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Bet365 Faces Big Penalties after Federal Court deems ‘Free Bets’ Misleading and Deceptive Conduct

Bet365 faces large fines and other punitive measures after the Federal Court decided that the company engaged in misleading and deceptive conduct, after it offered ‘free bets’ to new customers.
His Honour Justice Beach of the Federal Court found that the betting giant, using resources from both its UK and Australian arms, wove a ‘web of deception’, which ‘enticed’ inexperienced and experienced online gamblers alike.

What was the conduct?
Over a 10-month period beginning in March 2013 and ending in January 2014, Bet365 ran a promotion that offered ‘$200 in free bets for new customers’. While this offer may have sounded very appealing, the Australian Competition and Consumer Commission (ACCC) took issue when it discovered that:

  • In order to obtain a ‘free bet’, punters first needed to pay and gamble $200 of their own money first;
  • In order to be eligible for a ‘free bet’, punters needed to gamble three times the value of their deposit and bonus within 90 days before being able to withdraw winnings. This means that consumers who made an initial deposit of $200, and obtained $200 in ‘free bets’ were required to gamble $1200 before they could withdraw any money; and
  • To satisfy the conditions of the promotion, punters were required to make bets at odds which were higher than 1.5, which drew consumers toward higher risk transactions.

In response, the ACCC took action against Bet365 in the Federal Court in August 2014, alleging that the betting company’s offer fell short of explaining these onerous terms, instead leading the consumer to believe that he or she would be able to make a $200 bet, without limitation or restriction.
Justice Beach agreed with the ACCC in his judgment, which was handed down on 11 September 2015.
His Honour found that the conduct of offering ‘$200 FREE BETS FOR NEW CUSTOMERS’ was ‘misleading or deceptive’ and involved the making of ‘false representations’. He also found that new customers, who had not previously used online gambling services, as well as those with experience with such services, would have been ‘enticed’ by this promotion.

What does this mean?
After the judgment was handed down, ACCC Chairman Rod Sims made this comment:
“This judgment makes it clear that companies cannot use the word ‘free’ in offers to consumers where any conditions that seek to neutralise the ‘free’ nature of the offer are not clearly identified. Inducements like free bets run the risk of signing up new and inexperienced gamblers based on a deceptive claim.”
This comment reflects an important lesson for businesses wishing to run promotions. Either businesses should altogether avoid the word ‘free’ in promotions, or if the word free must be used, the details of the offer should be thoroughly and clearly explained to the consumer.

What will happen to Bet365?
The repercussions of Bet365’s conduct will be determined in a further hearing in the Federal Court. However, the possible consequences are burdensome and many. To give an idea, the ACCC has asked the Federal Court to consider declarations, injunctions, pecuniary penalties, corrective advertising, a compliance program and costs, all of which are on the cards.