Under the 2005 Gambling Act (section 42) it is a criminal offence to cheat at gambling or do anything for the purpose of enabling or assisting another person to cheat at gambling. The maximum penalty is up to 2 years in prison. All betting companies licensed by the UK’s Gambling Commission (including remote betting intermediary licensees, or trading rooms), are required to report suspected offences (LCCP 15.1.2). Licensed operators are also required to carry out enhanced due diligence on the gambling of ‘politically exposed persons’ or family members or close associates of such persons – this would include individuals who work closely with such persons.
Suspicious activity in betting markets is usually connected with manipulation of results in sports (in forms such as match fixing). In the UK, allegations about that activity are handled via the Gambling Commission’s Sports Betting Intelligence Unit. However, the Commission has long recognised that bets also can be placed on political markets.
The Commission has powers to investigate allegations related to misuse of ‘inside information’ in bets on non-sporting events, such as elections. ‘Inside information’ would be known by an individual or individuals as a result of their role in connection with the event, and which is not in the public domain – such as knowing the winner of a TV competition, or that an election is going to be held on a particular date.
The standard of proof needed to show that someone has cheated is contested. Given the huge range of activities on which one can bet, from corner kicks to colours of hats worn by monarchs, the definition of cheating has to be somewhat flexible. As a Supreme Court justice put it, “what is cheating in one form of game may be legitimate competition in another."
Professor Kate Bedford, Birmingham Law School
After the investigation, the Commission has the power to void bets accepted by licensed operators that involve misuse of inside information (under section 336 of the Gambling Act 2005). The Commission can also take forward prosecutions for cheating, although this is a power it expressly commits to use very rarely. It prefers to work with the Crown Prosecution Service (or its Scottish equivalent) and the police on prosecutions. The Commission is unlikely to proceed independently with a criminal investigation unless there are exceptional circumstances (for example, the need to set a legal precedent).
How do you prove cheating?
The standard of proof needed to show that someone has cheated is contested. Given the huge range of activities on which one can bet, from corner kicks to colours of hats worn by monarchs, the definition of cheating has to be somewhat flexible. As a Supreme Court justice put it, “what is cheating in one form of game may be legitimate competition in another” (Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 LJ Hughes, para 38).
The evidence required to show cheating also varies depending on the consequence. The proof needed to void a bet would be lower than to proceed with a criminal investigation. However, a recent Supreme Court case on cheating at baccarat – Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 - gives us some guidance as to how the courts may interpret the term, if a prosecution were launched.
In this 2017 case, a gambler who had used edge-sorting (a type of card counting) to win at baccarat in a casino said he was not cheating but deploying ‘a perfectly legitimate advantage.’ The Court held that he had, in fact, cheated, and that the casino could withhold his winnings, even though he did not consider his acts to be dishonest. In that case, the ‘essentials’ of cheating were held to “normally involve a deliberate (and not an accidental) act designed to gain an advantage in the play which is objectively improper, given the nature, parameters and rules (formal or informal) of the game under examination” (para 47).
Prior to that case, in deciding whether an act is ‘dishonest’ (as key test of fraud), judges directed juries to firstly ask whether the conduct complained of was dishonest ‘by the lay objective standards of ordinary reasonable and honest people’, and then - if so – to secondly ask whether the defendant ‘must have realised that ordinary honest people would so regard his behaviour’ as dishonest. That second test – of whether the defendant would think that ordinary honest people would consider the act to be dishonest – was challenged by the Court in the baccarat case. They found that the gambler had – ‘contrary to his own opinion’ cheated and been dishonest (para 76).
This case matters because it suggests that misusing inside information to deliberately gain an objectively improper advantage when gambling would constitute cheating under section 42, regardless of whether the person engaging in the conduct thought they were being dishonest, or whether they thought that ordinary honest people would regard their ‘punt’ as cheating.
