April 14, 2021
Andrew Green – and – Petfre (Gibraltar) Limited t/a Betfred, before Mrs Justice Foster DBE.
The High Court has granted summary judgment in favour of Mr Green, a customer of Betfred who sought recovery of £1.7m in winnings to which he claimed to be entitled. Betfred argued that they were not obliged to pay Mr Green because the winnings arose from a game defect, and the terms of the contract between them excluded their liability to him in those circumstances.
Mr Green won, which meant he recovered his game winnings in full, plus interest and costs against Betfred, who will not appeal. Betfred lost on each and every attempt to rely on its contractual exclusions for wins attributable to the defect.
The court found that:
- the wording of the exclusion clauses was inadequate – they just didn’t work as a matter of language;
- even if they had been effective to exclude liability, the way in which the relevant exclusion clauses were presented and the failure adequately to ‘signpost’ them to Mr Green meant they were not incorporated into the contract between Betfred and Mr Green – so they plainly couldn’t bind Mr Green; and
- even if the clauses were adequate to encompass the defect in the game and had been incorporated into the contract, they were not transparent or fair in terms of the Consumer Rights Act 2015 (CRA) so Betfred would not have been entitled to rely on them. Essentially the drafting of the exclusions against defects and the way they had been presented was fundamentally unfair.
On 26 January 2018, Mr Green began playing a new game called ‘Frankie Dettori’s Magic Seven Blackjack’ (the Game) via an online platform hosted by Betfred. In particular, Mr Green played for about five hours on a side bet feature within the Game. At the point when he stopped playing, chips to the value of £1,722,500.24 were recorded on screen as his winnings. When he attempted to withdraw the winning chips into his cash account with Betfred he was unable to do so.
Mr Green contacted Betfred customer services about his win, and they asked him to ring back later that day to make arrangements for his chips to be cashed. When he was in touch later with Betfred’s VIP team, he was told the win was so big it would have to be sent off to the Game provider to be double-checked, and that this was standard procedure. Two days later, Betfred informed Mr Green that the Game provider had informed them that there had been a glitch in the Game, and therefore Mr Green could not be paid out.
What transpired was that a defect in the development of the Game meant that where play continued without a break, it gave much better odds of a player winning than Betfred intended. Indeed, it emerged that if play did not cease, eventually the player would have held only winning cards.
Mr Green’s Claim:
Mr Green issued a claim for his winnings relying upon certain clauses in the terms and conditions which he had clicked to accept when he first accessed Betfred’s site some years previously. In particular, he claimed that in refusing to pay out the winnings, Betfred were in breach of a promise contained in the following clause of their terms and conditions: “Customers may withdraw funds from their account at any time providing all payments have been confirmed.”
Further, Mr Green argued that the exclusion clauses upon which Betfred sought to rely were inaccessible and unclear (even if they did cover the circumstances, which he denied) and that it was irrational for Betfred to have believed he had accessed, read, and understood the terms and conditions – accordingly, he argued, they were not incorporated into the contract between the parties and could not be enforced against him.
Betfred’s defence ran broadly as follows:
- the clause upon which Mr Green relied was not relevant to the claim because it related to the right to withdraw funds (i.e. money deposited by the player) not to the payment out of chip balances in the Casino area of the Betfred website;
- because there was a defect in the Game, two exclusion clauses (one in Betfred’s main terms and conditions (the T&Cs) and one in a separate End-User Licence Agreement (the EULA)) meant that Betfred was not liable to pay out; and
- the rules of the Game (the Game rules) also excluded liability as they provided that bets and payments in the Game would be void in the event of a “malfunction”.
The Essential Questions:
The Judge considered that there were three essential questions to be considered:
- Meaning: What did the exclusion clauses actually mean?
- Incorporation: Were the exclusion clauses properly incorporated into the contract between Betfred and Mr Green?
- Reliance: Could the exclusion clauses actually be relied upon as matter of consumer law?
The Judge found that the relevant clause in the T&Cs (copied below at footnote ) was at best unclear, and in any event was not capable of covering the circumstances of the case because it did not deal with the failure to pay out winnings, nor did it deal with an undetectable defect, glitch or programming mistake (as was claimed to be the situation here). The Judge added that if Betfred were to seek to exclude liability to pay on an “ostensibly clear win” it would have to be much clearer in what it said on the page.
The clause in the EULA was found to suffer from the same issue, i.e. it simply did not cover – and was not capable of extending to – the circumstances of the case. The Judge added that the clause was in her judgement “conspicuously obscure when the intended meaning is that the player’s bet is voided so the obligation to pay never arises” because there was no mention of voiding bets and it appeared to deal solely with payments already made.
Finally, turning to the wording in the Game rules (“a malfunction voids all pays and plays”), the Judge criticised the lack of a definition of the meaning and extent of the word “malfunction” and considered that, absent a clear definition, the natural meaning of the word would not imply the circumstances of the case.
In conclusion, the Judge found that to achieve the meaning sought by Betfred for the exclusion clauses in the T&Cs, the EULA and the Game rules required “a strained and unnatural meaning to be given to the terms” and that the wording of each of the clauses was “inadequate as a matter of the natural meaning of the language in context” to bind Mr Green or to exclude Betfred’s liability to pay Mr Green’s winnings.
The Judge found that the manner in which the exclusion clauses were presented and the failure adequately to draw them to Mr Green’s attention meant that, even if they might otherwise have been effective, the clauses were not incorporated in the contract between the parties.
The Judge criticised the combination of inadequate signposting to the significant exclusions of liability, and the failure to highlight the meaning and effect intended. This was exacerbated by unhelpful, iterative presentation in closely typed lower-case or capital letters, which meant that the relevant clauses were buried in other materials. Additionally, players were required to click through and scroll online, searching out what appeared to be relevant to them. The Judge concluded that it was therefore unreasonable to expect that Mr Green would have found and noted the importance of the key clauses, adding that this was “overwhelmingly obvious” in the case of the Game rules where, in her view, it was highly unlikely that Mr Green would have scrolled down past the ‘how to play’ instructions to the exclusion clause (presented as a “note”) at the very bottom of the document.
It was also noted that Mr Green was able to play the Game without accessing or expressly accepting the Game rules. Betfred argued that the Game rules were incorporated by a reference in the EULA, but the Judge denied this on the basis that the reference (“including but not limited to rules describing how to play…and any other rules governing particular game, event and tournament“) was too obscure to include (therefore bind Mr Green to) the Game rules.
The Judge’s observations led her “inexorably” to the conclusion that, whatever their true meaning, none of the terms seeking to exclude liability was sufficiently brought to the attention of Mr Green so as to be incorporated in the contract he entered with Betfred.
The CRA requires that contract terms between a trader and a consumer must be transparent and fair. A term that is unfair is not binding on a consumer.
Under the CRA, a contract term is ‘transparent’ if it is expressed in plain and intelligible language, and is ‘prominent’ if brought to the consumer’s attention in such a way that the average consumer (someone who is “reasonably well-informed, observant, and circumspect”) would be aware of it.
The Judge considered that her findings about the drafting and presentation of the exclusion clauses inevitably meant that those clauses fell foul of the statutory requirements of fairness and transparency. The obscurity of the language, the context of the contract, and the failure to adequately signpost the exclusion clauses and explain their consequences to Mr Green were, she said, inconsistent with the fairness envisaged by the CRA. The result was that even if the words of the clauses were adequate to cover the defect in the Game and were adequately brought to Mr Green’s attention, they were not transparent or fair and Betfred therefore could not rely on them.
What Lessons Can Operators Draw from The Judgment?
It’s important to note that this case does not mean that exclusions of liability to pay out winnings in the event of a game error are necessarily going to fail. Indeed, the Judge accepted the possibility that liability in the context of an online betting facility may be excluded in respect of the events that occurred in this case, provided that the exclusions were properly drafted and signposted.
That said, clearly the high bar for the successful exclusion of liability against consumers in these circumstances has been emphasised by the Judge’s findings in this case and a number of lessons can be drawn from the judgment:-
Clarity: Terms and conditions must be clear and readily understandable to the average player. This has long been a requirement both of operators’ licence conditions and of consumer law more generally (not least following the CMA’s investigation in 2018/19 which led to the vast majority of operators undertaking a significant overhaul of their terms and conditions, but this case is a timely reminder of the vital importance of clear drafting and regular re-examination of such terms).
Signposting: It’s evident from this judgment that exclusions of liability – particularly of the type at the centre of this case (i.e. excluding the operator’s liability to pay out in respect of an undetected and/or undetectable game defect) – need to be clearly signposted in a timely way to the player if they’re to stand a chance of being enforceable. The practice of using large swathes of capital letters clearly will not cut it – the Judge in this case was unmoved by Betfred’s argument that its use of capital letters amounted to a ‘signpost of importance’, saying that this did “little to remedy the obscurity about the purported scope of the exclusion of responsibility for the hidden defect”.
Context: Exclusions of liability need to be considered in their specific context. The Judge in this case was obviously influenced by the fact that it seemed to be accepted by Betfred that the error in the Game was not detected or even detectable by Mr Green (because what happened to Mr Green was in fact possible absent the defect, just extremely unlikely). Clearly the Judge felt that to successfully exclude liability in these particular circumstances would require a higher degree of drafting clarity, signposting, and so on. From this we can presumably (though not certainly) infer that the bar for signposting etc. may not be as high for exclusions of liability in a situation where, say, a player deliberately takes advantage of a game defect or system error of which he or she has become aware.
Specificity: When seeking to exclude liability, using broad, vague, ‘catch-all’ language will not do. Drafting needs to be specific, so that its particular meaning is clear and unambiguous. This is especially the case when seeking to exclude liability for a game defect that is not apparent to the player. As the Judge in this case said, an exclusion of liability in these circumstances “would need to be achieved with great care and particularity.”
Presentation: Factors such as consistency, structure, numbering, font size, line spacing, length, style, etc. are not irrelevant or merely cosmetic. If terms and conditions are put to the test, these factors will go towards the question of transparency and fairness (and therefore enforceability).
Acceptance/Incorporation: The Judge emphasised that she did not make any finding that acceptance of terms by means of a so-called “click wrap” (i.e. the act of clicking to check a box that includes acceptance language such as “I Agree” or “Accept”) is inadequate to form a binding contract that contains limitations to or exclusions of liability, or that it is impossible to bind a regular player to terms even if they’re accepted in this way only once (i.e. during account registration). However, there were incorporation issues in this case, including the fact that it was not obligatory to access the Game rules in order to play the Game, and the inadequacy of the ‘incorporation by reference’ language in the EULA.
What Steps Should Operators Be Taking?
There’s an obvious need for operators to review their terms and conditions in light of this case. There are never any guarantees of enforceability when it comes to exclusions of liability against consumers, but operators should certainly take note of the Judge’s criticisms in this case, and review/update their terms and conditions accordingly.
There’s an equally obvious need for operators to consider what additional steps might be taken in order to adequately signpost exclusions clauses (and indeed other key terms) on which they want to rely. It’s worth noting, of course, that the circumstances that arose in this case are fairly rare, and that significant changes to player experiences to guard against them might therefore not be welcomed by operators. However, there are relatively modest steps that operators can take that will improve their level of protection when it comes to exclusion clauses (albeit that such clauses are unlikely to provide cover in all circumstances). These steps might include:
- reviewing the player registration journey and acceptance of terms and conditions (and any updates to the same);
- reviewing the acceptance processes for individual product terms (particularly when the product is first accessed);
- producing a summary of key terms which are made clearly known to the player and which the player can easily access at any time (and potentially introducing periodic reminders of the key terms); and/or
- considering the introduction of clear warnings that ‘wins’ will be subject to checks and will not be paid if found to be the result of a fault or defect.
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