Whilst its focus is on the terms of online betting companies, the much publicised case of Green v Betfred is a valuable reminder for all companies contracting with consumers of the correct approach to drafting consumer terms. The judgment reiterates the importance of clear contractual clauses (in particular, exclusion or limitation of liability clauses), the need for exclusion of liability clauses to be prominent, and the general requirement that consumer terms must be fair and transparent.
Mr Green played a betting game via an online platform hosted by Betfred. When he stopped playing after a number of hours, the screen recorded his winnings as £1,722,500.24 but, when he tried to withdraw his winnings, he was unable to do so. Betfred subsequently informed Mr Green that there had been a software error in the game, unbeknown to either Betfred or Mr Green at the time. Betfred, in reliance upon its gaming terms that sought to exclude liability for software malfunction or defect, argued that it was not obliged to pay out.
The Court rejected Betfred's arguments and concluded that the terms were not effective to prevent payout. However, the Court did not rule out gaming operators excluding their liability to pay out in certain circumstances: "the nature of the liability sought to be excluded required clear explanation and “signposting” which would have involved a full and clear description of the possibility of a hidden technical defect, and its potential consequences for the gaming contract" and would need to be drafted "with great care and particularity". There would therefore need to be signposting and a clear explanation that hidden technical defects in the software may render a winning bet void.
Interpretation of the exclusion clauses
Betfred sought to rely on its terms and conditions, the End-User Licence Agreement (EULA) (which governed the specific use of the online platform) and the game's rules, all of which contained various exclusion clauses. However, Foster J criticised the terms for suffering from "a number of infelicities of presentation" and for not making clear what a player was obliged to agree to or where to find it. The numerous exclusion clauses were not part of an open and fair consumer contract and, separately, did not apply to the particular circumstances.
The exclusion clauses which Betfred sought to rely upon were found inadequate to cover its attempt to exclude liability to pay out winnings due to a software fault. For example, Betfred attempted to rely on a term which stated that "Neither we nor our affiliates and related parties will be liable to you or to any third party for payments made to you as a result of a defect or error in the software, or in connection with any claim or demand made by the vendor or any third party for the return of such payments or otherwise in connection with such payments". Foster J concluded that "error" was unclear and "payments made to you" was meant to cover payments already made to a player. Similarly, the use of "malfunction" in another exclusion clause was unclear but likely connected to hardware or related to the operation of a visible mechanism in the game.
Where Betfred tried to rely on the EULA, the judge noted that it was akin to a standard form of software licence agreement. It therefore had not been tailored to the context in which it was being used by Betfred.
Betfred's general terms stated "in the event of communications or system errors occurring in connection with the settelment [sic] of accounts or other features or components of the software neither us [sic] nor our software provider will be liable to you or to any third party for any costs, expenses, losses or claims arising resulting [sic] from such errors ". This was seeking to exclude liability for obvious failures of connection or computer equipment and did not cover a failure to pay out winnings. The judge also concluded that the reference to "losses" meant losses akin to consequential and other losses rather than payouts owed to players. Other exclusion clauses simply dealt with merchantability and fitness for purpose, and not an obligation to pay out winnings.
In conclusion, there was nothing in Betfred's terms that directed Mr Green "to a term that purports to allow Betfred to sweep away the whole of his winnings after a significantly extended period of apparently unimpeachable play where neither he nor they have, or could have, any idea there is anything amiss".
Incorporation of exclusion clauses into the contract
Foster J was very critical of the presentation of the various legal terms, noting that for a player to find wording that might involve their planned activity, they were required to scroll through repetitive sections. The legal terms were lengthy (the terms and conditions were 24 pages when printed), contained sections of capitalised text, without numbering or paragraph breaks and contained typographical mistakes.
Business-to-consumer operators are required to bring fairly any particularly onerous, unusual or unexpected condition to the attention of the consumer. Whilst Betfred had attempted to draw attention to particular clauses through the use of capitalised text, Foster J noted that there were numerous paragraphs of capital letters which in fact served to bury the relevant clauses. Mr Green was required to seek out terms relevant to him. Foster J concluded that "it is quite unreasonable to expect he would have found and noted the importance of the key clauses relied upon" or that Mr Green would have gone beyond the "how to play" rules of the game in the "Game Rules" terms to reach the more onerous terms.
Consumer Rights Act 2015
Under the Consumer Rights Act 2015, consumer contractual terms must be fair and transparent. A term is "transparent" if it is expressed in clear and intelligible language. Unclear and unfair terms will not bind a consumer.
Given the complexity and length of Betfred's terms, and that the exclusion clauses were not fairly and properly brought to Mr Green's attention, Foster J also concluded that the Betfred terms were not in compliance with consumer law.
Clarity and transparency of contractual terms are therefore crucial when contracting with consumers. This is consistent with the existing requirements under the licence conditions and codes of practice applicable to all business-to-consumer gambling operators licensed by the Gambling Commission.
Gambling operators, in particular, should take note of the requirement to make clear to players all the relevant terms, and to incorporate them successfully into the consumer contract. It is usual (and indeed necessary) for gambling operators to refer to general terms and conditions for the use of their products and services, and separate game rules. However, following the judgment in this case, gambling operators should review the constituent parts of their consumer contract to ensure that players can easily identify what terms they are obliged to agree and where to find them. Any onerous terms (including exclusions of liability) should be prominent and brought to players' attention; for example from a list at the outset of the terms and conditions. Gambling operators must also ensure that such provisions are sufficiently particularised so that consumers are aware of the specific circumstances under which the operator will void a bet.
If you need any assistance reviewing and updating your terms and conditions and/or game rules in light of this judgment, please contact your usual member of the Betting & Gaming or Commercial group.