High Court dismisses claim against Betfair: the gambling industry does not owe a general duty of care to its customers

United Kingdom

Overview 

In a significant judgment, the High Court has reaffirmed the decision in the case of Calvert v William Hill [2008] EWCA Civ 1427 that gambling operators do not owe a general duty of care to their customers.

This judgment will provide gambling operators with helpful clarity as to their obligations to customers as distinct from their regulatory obligations.

Background

Mr Gibson lost £1,480,728.84 gambling on the outcome of sporting events (mainly football matches) over a period of 10 years on the Betfair betting exchange. He then sought to recover a significant portion of those losses from Betfair.

Mr Gibson said that he was a problem gambler, and that Betfair knew (or ought to have known) that was the case. He argued that Betfair had therefore breached the terms of its licence by failing to take appropriate steps to protect Mr Gibson from losing money, and that this breach gave rise to a personal right of action in tort or contract and a right to damages. He also suggested that when Betfair was in breach of the terms of its licence, it was operating unlawfully, such that each individual bet he placed in that period was void.

Betfair’s knowledge (constructive or actual) of Mr Gibson’s problem gambling (and the fact of it) was central to most aspects of his claim on the basis that if he was not a problem gambler, or if Betfair could not be taken to have been aware of that fact, then most of his claim would fail.

The Gambling Act 2005 (the “Act”) provides a fundamental backdrop to Mr Gibson’s claim, representing, as the judge put it, a “watershed in gambling regulation” by recognising the economic benefits of safe gambling and introducing protections to safeguard vulnerable people against its dangers. Betfair has been subject to the Act since 2014. The Act was central to all elements of Mr Gibson’s claim.

Was Mr Gibson a problem gambler?

As noted in the judgment, the British Gambling Prevalence Survey 2010 defines problem gambling as “gambling to a degree that compromises, disrupts or damages family, personal or recreational pursuits”.

Although they gave different reasons, each of the expert witnesses (appointed by Mr Gibson and Betfair, respectively), agreed that Mr Gibson suffered during the relevant time from a gambling disorder of moderate severity.

Despite this, the judge did not consider that Betfair knew or ought to have known that Mr Gibson had a gambling problem at any time between 2009 and 2019. This was not least because he kept his gambling problem to himself, he could afford (or at least it appeared so) to fund his gambling, he misled Betfair about it and it is not easy to identify a problem gambler who is being dishonest. Betfair had obligations under the Licence Conditions and Codes of Practice (“LCCP”), but the judge found that Betfair was not in breach of the LCCP and it need not go further.

The Legal Issues

Implied terms

Mr Gibson argued that every time he entered into a betting transaction on the exchange, a new contract was made with both his betting counterparty and with Betfair. In his view, each contract contained an implied term that Betfair would comply with its licence conditions.

The judge did not agree. The judge found that a contract with Betfair is formed when a customer opens an account, each customer only being permitted to have one account through which they can engage in numerous transactions. The customer makes various representations on opening an account, which are made once, and an “express obligation to keep Betfair informed of any changes in some key details” would be unnecessary if they formed a separate contract each time they entered a transaction (as would the right to vary terms and conditions).

As to the implied term, the judge found that the “term contended for is plainly not one that is so obvious that its presence in the contract would ‘go without saying’”. The judgment refers to the Government’s 2023 White Paper, which makes clear that “licensees’ obligations around preventing harm [set out in the LCCP] are not generally part of the terms and conditions and so do not form part of the contract between the customer and licensee”.

The judgment concludes that Betfair’s contract with its customers “works perfectly well” and does not require an implied term. It works within the framework of the Act and there is no suggestion that the current regime (which does not provide direct redress to individual customers against licensed providers) does not work.

Mr Gibson also sought to rely on terms implied by section 13 of the Supply of Goods and Services Act 1982 and section 49 of the Consumer Rights Act, respectively, that Betfair would perform or carry out the “service” with reasonable care and skill. Betfair argued that the “service” provided under the contract was that of facilitating the placing of bets. Mr Gibson argued the “service” was the interaction Betfair would carry out with a problem gambler. The judge agreed with Betfair, noting in the judgment that the term implied by statute “relates to the standard of a service to be performed, not to the existence or otherwise of that service”.

Negligence claim

Mr Gibson argued that Betfair owed him a duty to take reasonable care to prevent him, as a customer being actively managed and who Betfair knew (or ought to have known) was a problem gambler, from suffering financial harm by the provision of gambling facilities. Under Calvert v William Hill [2008] EWHC 454 Ch it would be a “journey to the outermost reaches of the tort of negligence, to the realm of the truly exceptional” to establish such a duty of care to prevent pure economic loss resulting from his own actions.

The general position is that a person does not owe a common law duty of care to prevent others suffering harm from their own actions. The Court considered whether, on the facts of the case, there had been an assumption of liability and, alternatively, if the Caparo v Dickman [1990] 1 All ER 568 three-stage test was satisfied (foreseeability of damage, proximity and whether it would be fair, just and reasonable to impose a duty).

Mr Gibson argued that Betfair assumed responsibility to prevent him from suffering economic loss by using its gambling services because it actively managed his betting. The judge disagreed, because:

  1. Mr Gibson had not asked to be excluded from Betfair or have any formal restriction placed on his gambling (in which case, there might have been an assumption of responsibility). The question was therefore whether Betfair had constructive knowledge of Mr Gibson’s issues (and, as such, need for support). Mr Gibson portrayed himself as a wealthy man who could afford his losses and who had no interest in imposing any limit on his gambling. Betfair could not have assumed any responsibility to prevent him losing money.
  2. The fact that Mr Gibson had a VIP manager at Betfair and received incentives to gamble does not, absent knowledge of a gambling issue, mean responsibility was assumed. Mr Gibson’s VIP manager had performed his role in a “thoroughly professional manner” and the LCCP acknowledged and accepted that some customers would be managed in this way.
  3. The Act “entrusts matters of enforcement to a specialist regulator” and does not provide for a private right of redress.

In relation to the three-stage test, although foreseeability could be established, the judge held that the relationship between Mr Gibson and Betfair was not so proximate that it would be appropriate to impose a duty of care (nor would it be fair or reasonable to impose one). As such, Betfair owed no relevant duty to Mr Gibson.

The judge goes on to note that, even if there had been a breach of duty, there was a causation issue as Mr Gibson would have gone on to lose at least the same sums elsewhere. The judge rejected the argument that other gambling providers would have recognised Mr Gibson as a problem gambler and stopped dealing with him.

Illegality claim

On the question of illegality, the judge considered whether section 33 of the Act implies a prohibition on entering gambling contracts, other than where facilitated by a party complying in full with the terms of its licence, such that any breach of the licence in relation to a particular customer would render the contract with the customer void ab initio.

Both parties accepted that the Act does not contain an express prohibition to this effect, so Mr Gibson relied on an implication that this was Parliament’s intention. The judge held that section 33 does not ban gambling as an activity and cannot have been intended by Parliament to void contracts. Rather, it imposes a penalty on one party and public policy “overwhelmingly favours the enforceability of gambling contracts even when the operator is in breach of his licence”. In particular because a successful gambler should not be “deprived of the fruits of his bet”, but equally because a problem gambler should not be “able to escape the consequences of his decision”. The bespoke regulatory regime set out in the Act would be impossible if contracts were voided in this situation.

Mr Gibson’s claim was dismissed in its entirety.

Comment

This judgment provides helpful clarity to gambling operators in respect of their duties to customers, reaffirming the decision in Calvert that operators do not generally owe a duty of care to their customers.

Whilst operators must meet their obligations under the LCCP, in particular in respect of social responsibility, they cannot be expected to be aware of a problem gambler in circumstances where relevant information has been withheld.

In addition, the decision makes clear that where the Gambling Commission identifies non-compliance, of itself this does not give consumers a private right to redress against an operator. Rather, the Act entrusts matters of enforcement to a specialist regulator.