This is the second of a two articles on the potential introduction of ‘affordability checks’ in gambling. The first article looked at the proposals generally while this article looks at how we have arrived at the prospect of the introduction of ‘affordability checks’ in gambling.
When professional greyhound trainer Graham Calvert brought a claim in the High Court against William Hill in 2008, the Gambling Act 2005 was still very much in short trousers (having not in fact come into force until the beginning of 2007). Mr Calvert’s claim was that William Hill had failed to prevent him from losing substantial sums of money as a result of his gambling problem.
The High Court’s judgment in Calvert is long and complex and includes a large amount of factual detail. The extent of Mr Calvert’s gambling with William Hill and other bookmakers remains something of a mystery. However what seems clear is that he lost an enormous amount of money to William Hill as a result of what the court called his ‘pathological gambling’.
Having placed a number of what most of us would consider vast bets, Mr Calvert contacted William Hill and asked for his account to be closed because he was out of control of his gambling. In fact he did so twice. However as a result of administrative oversights, the bookmaker failed to close his account on either occasion and afterwards Mr Calvert’s evidence was that he lost £2 million, including via a single unsuccessful bet of £340,000 on the USA to win the 2006 Ryder Cup.
Mr Calvert lost his claim in the High Court and his subsequent appeal to the Court of Appeal.
The surprising starting point when considering the effect of the judgment in Calvert is that it expressly establishes that bookmakers do owe a duty of care to problem gamblers. There is no general duty to prevent any problem gambler from losing their money but there is a narrower a duty when a problem gambler has identified themself as such and asked to be prevented from placing further bets. Further the judgment suggests that if a customer’s behaviour makes it obvious to a bookmaker that they have a gambling problem then the same duty of care may arise. Unfortunately the judgment gives very little indication of what kind of behaviour is required before a bookmaker should spot the signs of problem gambling. It is tempting to think that the court would at the very least give rather more consideration to this question were Calvert to be decided today.
The problems which have arisen between problem gamblers and bookmakers in the 15 years since Calvert relate less to the question of the extent of a bookmaker’s duty of care than to the consequences of a breach of that duty of care. Having found William Hill to have acted negligently in its dealings with Mr Calvert, the court went on to consider the question of what the consequences of that negligence were.
Both the High Court and the Court of Appeal held that despite having concluded William Hill had a duty of care to Mr Calvert and that the bookmaker had acted in breach of that duty of care, Mr Calvert was not entitled to recover a penny of his extraordinary losses – William Hill could keep the lot. While the two courts arrived at the same conclusion by slightly different paths the reason for their decision was essentially that they believed Mr Calvert would simply have lost his money to another bookmaker had he not lost it to William Hill, such was the extent of his gambling problem. In legal terms, William Hill’s negligence had not in fact caused Mr Calvert’s gambling losses. Rather his losses were caused by his extreme gambling problem.
Arguably this logic amounted to carte blanche for bookmakers. On one analysis, if you turn down the business of a very obvious problem gambler, you are just handing that business to a competitor who is very unlikely ever to be held responsible for that gambler’s losses. Perversely Calvert seemed to mean that the more serious a customer’s gambling problem was, the less likely that a court was ever going to order a bookmaker taking his bets to repay any of his losses. This is because the more serious the gambling problem, the easier it is for the bookmaker to argue that the customer would have lost the money to another bookmaker.
A hole where regulation should have been
Calvert represented the first occasion on which a court had been tasked with applying the law of negligence to bookmakers in the context of problem gambling. In the High Court Mr Justice Briggs carried out a detailed analysis of the history and philosophy of the law of negligence and in doing so he identified the source of the stark contrast between the approach of the civil justice system and the SMF when he referred to the following passage from the House of Lords judgment in Commissioner of Police v Reeves  1 AC 360:
“… there is a difference between protecting people against harm caused to them by third parties and protecting them against harm which they inflict upon themselves. It reflects the individualist philosophy of the common law. People of full age and sound understanding must look after themselves and take responsibility for their actions… Duties to safeguard from harm deliberately caused by others are unusual and a duty to protect a person of full understanding from causing harm to himself is very rare indeed”.
The use of this language is frankly quite jarring when one considers what has happened in the gambling industry since the Court of Appeal handed down judgment in Calvert. Whatever way one looks at it, it is not an approach which lends much sympathy at all to those suffering with serious gambling problems. But it was into this lacuna of redress that the new Gambling Commission ought to have stepped. The fact that we find ourselves where we are entirely supports the generally held view that this simply did not ever happen.
A potential solution: a statutory duty of care
It is common for government, politicians and regulators to suggest that the appropriate remedy for inadequate regulation is yet more regulation. The SMF now suggests the creation of a Gambling Ombudsman. The Gambling Commission, like the SMF, appears to consider that the answer is to require bookmakers to demand and review the private financial records of their customers and to monitor a concept called ‘affordability’ which the regulator seems very reluctant to define. The concern for many is that the government may share that view.
Perhaps the answer lies outside of regulation however.
Most businesses, regardless of the sphere in which they operate, take steps to avoid acting negligently not primarily from any sense of altruism but because they fear being taken to court and being ordered to pay damages and costs to the victims of their negligence. The effect of Calvert is that, when it comes to their interaction with problem gamblers, bookmakers have (whether rightly or wrongly) generally held very few such concerns.
An amendment to the Gambling Act 2005 which imposes a statutory duty of care on bookmakers to take reasonable care to avoid doing business with problem gamblers (and therefore ‘undoes’ Calvert) could well prove a much more effective answer to issues surrounding problem gambling than requiring bookmakers to routinely review and assess their customers’ payslips.
Admittedly the terms of any statutory duty would require careful consideration and such a duty would ultimately increase the strain on the civil justice system, but perhaps it is now necessary for the courts to step in where regulation has so far failed.
Indeed, at this point, it may well be that even bookmakers would welcome this lesser of two evils.