The Competition and Markets Authority (“CMA”) has confirmed the launch of an investigation into concerns raised by the Gambling Commission about potential breaches of consumer law in the online gambling industry. The CMA, which assumed consumer protection enforcement responsibilities from the Office of Fair Trading in April 2014, is considering whether it should exercise its powers to restrain alleged unfair or misleading behaviour by online bookmakers.

The announcement from the CMA is linked to increased complaints from gamblers who claim to have been mistreated by the online betting industry. The CMA is especially concerned that players may be losing out due to companies having excessively wide discretion to cancel bets or alter odds after bets have been accepted, companies using contract terms to restrict players’ ability to challenge a company’s decision and companies closing accounts of those who ‘bet smart’ or show any betting ability.

The overriding message from the CMA is that, while gambling inevitably involves taking a risk, it shouldn’t be a con. The CMA has not confirmed what legislation it will be examining, but the key statute is likely to be the Consumer Rights Act 2015 (“CRA”). The CRA requires contract terms and consumer notices to be “fair”, which means that they must not cause a significant imbalance in the parties’ rights and obligations to the consumer’s detriment. This rule is supplemented by an indicative “grey list” of terms which may be regarded as unfair. The grey list includes terms enabling the trader to alter the terms of a contract, or the characteristics of services to be provided under a contract, unilaterally without a valid reason. It also includes terms authorising the trader to dissolve the contract where the consumer does not have the same rights. Moreover, consumer contracts must be “transparent”, which means they must be expressed in plain and intelligible language. Significantly, any ambiguity must be resolved in the consumer’s favour.

If the CMA considers that any online gambling companies have included unfair terms in their consumer contracts, it can apply to court for an injunction preventing further use of the offending contract term. Unfair terms are also not binding on consumers, opening the way to claims by consumers on the basis that the companies cannot rely on the unfair terms. Perhaps more significantly, the CMA can also recommend that the Gambling Commission revokes an individual firm’s licence to operate in the UK, which can have serious financial repercussions for an online bookmaker even if the revocation is only temporary. All in all, the announcements acts as a warning for online betting firms to ensure that all of their terms, conditions and offers are transparent, balanced and fair.