Global gambling giant Bet365 could be forced to pay hefty fines after the Federal Court ruled the company engaged in misleading and deceptive conduct by advertising “free bets” to new customers for a 10-month period in 2013 and 2014.
Federal Court Justice Jonathan Beach said the actions of the Australian and UK arms of Bet365 ultimately amounted to customers who had never used online betting services before being drawn into a “web of deception”.
The conduct relates to a promotion from Bet365 operating companies Hillside (Australia New Media) and Hillside (Shared Services) that ran from March 18, 2013 to January 13, 2014 and offered “$200 FREE BETS FOR NEW CUSTOMERS”.
The Australian Competition and Consumer Commission launched legal action against the companies in August, alleging the offer was deceptive and misleading as the qualifications to the offer were not readily apparent to the users of Bet365’s website when they signed up.
The ACCC said that individuals that took up the offer had to spend hundreds of dollars before being able to withdraw any winnings.
The competition watchdog presented evidence to the court that new Bet365 customers had to spend their deposit and bonus amounts three times before they could withdraw any winnings associated with the “free” offer.
“As a result, a customer who makes an initial deposit of $200 and receives $200 must then gamble $1200 before being able to withdraw any money,” the commission said in a statement on Friday.
“The free bet offer was directed at new customers, which included inexperienced gamblers and young people,” ACCC chairman Rod Sims said in the same statement.
“The ACCC will take action where it thinks consumers are being mislead, especially in emerging markets where there are potentially vulnerable consumers.”
Justice Jonathan Beach ruled in the ACCC’s favour, saying new customers, as well as individuals who had previously had little experience with online betting websites, would have been “enticed” by the offer.
Beach will determine the penalties for the company at a future trial date.
“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,” Sims said.
“Inducements like free bets run the risk of signing up new and inexperienced gamblers based on a deceptive claim.”
“Compliance with the Australian Consumer Law is essential for all companies that sell to Australian consumers, regardless of geographic location.
“Bet365 in the UK provided support to the Australian company including finance, customer service, and the Bet365 website.”
The ACCC also alleged the companies misled consumers in relation to representations offering deposit bonuses with qualifications and representations in January 2014, but the court dismissed those claims.
The court also rejected the ACCC’s claims that Bet365 Group Limited, the global parent company of Hillside (Australia New Media) and Hillside (Shared Services), was involved in the conduct.
Melissa Monks, special counsel at law firm King & Wood Mallesons, told SmartCompany this morning Bet365 is just the latest in a group of businesses that “have gambled and lost in using what has been described as a danger world – free”.
“For the claim to be made, goods or services need to be absolutely free of any charge or cost, no matter how insignificant,” Monks says.
“In this case, punters could only benefit with free bets if they risked their deposit three times, meaning they faced potential to lose up to $1200, which is by no accounts ‘free’.”
Monks says the Federal Court also rejected Bet365’s arguments that its provision of additional qualifying information about an offer attached to an asterisk meant the representations were not misleading.
Monks says this area is a common source of misunderstandings for businesses.
“Businesses should not rely on an asterisk as a miracle fix,” she says.
“If there are key limits to the claim being made, or an asterisked disclaimer will contract the claims, sticking this into a fine print disclaimer is highly likely to be misleading.
“And post-advertising steps will never cure a misleading marketing campaign. The courts talk about consumers having been ‘enticed into the marketing web’ on false pretences and consider this still to be misleading even if a consumer is made aware of the true position at some later stage.”
SmartCompany contacted Bet365 Australia but did not receive a response prior to publication.