Gambling with Exclusion Clauses: Betfred’s Big Blunder

The Case

In Green v Petfre Gibraltar Ltd (t/a Betfred) Mr Green sought to recover winnings totalling over £1.7 million from an online betting company, Betfred. Mr Green had played an online betting game hosted by Betfred for several hours, and at the end of his session his winnings were recorded on the screen as being over £1.7 million. When Mr Green attempted to withdraw these winnings, he was informed by Betfred that there had been a glitch in the game. Betfred argued that they were therefore under no obligation to pay out to Mr Green, as the terms of the contract between the parties excluded liability where a pay-out had been triggered by a software malfunction or defect.

The contract Betfred referred to consisted of three documents: the general Betfred Terms and Conditions of use, the end-use licence agreement (EULA), and the individual Game Rules. Each of these contained clauses that Betfred claimed would exclude their liability in the circumstances.

However, the High Court judge found that the wording of these clauses was inadequate, considering the natural meaning of the language in the context, to exclude liability in the circumstances:

• The clause in the Terms and Conditions that Betfred sought to rely on did not deal with the failure to pay out winnings, nor with a glitch which was undetectable to either party, as was the case here.
• The EULA was a standard form software licence agreement, which was inappropriate in the context of a gaming contract. The EULA sought to exclude liability for failures of connection, computer equipment or signal, but made no reference to the voiding of a bet or the non-payment of winnings.
• The Game Rules referred to an undefined “malfunction” voiding “all pay and plays”, but this did not appear to be intended to apply to the circumstances, where the game had functioned flawlessly but produced unintended odds.
• Elsewhere in the Terms and Conditions, “malfunction” was used in the context of hardware, and to refer to obvious communications or internet failures.

The judge concluded that these clauses would only produce the meaning sought by Betfred if a strained and unnatural interpretation was applied.

Even if the exclusion clauses were effective to exclude liability, there was then the question of whether they had been adequately presented and drawn to Mr Green’s attention for them to be incorporated into the contract between the parties. The judge found that none of the clauses was sufficiently brought to Mr Green’s attention, due to a combination of inadequate signposting  and a failure to highlight the intended effect of the clauses. The documents were unnecessarily long and often repeated themselves, and a mix of closely typed lower-case and paragraphs of capital letters meant that the exclusion clauses were buried within mounds of difficult to read text.

The judge concluded that even if the clauses had been worded adequately to exclude liability and had been properly incorporated into the contract, they were not transparent or fair for the purposes of the Consumer Rights Act 2015.

As a result of all of this summary judgment was granted in Mr Green’s favour, allowing him to finally recover his more than £1.7 million winnings from Betfred.

Lessons to Learn:

There are several important points to take away from this judgment as regards the drafting and incorporation of exclusion clauses into online contracts:

• Any clause purporting to exclude liability should be tailored to the particular circumstances for which you wish to exclude liability. Betfred’s failure to consider circumstances in which a software glitch produced undetected changes in odds meant that their exclusion clauses, which were designed to deal with hardware or internet failures, could not operate to exclude their liability to Mr Green.
• Exclusion clauses should be clearly signposted to the user, and the intended meaning of these clauses should be made clear.
• Terms and conditions and other such similar documents containing exclusion clauses should avoid repeating themselves or being unnecessarily long, and the text should be easy to read.

If you have any questions arising from this article or would like to discuss how you might make improvements to your terms & conditions or other standard documents, please contact Cathrine Ripley or one of the other members of FSP’s Commercial & Technology Team.