The Australian Competition and Consumer Commission (ACCC) had pushed for Bet365 to receive more that double the AU$2.75m fine it has received for posting a misleading sign-up offer on its Australian site.
The ACCC believed that the bookmaker should pay between AU$5m- $6m for the sign up offer, which was accidentally promoted between March 2013 and January 2014 on its Australian landing page after a mistake in a software update.
The offending advert offered customers $200 in free bets, but didn’t make any reference to the terms and conditions that were attached to the deal, such as the need to make an initial deposit and the rollover requirements before any withdrawal of funds.
Bet365 countered that a fine of $250,000 to $300,000 would be more appropriate given the size of the company in Australia at the time, and the fact that it has introduced a compliance programme to counter any such errors in the future, but the Australian Federal Court determined that a level of $2.75m would be necessary in order to work as a deterrent.
The Federal Court’s Judge Beach explained: “The proposed penalties are necessary and appropriate in order to satisfy the principal object of deterrence, both specific and general. I accept though that limited specific deterrence is necessary in the present case as the conduct is unlikely to be repeated, provided that the compliance program is properly implemented. But the penalties should not be set at the low level contended for by the respondents. To do so would then risk the penalties merely being seen as a cost of doing business and would thereby diminish the necessary deterrent effect.
“The contravening conduct was extensive in its duration and in the scope of its effect on users of the relevant services. Whilst I cannot quantify the monetary effect on such users, I am entitled to infer that it was substantial.
“Further, the conduct involved a significant element of recklessness in an objective sense. It occurred in an environment where there was no substantial and rigorous compliance program. The systems that were in place were reactive to change rather than proactive involving continual monitoring of the content of websites. The systems were surprisingly deficient for the nature and scale of the local and global enterprise. The respondents took a risk by not investing in appropriate systems. The risk eventuated. They must accept the consequences.”
The ACCC also pushed for Bet365 to be given a three year ban from publishing any Free Bets offers ‘without clearly and prominently stating in close proximity to the word “free” the limitations and conditions which apply to that offer’. However Judge Beach turned it down claiming: “There is no material likelihood of future repetition.”
The company has also been ordered to send a corrective notice to those affected by the offer, which the judge said amounted to a “significant proportion” of the 73,000 customers the operator had at the time of the breach.
Rod Sims, ACCC chairman, said: “If the restrictions and limitations had been appropriately brought to consumers’ attention, they would have been able to recognise that there was no ‘free’ bet, particularly given that they had to risk their own money before making such a bet.
“These penalties should serve as a warning to all businesses that is it not acceptable to promote ‘free’ offers as a headline offer without ensuring that any restrictions or limitations are disclosed in a prominent way. This is particularly relevant in an emerging industry like the online gambling market, where online and print advertisements target consumers who may not previously have used online gambling services.”
A Bet365 spokesman acknowledged an unintentional software error and said: “Bet365 regrets that, as a result of this error, it may not have adequately brought to the attention of customers’ terms and conditions associated with the promotion. Bet365 has introduced stricter compliance processes and controls, as well as improved staff training to prevent a similar issue arising again.”
It seems that this approach was recognised as Judge Beach acknowledged that he had given Bet365 some discount for “contrition, co-operation, the fact that an adequate compliance program is now in place and the fact that there has already been some damage to reputation, but at the end of the day a substantial penalty is warranted, particularly given that there are strictly multiple contraventions.”