Gambling Debts, Enforceability and Voiding Bets

ON THE ENFORCEABILITY OF GAMBLING DEBTS AND THE GAMBLING ACT 2005

I noted recently some discussion of the potential to take someone to court over a gambling debt. For many years gambling contracts were unenforceable in the courts. By gambling “contracts” I refer to any arrangement, such as poker game between friends and the loser fails to pay up, or the placing of a bet with a bookie, and everything else in between.

The treatment of gambling contracts as “unenforceable” was underpinned by a legal doctrine called sponsiones ludicrae. It was also enshrined in statute, much of it now very much historic. The Gambling Act 2005 has changed of all of that. Section 335 of the 2005 Act states: “The fact that a contract relates to gambling shall not prevent its enforcement“. This short and simple phrase is Parliament making it perfectly clear that a gambling contract is enforceable.

For the anoraks, you may wish to note that the following laws which prevented enforcement were either repealed or amended by the 2005 Act:

  • Gaming Act 1710
  • Gaming Act 1835
  • Gaming Act 1845
  • Gaming Act 1892
  • Section 412 of the Financial Services and Markets Act 2000

The right to rely on a gambling contract in court came into force along with the Act itself, which was on 1 September 2007, and is not retrospective. The presence of s.335 of the Gambling Act, it should be noted, does not “cure” any defect preventing enforceability for some non-gambling reason.

THE VOIDING OF BETS
The Gambling Commission has the power to void a bet. This is not commonly known and I am not aware how many times, if ever, this power has been utilised. If a bet is accepted by an appropriate operating licence holder, and the Gambling Commission is satisfied that the bet was “substantially unfair” (s.336), it can void the bet. The effect of this is to make the contract/arrangement void, and any money paid in or paid out in relation to the bet is to be refunded, and a person can raise a claim for it if it is not returned.

The factors which are considered as to whether the bet was unfair include:

  • Either party was supplied false or misleading information
  • Either party believed or ought to have belived that the the race, competition or other event or process to which the bet related was or would be conducted in contravention of industry rules
  • Either party believed or ought to have believed that an offence under s.42 was likely to be committed in respect of anything to which the bet related
  • The fact that either party to the bet was convicyed of an offence under s.42

Section 42 relates to the offence of cheating at gambling.

INDEPENDENT ADJUDICATION
A person who places a bet which is not paid out, and who believes it should have been, should of course raise this with the betting operator in the first instance through their customer service or complaint procedure. If the person is not satisfied, then he may raise the matter with an independent adjudicator who will review the case impartially and make a judgement. Every betting operator is required by law to nominate a third party impartial adjudicator to whom such matters can be referred. The most common adjudicator is the IBAS organisation (Independent Betting Adjudicator Service) whose details can be found here.

If the bet was placed online, then the UK based adjudicator may still consider the case and give a decision, but the unhappy punter might also be able to seek redress via the relevant regulator of the online licence. For example, if the website was licensed under Gibraltar gaming laws, then the person may be able to follow the law of that jurisdiction to seek redress. I have acted in at least one “appeal” to the Gibraltar Gambling Commission on behalf on an unhappy punter and there are processes in place to deal with this.

 

 

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About Stephen McGowan

Leading Scottish licensing solicitor at TLT. Chairman of BII Scotland.
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