If press reports are accurate, the number of people being investigated by the Gambling Commission for betting that a general election would take place on 4 July, shortly before it became public knowledge, continues to grow.
Under section 42 of the Gambling Act 2005 it is a criminal offence to ‘cheat’ at gambling or do anything for the purpose of enabling or assisting another person in doing so. The penalty is up to two years in prison or a fine - or both. Relevant case law and the commission place weight on the use of ‘inside information’ to gain an ‘unfair advantage’. Without wishing to state the obvious, this will likely involve something more than 'overhearing something in the pub'. There will need to be some knowledge on behalf of the customer that this information is restricted, for example, if information has been gained because of the customer’s role in connection with the event or because of a close association with an individual with such a connection.
The recent (and ongoing) review of gambling in this country has highlighted the types of checks that operators carry out and/or may be required to carry out in the future. Understandably, a lot of that focus has been on affordability for punters and AML matters. However, operators are required to report any suspicion of an offence to the commission and this includes instances of ‘cheating’. The array of checks undertaken by operators include enhanced due diligence on the gambling of ‘politically exposed persons’ or anyone related to or closely associated with them. This would include anyone who works closely with them.
After investigation, the commission has the power (according to s336 of the Gambling Act 2005) to void bets accepted by operators that involve misuse of inside information. However, operators themselves may be able to rely on their own terms and conditions to void a bet in these circumstances and to seek an indemnity from the customer if the operator has been caused a loss. Plainly, it may not be worth the time and cost of doing so.
The commission can also prosecute people for cheating, although it commits to doing so very rarely. Instead, when cheating – a criminal offence – is alleged, it prefers to work with the Crown Prosecution Service (or its Scottish equivalent) and the police to bring a prosecution. It also works closely with sport’s governing bodies, which have their own processes for handling allegations, and which can impose other penalties, such as banning athletes.
The 'gamblegate' case matters and raises some interesting points. Aside from the apparent political implications, it brings into focus the potential misuse of inside information to gain an improper advantage in circumstances outside of sports governance. It may have an implication for future of ‘specials’ markets.
It also focuses attention on gambling operators and the commission at a time when gambling is very much in the public eye. It seems that operators’ checks for type of activity work. Surely, they deserve credit for that. Likewise, the commission, for investigating these issues in line with the law and its published guidance, despite the political and journalistic ‘noise’ surrounding it.
Clearly operators need to ensure all appropriate due diligence is undertaken in line with their obligations. Once the dust has settled, operators would be well advised to double check their own terms and conditions to ensure they are suitably worded.
Melissa Haskell is a partner in the licensing and gambling team at Knights
No comments yet