“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,” states Melissa Haskell, partner in the licensing and gambling team at Knights.
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 can be up to two years in prison, a fine, or both. Relevant case law and the Commission place significant weight on the use of ‘inside information’ to gain an ‘unfair advantage’. As Melissa Haskell explains, “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 review of gambling in the UK has highlighted the types of checks that operators carry out and/or may be required to carry out in the future. Much of this focus has been on affordability for punters and anti-money laundering (AML) matters. However, operators are required to report any suspicion of an offence to the Commission, including instances of ‘cheating’. The array of checks undertaken by operators includes 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,” Melissa Haskell notes.
According to section 336 of the Gambling Act 2005, the Commission has the power 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,” Melissa Haskell points out.
The Commission can 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. The Commission also works closely with sports governing bodies, which have their own processes for handling allegations and can impose other penalties, such as banning athletes.
“This case matters and raises some interesting points,” Melissa Haskell states. “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 the 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 this type of activity work. Surely, they deserve credit for that. Likewise, the Commission deserves credit for investigating these issues in line with the law and its published guidance, despite the political and journalistic ‘noise’ surrounding it seeking instant decisions.”
Melissa Haskell concludes, “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.”