Lesson in drafting contracts

Andrew Green v Petfre (Gibraltar) Limited t/a Betfred – a salutary lesson in drafting contracts relevant to all levels of the supply chain

The recent summary judgment handed down by Mrs Justice Foster DBE has the potential to upend a previously thought “get out of jail free” card available to operators: Malfunction voids play.

Following Green v Betfred, this simply isn’t the case anymore and, with Betfred indicating they will not be appealing, the position is likely a precedent for some time to come.

The full judgment (all 44 pages of it) can be accessed here. It merits a read by lawyers, regulatory officers, developers, and strategists alike.

The facts

Mrs Justice Foster DBE summarized the facts underlying the long-standing (3 year) dispute between Betfred’s digital enterprise and one of its online casino customers (Green) which occurred within hours following the release of a new online blackjack title which had a side-bet function (the cause of Betfred’s problems).


1. On 26 January 2018, just after midnight Mr Green began playing a game online called 'Frankie Dettori's Magic Seven Blackjack' ("the Game") via an online platform hosted by the Defendant (whom I shall refer to here as "Betfred"). In particular he played for about 5½ hours on a side bet feature within the Game. At the point when he finally stopped playing the Game, having left, and played elsewhere on the site for a short time, betting 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.

2. He contacted customer services at Betfred about his win, they congratulated him and asked him to ring back after 9:30 AM later that day to make arrangements for his chips to be cashed. The evidence differs as to what was said, but it is agreed that, subject to checks which they said had to be carried out, Betfred did not seek at this point to suggest other than that he was a big winner. Mr Green went out that night and celebrated with his family and friends spending some £2,500 in the process, expecting, as he says, to be credited with £1,722,500.24 in his account. When he was in touch with Betfred's VIP team on the Monday he was told the win was so big it would have to be sent off to the Game provider, Playtech, to be double-checked, and that this was standard procedure. Two days later on Wednesday, 31 January 2018 a Mr Russell Young for Betfred informed Mr Green that Playtech had informed him there had been a glitch in the Game and he could not be paid out.

3. For the purposes of this application, the Claimant agrees, as is pleaded in Betfred's defence, that, unknown to Betfred and to Mr Green, what appears to be a fault 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. Betfred say that eventually at some point over time if play did not cease, the player would have held only winning cards.

4. Betfred said they were not obliged to pay Mr Green his winnings in the circumstances, and the terms of the contract between them excluded liability to him. Mr Green issued a claim for his winnings relying upon certain clauses in a Terms and Conditions document he had clicked to accept when he first accessed the site some years previously. The Game itself was first made available to players at 10:19 AM the day before it was played by Mr Green.

Betfred’s Defence

Betfred argued that they were not liable to pay out the winnings to Green in reliance on exclusion clauses contained in multiple “contracts” which governed a player’s use of Betfred’s site, software, and the game itself. These terms were set out variously in Terms and Conditions published on the site, in an End User Licence Agreement which is entered into later by a user on first play of a content title within Betfred’s online casino area of the website (or mobile app), and also in Game Rules (which are essentially instructions for use applicable to each hosted content title within Betfred’s online casino area of the website (or mobile app)).

That’s a lot of contractual terms! A fact not lost on Mrs Justice Foster when giving her judgment in this case; particularly in light of the fact that they applied in a B2C context.

Malfunction

Betfred essentially relied on an argument that the game contained a “malfunction” related to “trophy cards” in the side-bet feature which were supposed to be randomly dealt to the dealer and player. The problem was that trophy cards previously dealt in earlier hands were not re-set. So the more hands a player played in a continuous session, the previously dealt trophy cards appear to have been counted in later hands and added to the jackpot prizes being won by Green. Eventually (as the court acknowledged), if played long enough in an uninterrupted session, Green would have only had winning trophy cards; the maximum jackpot was 7777 times his side-bet stake.

Consequently, after several hours of play, Green won 3 jackpots totaling £1.7 million (within minutes of each other). He was happy, and tried to convert his chips in his wallet to cash for withdrawal, but couldn’t.

Betfred seemed happy for him, but advised that checks needed to be carried out.

Ultimately, Playtech (after a number of days) realized the problem and (presumably) cautioned Betfred to withhold payment (it being highly unlikely that, under the contract between Playtech and Betfred for the provision of Betfred’s casino content, Playtech would have any liability to Betfred due to an exclusion clause based on the industry accepted “malfunction voids play” scenario). Should Betfred have, at the time, taken the decision to pay out Green’s winnings, they would have been unlikely to have had any rights to recover any of it from Playtech.

Much debate will have been had over what constitutes a malfunction. Not only its natural meaning, but also its interpreted meaning within the context of the exclusion clauses which Betfred sought to rely on in order not to pay Green his winnings.

My own take on this point is this: operators and content developers should consider carefully how they define a malfunction; and be very open and clear about their intended meaning. In this case, from what can be gleaned from the judgment, it appears that the problem was not a malfunction at all. The game operated perfectly well for several hours; hand after hand. The problem was more likely one of human error; potentially (and I am making assumptions here) one of bad coding whereby the lack of effective code to re-set the previously dealt trophy cards meant they accumulated to and were counted towards later hands leading to an exponential increase of odds in Green’s favour.

Clearly, something which is unintended (relative to the published RTP of the game; which we all know is theoretical over millions of simulated play cycles due to RNGs being only ever pseudo-random) is not, without more (i.e. a technical failure of the software to operate as coded), a malfunction.

The judgment did touch on this, but, in my view, without sufficient clarity or depth. At no point in the judgment does it suggest that any debate was had over whether a coding “error” (i.e. an omission) could or should be classed as a “malfunction” in the game. It would have been helpful.

The judgment seemed to accept that there was a malfunction. And went on to consider whether the wording used in exclusion clauses relied upon by Betfred could be construed to include a malfunction of type at issue in this case.

Judgment

Mrs Justice Foster DBE concluded:

1. The wording of each of the clauses relied upon is inadequate as a matter of the natural meaning of the language in context to exclude liability to payout Mr Green's winnings in the events which happened.

2. The manner in which the relevant clauses were presented and the failure adequately to draw them to his attention meant that the three purported exclusions, even had they been effective to exclude liability, were not incorporated in the contract between the parties.

3. Even if the words of the clauses relied upon by Betfred were adequate to encompass the fault in the Game and adequately brought to Mr Green's attention so as to be incorporated in the contracts of gaming, they were not transparent or fair and Betfred were not entitled to rely upon them.

The final point relates to a claim under the Consumer Rights Act 2015 which involves an analysis of whether a contractual term is unfair in the context of a B2C contractual relationship.

The ramifications for operators and content suppliers

The judgment in Green is potentially far reaching and warrants a detailed review of the contractual eco-system which envelopes the offering of gambling content to consumers. The review shouldn’t be limited to just the contractual position vis a vis the operator and the player; that would be myopic and potentially dangerous.

In my experience, the existing contractual position accepted within the industry in the context of content developer/provider and operator has accepted that an operator can rely on “malfunction voids play”. After Green, that is far from being a given. Consequently, to fail to look at addressing the position of liability at the point of “fault” (i.e. the cause of the malfunction), will potentially leave operators exposed. The law clearly favours the player following Green.

Taking the lessons from the way the judgment in Green was arrived at, operators are well advised to look at the terms which govern the relationship between operator and player. What Green shows us is that the operator’s terms were inadequate in three fundamental respects.

First, in order to be able to be relied upon, they have to have been effectively part of the contract. In Green, they weren’t.

Second if they are effectively “incorporated”, does their wording (or, in legal-speak, construction) actually apply to the issue in dispute. In Green, they didn’t.

Third, even if the first and second are satisfied, is the term fair (in the context of the consumer). In Green, it wasn’t.

Operators should remind themselves of potential regulatory oversight in this context also. In particular, their LCCP obligations where they are UK-licensed. Licence Condition 7.1.1 speaks to “fair and transparent terms and practices” which requires all terms and notices applicable to a consumer gaming contract to not be unfair within the meaning of the Consumer Rights Act 2015 and to be transparent and accessible. This expressly applies also to the manner in which changes to the applicable terms are effected.

Equally, operators are well advised to look at the terms which govern the relationship between themselves and (unless developed in-house) their 3rd party content developer/supplier. Should a malfunction occur, which is of sufficient magnitude in financial terms, even with the most precisely drafted contract terms between the operator and the player, there is also the position which must be taken account of that the cost of defending litigation is likely to be a significant deterrent and an operator might prefer to take a different (more generous) stance with its players to that which Betfred took (admittedly on the advice of Playtech; and in the knowledge that its contract with Playtech meant it would have to swallow the loss caused by Playtech’s ill-performing game).

I, myself, might actually take a bet that, if an operator’s contract with its content supplier ensured that, due to a malfunction in the game which could be shown to have been caused by the content supplier, the content supplier had to indemnify the operator for payouts made to the player, the optics would favour an operator preferring to pay out to the player and recover it from the supplier. However, negotiating such a position would require a commercial resolve on both parties, and (if we are to take anything from Green) very precise and well considered drafting. Without giving too much away, there are mechanisms available (from a different context) which could assist with how this could be achieved to the commercial satisfaction of both operator and supplier.

In conclusion, Green has shifted the odds. And the courts are clear about what is required to be able to exclude liability in a consumer gaming contract (at least): Precise, clear, and fair drafting which has been sufficiently brought to the attention of the player.

This isn’t just about lawyers doing their job properly; it is also very much about the UX (user experience) of the customer journey and how the terms are communicated to the player. Undoubtedly, there is a tension between those things which will have to be resolved.

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