Risks for the gambling sector: are your standard terms fair and incorporated?

The Gambling Act 2005 made betting contracts legally enforceable for the first time. Operators braced themselves for a significant increase in claims, which luckily has so far not materialised. However, with increasing legislation to protect the consumer, you need to ensure you are protected when an aggrieved customer comes looking for redress.

Are your terms and conditions incorporated?

If a customer can gamble without your terms being reasonably brought to his attention, the terms will not be incorporated into the contract between you and your customer. The importance of incorporation was highlighted in July in the case of GHSP Inc v AB Electronic Ltd (See: Battle of the forms ends without terms and conditions victor, OUT-LAW News, 02/08/2010).

The High Court ruled that neither side's terms were properly incorporated and that the fallback position was the standard position under English law. For operators in the gambling sector, this would mean, amongst other matters, no maximum payout rule and potential issues with contingency gambling.

Incorporation should be easy to show online: customers must accept your terms to register – but bear in mind that the terms must be readily accessible, and pop-up boxes are not best practice. It may be more difficult to show that changes to the terms have been accepted. The most important factor is to keep an audit trail of the initial acceptance, the date and content of any changes, and the steps taken to communicate those changes.

On the high street, incorporation can be achieved by ensuring your terms are clearly and prominently displayed on a rules poster and that there are notices within the premises which confirm that bets are accepted subject to those terms. Reference to these terms should always be included on any betting slips and bets should not be accepted unless they are on a proper slip.

These steps may seem simple but in our experience the majority of claimants deny that the terms are incorporated. You don’t want to fall at the first hurdle.

Are key terms prominent and easy to understand?

One of the main aims of your terms is to limit your liability to the customer. Ideally there should be a summary of the key provisions at the start of the terms in a clear and legible type and reference should then be made to the full terms and conditions below.

There are certain clauses which are fundamentally important or are common areas of complaint and/or confusion for the customers. These include: Maximum Winnings, 90 Minute Football result, Dispute Resolution, and Errors caused by machine malfunction or human error. These and any other important terms should be included in bold type or different colour/font size or highlighted in some other way.

All terms should also be written in plain English. The Office of Fair Trading has given guidance (88-page / 288KB PDF) as to what "easy to understand" means.  It says that you should use short sentences, avoid double negatives, and minimise cross-references and that the terms should be in a font size and colour, and on paper of sufficient quality, so as to make them easy to read.

Finally, consistency is important – your terms should always be called the same thing so that consumers cannot claim that they did not know what terms they referred to.

Are they fair and reasonable?

The main thrust of recent consumer legislation is around fairness/reasonableness. Part of this relates to whether the terms and conditions have fairly been brought to the attention of the consumer and are in plain English.

Fairness/reasonableness is tested at the time that the particular contract was entered into, and not at the time of challenge. It is for you to prove that a clause is reasonable and if you cannot do this, or if it is evenly balanced, the consumer wins the day. Whether a clause is an industry standard clause will assist, but each clause must be assessed individually.

Your terms may pre-date the Gambling Act and may only have been subject to minimal update since it came into force. A review of their wording and application now may seem like an unnecessary expense or task, but the costs of the process could be dwarfed by the cost of litigation if a claimant challenges their incorporation or enforceability and you are in a position where you feel you must defend your terms.

By Bill Broughton, a partner with Pinsent Masons, the law firm behind OUT-LAW.COM. Bill specialises in dispute resolution and is a member of Pinsent Masons' core team for the gambling sector.