Gambling Commission agrees voluntary settlement with TGP Europe and Fesuge for unclear and ambiguous terms in Cheltenham Festival bonus offer

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

TGP Europe and Fesuge, the operators of 12Bet, 138.com, Fun88 and TLC Bet, have entered into a voluntary settlement with the Gambling Commission for a number of failures arising from a Cheltenham Festival bonus offer. Over 5000 accounts were suspended by the operators following concerns relating to suspected bonus abuse. The Gambling Commission published a public statement on 11 January 2017, which encourages other operators to ensure the terms and conditions of bonus promotions are fair and easily understood by consumers, and to act quickly when evidence of consumer detriment is identified, especially in response to complaints.

Given the ongoing investigation by the Competition and Markets Authority into the fairness of terms and conditions and practices employed by the online gambling industry, operators are advised to read the public statement and consider carefully whether their own consumer-facing terms and conditions, particularly those purporting to enable the operator to void bets and suspend accounts for suspected bonus abuse, are clear, fair and transparent.

Facts of the case

The case concerned TGP Europe Limited (TGP) and Fesuge Limited (Fesuge) (part of a single group of companies) who are based in the Isle of Man (IOM). TGP and Fesuge are currently licensed by the IOM and the Gambling Commission. The IOM regulator, the Gambling Commission and the Competition Markets Authority (CMA) worked closely in relation to this matter. Both TGP and Fesuge hold combined remote operating licenses issued by the Commission.

During the 3 day Cheltenham festival in March 2016, TGP and Fesuge promoted bonus offers for four remote gambling brands. The offers were subject to their own terms and conditions, as well as TGP and Fesuge's general terms. The brands offered bonuses for new sign ups and existing customers, but none of the brands allowed customers to have multiple accounts. Clause 15.2 of their terms provided

"In the event that we suspect that you or any other Player is abusing or attempt to abuse a bonus or other promotion, or is likely to benefit through such abuse we may block, deny or suspend, withhold or cancel the account of any such player, including your account if we determine that you are involved in such."

TGP and Fesuge took the decision to suspend over 5000 accounts, and notified the Commission. The Commission and the Independent Betting Adjudication Service (IBAS) received numerous complaints as a result, with over 1000 cases being referred to the IBAS website.

Identified issues

TGP and Fesuge acknowledged their general terms need to be clearer and more detailed and have taken steps to improve the clarity of their terms. They have also subsequently engaged external solicitors to undertake a full review of their terms to ensure compliance with the Consumer Rights Act 2015 (CRA).

They acknowledged their inefficiency in dealing with the volume of new accounts and the failure of their anti-fraud tools in identifying people opening multiple accounts at the point of registration. This led to them having to take a reactionary rather than a proactive approach. They also acknowledged that the processes and procedures used as an indicator for bonus abuse were inadequate and did not sufficiently satisfy their duty to comply with the licensing objectives, to ensure gambling is conducted in a fair and open way.

Finally they accepted that without a specific provision in their terms, they failed to make it clear to existing customers that they could not sign up and take advantage of the bonuses for new sign ups.

The Commission's findings

After considering the evidence, the Commission found that TGP and Fesuge had breached licence condition 7.1.1B, General "fair and open" provisions as well as Social Responsibility (SR) code provision 5.1.1.1a (Rewards and bonuses).

Under licence condition 7.1.1B, licensees must satisfy themselves that none of the terms on which gambling is offered are unfair terms within the meaning of the CRA. Section 62(4) of the CRA defines a term as unfair if "contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer." The Commission concluded that TGP and Fesuge failed to satisfy itself as to the fairness of clause 15.2 of its terms, which gave TGP and Fesuge a unilateral right to end the contract with its consumers on grounds which were not clearly spelt out, giving no definition of bonus abuse within the terms.

SR code provision 5.1.1.1a states that where any incentive or reward scheme is offered to customers, the operators must ensure that the "circumstances in which, and conditions subject to which, the benefit is available are clearly set out and readily accessible to the customers." TGP and Fesuge accepted that they had not made plain in their general or specific terms that a person utilising the bonus promotion in relation to one offer would not be entitled to use it in relation to another offer being promoted by TGP or Fesuge on the same brand.

The voluntary settlement

TGP and Fesuge accepted that their terms were unfair and did not provide a clear definition of bonus abuse, and that their terms were unclear in relation to the bonus promotion offered during the Cheltenham festival. TGP and Fesuge cooperated with the Commission and took advice throughout the investigation, acting promptly to release funds to affected players on a case by case basis.

TGP and Fesuge proposed a voluntary settlement, which comprised of the following elements:

a)agreement to the publication of a public statement outlining failings by TGP for industry and wider learning;

b)changes to its terms in order to address the failings identified, including providing clearer information about the definition of "bonus abuse";

c)the implementation of a wide package of measures to improve compliance in this area including, but not limited to:

• engaging a firm of solicitors to undertake a full review of terms to ensure compliance with the CRA
• appointing an Operations Manager based in the IOM to oversee changes to its processes and controls
• improving anti-fraud processes and staff training
• changes in their business structure; and

d)agreement to contribute to the Commission's costs of investigating this matter in the sum of £7,000.

TGP and Fesuge have stated that they did not financially benefit from the failures identified. The breached resulted in a review of their business which they state, has to date, cost them a substantial amount of money. The Commission has accepted this voluntary settlement.

Going forward

This case highlights to remote and non-remote operators offering bonus promotions that they must ensure that their terms and conditions comply with the requirements of the CRA and the LCCP. It demonstrates the necessity to take a proactive approach in assessing their policies and procedures to ensure compliance.

QUESTIONS FOR OPERATORS TO CONSIDER

• Are you satisfied that none of the terms on which gambling is offered are unfair terms within the meaning of the CRA?
• Once you have satisfied yourself that none of the terms are unfair, make sure you comply with these terms.
• Ensure that an accurate summary of the contractual terms on which gambling is offered is available to customers and set out in plain and intelligible language.
• Where a bonus or reward scheme is being offered, are the circumstances in which, and conditions subject to which, the benefit is available clearly set out and readily accessible to the customers to whom it is offered?
• Is your position on bonus abuse, and how it will be applied, clear and transparent to consumers?

For more information, including about the Competition and Markets Authority's investigation, please contact Anna Soilleux-Mills.