose. For example, she concluded that, amongst other things, the Ts&Cs:

• had “a number of infelicities of presentation” and its language was both “iterative and repetitive” and “obscure and unclear”,
• contained typographical mistakes and numbering that was “absent or inconsistent’ in some places,
• employed a layout and terminology (in relation to ‘rules’) that neither made exactly clear what a player was obliged to agree to nor where to find it, if indeed it was additional to or differed from what was set out within the Ts&Cs,
• in a similar vein, purported to bind players to Betfred’s ‘House Rules’, without defining that phrase or providing a link to further documents that would constitute such rules or indicate what was comprised within such rules, and
• contained nothing within its phraseology to suggest that “the player [was] being directed to a term that purports to allow Betfred to sweep away the whole of his winnings after a significantly extended period of apparently unimpeachable play where neither he nor they have, or could have, any idea there is anything amiss”.

In the case of the Game Rules, failure to click on a box under which those rules were contained did not prohibit entry to the game in question. In addition, the Judge found that “nothing on the Game site suggests that important exclusions of liability are contained in the clauses which appear only in the ante-penultimate and penultimate lines and to deal only with the ‘how to’ of the Game”.

She criticised the EULA for having “the appearance of a standard form of software licence agreement. It is long and complex, repetitive, both internally, and in terms of areas of its content has similarity with the Terms and Conditions, and it is in parts, obscure”. In what could be regarded as recognition of this, the EULA cautioned customers to consult an attorney or other legal adviser in the jurisdiction if in doubt over its meaning. The judge commented that, in the context of a contract for an online consumer betting facility, this constituted “a singularly ineffective attempt to shift the burden of providing clear language and proper warning where liability is sought to be excluded”.

Overall, she found that:

• there was no definition within Betfred’s contractual documentations of the meaning and extent of the word “malfunction” with the consequence that, to achieve the meaning sought by Betfred for the exclusion clauses in its Ts&Cs, Game Rules and  EULA, it was necessary for “a strained and unnatural meaning to be given to the terms” and
• “each of the clauses which purports to allocate the burden of the risk of an undetected and undetectable defect to Mr Green, [were] inadequately drawn to his attention in order to do so”, as a result of which “none of the terms seeking to exclude liability was sufficiently brought to the attention of Mr Green so as to be incorporated in the gaming contracts he entered with Betfred”.

It is fair to add that the judgment makes clear that since the events giving rise to Mr Green’s claim arose, Betfred has “significantly amended” its Ts&Cs, which the judge said “illustrates that there is continuing development and fluidity in the industry”.

Final comments

We recommend that other online operators licensed by the Gambling Commission read the judgment in its entirety, bearing in mind that our above comments provide merely a summary of what we consider to be particularly salient points arising. Anyone requiring advice arising from our comments is invited to contact David Clifton – dc@cliftondavies.com

It may yet be that the background circumstances in this case tip the balance in favour of the current UK Government Gambling Act 2005 Review concluding that a Gambling Ombudsman should be introduced in place of existing customer complaints/disputes arrangements.

NOTE:

With our consent, this posting has been reproduced in its entirety in the May 2021 edition of IT Law Today (Volume 29, Number 5).

UPDATE: David Clifton is quoted on the above subject-matter in a 13 May 2021 article by Scott Longley for EGR entitled “Check the small print: the key lessons from the Betfred jackpot case”. That article is accessible to EGR Intel subscribers but is otherwise pay-gated. David’s additional views (certain of which feature in the article) are as follows:

Operators should learn from this case that the longer and more complex their Ts&Cs are, the less likely those Ts&Cs are to stand up to judicial scrutiny when challenged by a dissatisfied customer. Such a problem is more likely to arise where Ts&Cs have been amended and expanded on a piecemeal basis over a long period of time, particularly when they end up incorporating other documents altogether so that they become incredibly lengthy and unintelligible to anyone other than an experienced lawyer. That problem becomes even more exacerbated when, as I have seen in numerous cases, an operator’s Ts&Cs contain inadequate or contradictory definitions and are littered with typographical, numbering and layout errors.

The UKGC’s LCCP requires its licence holders to make available to their customers in an easily accessible way the contractual terms on which gambling is offered. Key terms, including where operators seek to exclude or limit their liability, should be emphasised by way of a separate ‘plain English’ summary at the sign-up stage so that it can justifiably be said that customers were adequately warned from the outset and did not have to wade through multiple pages of complex legal jargon to find the relevant provisions.

Too much ‘legalese’ is not only off-putting, but it could also result in Ts&Cs that are unenforceable because they are so unfair and lacking in transparency that they infringe both (a) consumer protection legislation and as a consequence (b) the UKGC’s LCCP licence condition 7.1.1 and Social Responsibility Code provision 4.1.1 too. However, it should be borne in mind that the judge in the Betfred case did acknowledge that, if a contractual term limiting or excluding liability is “adequately drafted and signposted … even in the context of an online betting facility”, it may serve to achieve its intended purpose.

Criticisms of the type made very forcibly by the judge in this case should already have led other UK licensed operators to look very carefully at their own Ts&Cs to ensure they can lawfully withhold payment of winnings to customers, not only when game software malfunctions and errors occur but also in other circumstances where they want to legitimately exclude or limit their liability. It should also serve to warn off newer entrants to the market from taking what some might otherwise think is an easy and inexpensive route of plagiarising other operators’ Ts&Cs in order to concoct their own.