The Court of Appeal has dismissed an appeal brought by a problem gambler who lost over £1.4 million on Betfair’s betting exchange. The Court found that Betfair neither knew nor ought to have known the appellant was a problem gambler, as he concealed his disorder, passed affordability checks and assured Betfair he was comfortable with his gambling.

Background 

Between 2009 and 2019, Mr Gibson was a problem gambler who gambled on a betting exchange operated by Betfair. During this period, Mr Gibson, who owned a substantial portfolio of tenanted properties, lost over £1.4 million. He sought to recover a portion of these losses on the basis that Betfair knew, or ought to have known, about his gambling addiction and should have intervened to prevent further harm. Mr Gibson argued that Betfair’s failure to do so breached its obligations under the Gambling Commission’s regulatory framework: the Licence Conditions and Codes of Practice (LCCP).

In 2021, Mr Gibson brought a claim against Betfair in the High Court, which the trial judge dismissed. Although expert psychiatrists agreed that Mr Gibson suffered from a gambling disorder, the Court found that Betfair was unaware of this and rejected the argument that it ought to have known. 

Mr Gibson appealed this decision on five grounds:

Ground 1: That Betfair breached the LCCP.

Grounds 2(a)–(c): That Betfair owed Mr Gibson a duty of care and was negligent, causing loss.

Ground 3: That Section 33 Gambling Act 2005 renders gambling contracts entered into in breach of licensing conditions void.

Decision

The Court of Appeal dismissed the appeal. 

The LCCP requires that operators implement procedures “where they have concerns that a customer’s behaviour may indicate problem gambling”. The Court found no practical difference between this LCCP standard and the test of whether Betfair ‘knew or ought to have known’ that Mr Gibson was a problem gambler. 

In his leading judgment, Sir Colin Birss confirmed that Betfair neither knew nor ought to have known that Mr Gibson was a problem gambler. Mr Gibson concealed his gambling disorder and Betfair had made appropriate affordability checks at the time, with Mr Gibson supplying sufficient information to satisfy those enquiries. He repeatedly told Betfair that he was comfortable with his gambling and the Court of Appeal agreed with the judge’s conclusion at first instance that identifying a problem gambler through data analysis alone is extremely difficult. Indeed, Mr Gibson’s VIP manager at Betfair described him as “calm, level-headed and rational”. As Betfair neither knew nor ought to have known of the gambling problem, there was therefore no breach of the LCCP. 

The Court held that unless ground 1 succeeded, the other grounds could not assist Mr Gibson’s case. Both grounds 2 and 3 depended on establishing that Betfair breached the LCCP. Regarding grounds 2(a) to (c), Betfair’s duty of care would arise from LCCP obligations, and as there was no breach of the same, grounds 2(a) to (c) were not decided in this appeal. The Court of Appeal noted that they would be “much better considered in a factual context in which they actually arise”.

Sir Colin Birss considered Ground 3 on an obiter basis due to it being a pure point of statutory construction and factually independent. Section 33 Gambling Act 2005 makes it an offence to provide facilities for gambling unless a statutory defence applies, such as holding a licence and complying with its terms. Mr Gibson contended that breaching the LCCP would void betting contracts. The Judge considered whether the statute intended to make such contracts unenforceable by either party. He concluded that Section 33 focussed on penalties addressed to the operator, rather than applying to both parties and does not render gambling contracts void if there is a breach of the LCCP. The judge concluded that Mr Gibson’s interpretation would be contrary to public policy, particularly regarding successful bets, stating that it would be “a very odd conclusion that this section was intended to render all gambling contracts void if the operator was in any breach of their licensing conditions”.

Key Takeaways

This decision clarifies the scope of gambling operators’ obligations towards their customers. In this case, the operator was not obliged to close an account where its customer had not disclosed a gambling addiction or problem, particularly where the gambler concealed that problem and presented himself as able to afford his losses. To succeed in such a claim, a gambler would need clear evidence to demonstrate that a gambling operator knew or ought to know that they were a problem gambler and failed to act. 

The evidence in this regard is crucial to defending any claim of this nature. Gambling operators should therefore keep clear records of their affordability enquiries and money laundering checks to demonstrate their level of knowledge.

Additionally, this appeal clarifies, albeit obiter, the scope of Section 33 Gambling Act 2005 in that a breach of the LCCP does not render a gambling contract void. Therefore, if a gambling operator has acted in breach of the LCCP, successful bets are still enforceable.