Introduction

The High Court yesterday handed down its eagerly anticipated judgment in the case brought against Betfair by Lee Gibson (Mr Lee Gibson v TSE Malta LP (t/a Betfair) [2024] EWHC 2900 (Comm)).

Mr Gibson was seeking to recover the greater part of some £1,480,728.84 he lost gambling on the outcome of sporting events on Betfair’s betting exchange on the basis that, he says, he was a problem gambler and that Betfair either knew or ought to have known that.

The Court dismissed Mr Gibson’s claim in its entirety.

Issue

The claim was focused on his assertion that Betfair breached the terms of its operating licence by failing to take appropriate steps to protect him from losing money and that gave right to a personal right of action in tort and/or contract and, therefore, to damages.

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.

He also ran a claim in illegality alleging that when Betfair was allegedly in breach of the terms of its licence, it was operating unlawfully so that each individual bet he placed in that time was void.

Betfair’s knowledge (constructive or actual) of Mr Gibson’s problem gambling was therefore a central issue to most aspects of his claim. The majority of his claim was bound to fail in the event he was not a problem gambler, or Betfair could not be taken to have been aware that he was.

Also of critical importance was the operation of the Gambling Act 2005 (the “Act”).  This was relevant to the claim in contract because the operation of the Act informs the question of whether it is necessary to imply a term that licence conditions will be complied with.  It was relevant to the claim in tort because the Act regulates the relationship between operators and their customers.  And it was relevant to the illegality claim because the existence of any remedy under that head depends on the interpretation of the Act.

Decision

Mr Gibson’s gambling addiction

While the Court accepted (on the evidence of two independent medical experts) that Mr Gibson did at the relevant time suffer from a gambling disorder of moderate severity, it found that Betfair neither knew nor ought to have known about it.  The judgment 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 Judge was clear that “it is very difficult to identify a problem gambler who is not being honest.” It was satisfied therefore that Betfair were not in breach of the LCCP.

The breach of contract claim and implied terms

Mr Gibson’s argument was that every time he entered into a betting transaction on the exchange, a fresh contract was made not only with his betting counterparty, but with Betfair. His assertion was that each such contract contained an implied term that Betfair would comply with its licence conditions, in particular those relating to social responsibility.

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 which would then take place between the customer and the operator.

The question for the Court was therefore whether a term that Betfair would comply with its licence conditions was implied into the single contract between it and Mr Gibson.  It found the answer to be no:

• Under common law, a term will be implied into a contract where (amongst other things) its existence is so obvious as to go without saying. The Court found that a term that Betfair would comply with its licence conditions was plainly not so obvious that it would go without saying. Indeed, the Judge noted that Chapter 4 of the Government’s 2023 White Paper comes to the opposite view and makes clear that “licensees’ obligations around preventing harm [set out in the LCCP] are not generally part of terms and conditions and so do not form part of the contract between the customer and the licensee”. In the Judge’s view, Betfair’s contract with its customers works perfectly well without such an implied term because it works within the framework provided by the Act.
• By statute, Mr Gibson and Betfair agreed that the contract between them was subject to terms implied by s13 Supply of Goods and Services Act 1982 up to 1 October 2015, and s49 Consumer Rights Act 2015 thereafter. In each case, the implied term was that Betfair would perform “the service” with reasonable care and skill. The Court accepted Betfair’s argument that the service provided under the terms of the contract was that of facilitating the placing of bets, and not Mr Gibson’s suggestion that the relevant contractual service was the interaction Betfair would carry out with a problem gambler, confirming there is no contractual obligation for an operator to interact as such.

The claim in negligence and alleged common law duty

On this, Mr Gibson’s case was that 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 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.

In advancing this argument, Mr Gibson had to navigate the Court of Appeal’s decision in Calvert v William Hill [2008] EWCA Civ 1427 and the general position that a person does not owe a common law duty of care to prevent others suffering harm from their own actions.

First. the Court considered whether there had been any assumption of responsibility by Betfair to take reasonable care to prevent Mr Gibson from suffering economic loss by using the gambling services it offered. 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.

The Court found that:

• If Mr Gibson had asked to be excluded from Betfair or had asked that some formal restriction be placed on his gambling, Betfair would have assumed responsibility.
• In circumstances where there was no such request, it was necessary for the Court to examine if Betfair had constructive knowledge of Mr Gibson’s issues and so constructive knowledge of the need to support him. 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. He was often reminded of controls he could impose on his gambling. In reality, he had no interest in imposing any limit on his ability to gamble and hid any such difficulties from Betfair. In the circumstances, the Court found it difficult to see on what basis Betfair could be said to have assumed any responsibility to prevent Mr Gibson from losing money. Given Mr Gibson’s masking of his condition (and the finding that it cannot be said Betfair ought to have known about it), the Judge reiterated the view expressed by the Court in Calvert that it was “wholly unrealistic to suppose that in the ordinary course of its business a bookmaker can be expected to be able to identify that sub-class by way of what amounts to a process of medical diagnosis”.
• In the Court’s judgment, the fact Mr Gibson had a VIP manager and received some incentives to gamble does not, absent knowledge of a gambling issue, elevate the case to one where responsibility is assumed. The VIP team was about fostering customer loyalty. The LCCP at the time acknowledged and accepted that some customers would be managed in this way, and there was no suggestion that Betfair’s VIP team acted outside of what might be regarded as industry norms – in the Court’s judgment VIP management added nothing.

Overall, the Court found the particular relationship between Betfair and Mr Gibson was not such that Betfair could be said to have assumed any responsibility.

For completeness, it went on briefly to consider whether the three-fold test of foreseeability of damage, proximity and the requirement that it is fair and just to impose a duty should be applied. On that:

1. The Judge accepted that foreseeability was established,
2. In the Judge’s view, the relationship between Betfair and Mr Gibson was not so proximate that it would be appropriate to impose a duty of care, and
3. In any event, the Judge considered it plain that it would be neither fair nor reasonable to impose a duty of care.

The Judge was therefore satisfied that Betfair owed no relevant duty to Mr Gibson.

Causation considerations

The Court briefly addressed causation making clear that, had it found a breach of duty, it would have concluded that Mr Gibson would in any event have gone on to lose at least the same sums elsewhere because he was “determined to gamble”.

The Judge’s view was that, had Betfair stopped him from gambling at any time, Mr Gibson would have gambled elsewhere to the same extent, would have remained a moderate problem gambler and would have continued to hide his problems. Mr Gibson tried to argue that could not be right because other gambling providers would have recognised him a problem gambler and ceased to deal with him. The Judge refused to accept that for the same reasons he refused to find Betfair should have known about his gambling addiction: he kept his problem under wraps, was able to afford to bet at the level he did, would not tell the truth when asked if he was comfortable about his losses, and would not use tools to limit his gambling.

Therefore, even if there had been a common law duty, Mr Gibson’s claim would still have failed.

The illegality claim and the lawfulness of transactions

The issue here was whether s33 of the Act implies a prohibition on entering into 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. The Judge found that could not be the case.

The Court found that s33 cannot have been intended by Parliament to operate so as to void contracts, but that it simply imposes a penalty on one party, stating that “public policy overwhelmingly favours the enforceability of gambling contracts even where the operator is in breach of his licence. A successful gambler should not be deprived of the fruits of his bet, but equally… a losing gambler should not be able to escape the consequences of his decisions”.

It was noted that the gambling industry could be thrown into chaos were Mr Gibson right on this point: every unsuccessful gambler would potentially be able to claim lost stakes back on the basis of a breach of the LCCP, which would run counter to the clear intention of the Act.

Conclusion

The Court dismissed Mr Gibson’s claim in its entirety.

Comment

Yesterday’s judgment – which upholds a clear distinction between the applicable regulatory and contractual regimes – 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.

Many operators, who are in regular receipt of cookie-cutter claims from opportunistic consumers represented by a small number of law firms, have been waiting for a case that confirmed the decision laid down in Calvert. It is confirmed that operators do not generally owe their customers a duty of care and the courts will not allow one to be established, particularly so soon after the recent review of the Gambling Act rejected the notion.

Moreover, 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 (which it wasn’t here), 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”.