Betfair wins HC judgement on VIP losses of £1.5m as care infringements

The High Court of England and Wales has dismissed a commercial complaint against Betfair, which sought to recover £1.5m in losses for a VIP customer. 

The complaint was submitted by plaintiff Lee Gibson, who lost “the greater part of some £1,480,728” on the outcome of sporting events on the Betfair Exchange on the basis that “he was a problem gambler and that Betfair either knew or ought to have known that”.

Brought to the High Court, the claim carried an ‘implied assertion’ that Betfair had breached the terms of its gambling licence, in which it owed Mr Gibson a duty of care to prevent large-scale gambling losses.

By asserting that Betfair had breached its licensing conditions, the lawsuit claimed that Betfair “was operating unlawfully so that each individual bet he placed in that time was void.”

As noted by a summary provided by Wiggin: “The claim in contract relied on the implication of a term that Betfair would operate in accordance with the terms of its licence.

“The claim in tort required a finding that the relationship between Betfair and Mr Gibson was such that a duty was imposed on Betfair to take care to avoid or prevent gambling losses: a ‘formidable combination of hurdles’ in light of the fact his losses were caused by his own actions.”

Evidence found that Mr Gibson had a ‘gambling disorder of moderate severity’, but that Betfair neither knew nor ought to have known about it due to Mr Gibson’s active concealment of his condition.

“The judgement is clear that Mr Gibson did not simply fail to share information about his gambling problem; he took steps actively to hide it and to portray to the world, and to Betfair in particular, a wholly inaccurate picture.”

The Court rejected that Betfair was contractually obligated to comply with its licence conditions each time Mr Gibson placed a bet on the Exchange, as “a new contract was formed” with the customer.

The above claim was deemed an assertion by Mr Gibson, as the “Judge found that each transaction did not create a new contract with Betfair and that a contract between an operator and a customer is formed when the customer opens an account, and that such a contract would ordinarily be understood to be a single contract governing the many transactions”.

Denying Mr Gibson’s contractual liabilities, the claim moved on to Betfair providing a duty of care to prevent large-scale losses: “Betfair owed him a duty to take reasonable care to prevent him, as a customer who was 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.”

The Court rejected the claim, stating that licensing duties created no common law duty of care to prevent Gibson’s gambling losses, explicitly as Gibson’s losses were self-inflicted: “The Judge found Mr Gibson’s claim to be ‘doubly exceptional’ because of the assertion that the operator had a duty to prevent pure economic loss brought about by his own actions.”

Key considerations were heard as “Mr Gibson argued that Betfair assumed that responsibility because it actively managed his betting (Mr Gibson was a VIP customer and so his account was managed by a VIP team within Betfair) and because it knew or ought to have known that he was a problem gambler”.

However, Mr Gibson had never asked Betfair to exclude him or impose restrictions on his account, in which case customer care teams would have assumed responsibility: “The Court found, as above, that Betfair did not know, nor ought they have known, that Mr Gibson was a problem gambler: he portrayed himself to them as a wealthy man and able to afford his losses.”

The High Court dismissed Gibson’s claim entirely, reiterating that licence breaches are not actionable in court by individual customers. Instead, any concerns regarding non-compliance should be addressed through the Gambling Commission’s regulatory channels.

Further elements noted that Mr Gibson had to raise new considerations in his dispute with Betfair, as the Court of Appel  had previously judged a ruling determining common law of duty of care for UK licensed operators –   Calvert v William Hill [2008] EWCA Civ 1427 

The judgement reinforces clarity in the distinction between regulatory compliance and contractual obligations under the 2005 Gambling Act, as “it does not grant individual customers a legal right to sue operators for damages based on alleged breaches of those conditions”.

Non-compliance with licence obligations, such as those related to identifying and protecting problem gamblers, may lead to regulatory penalties, including fines or suspension of an operator’s licence. However, the enforcement of these conditions is the sole responsibility of the Gambling Commission, and not the courts.

The Court determined, the judgement upholds a clear distinction between the applicable regulatory and contractual regimes. The determination will be welcomed by operators as bringing clarity and further certainty to the law and the legal framework governing B2C contracts in this heavily regulated space.

The relationship enshrined in the Act between the industry and the Gambling Commission was confirmed in that the Court clearly stated where non-compliance is identified, this did not in itself afford the consumer a course of action against the operator within the courts. Rather, this would be a matter for the “specialist regulator”.