There’s a High Court case reported today involving a gamber and greyhound race trainer who is suing William Hill, the bookmakers, for allowing him to rack up £2.1m of losses. He insists they should have refused to take the bets from a compulsive gambler.
Leaving aside that William Hill followed his request to freeze his account, and that he circumvented this by going into different shops and opening a new telephone account, his lawyer is arguing that William Hill manipulated the situation to make profits.
The case centres on the extent to which bookmakers are obligated to protect problem gamblers from their own habit, and may set new industry guidelines on “socially responsible’’ conduct, lawyers said.
Unsurprisingly, William Hill denies wrongdoing and says that it is not legally responsible for Mr Calvert’s losses, given that he was an adult participating in a lawful activity.
This case caught my attention for two reasons. Firstly, it follows a pattern of people blaming others for their own financial peril [sub-prime borrowers – banks shouldn’t have lent us money] and then seeking damages for the consequences.
The second reason is going to be less obvious to most, which is that the outcome of this case will have direct consequence for many broking firms.
Spread-betting is an activity that has exploded in size within a decade with firms like IG Index and Cantors Spreads benefiting from this wave of interest. It has successfully been applied to sports as well as to financial markets, and has done more to educate the “common man” about trading than any Government campaign could have ever dreamt of. Ask any Sun or Mirror reader about buying/selling goals or corners or runs and they are likely to have a good understanding of how the process works. Similarly, they will be probably be able to quote you in digital odds [1.01 = 1/100, 1.02 = 1/50….].
Most outsiders don’t realise that to offer a spread-betting service you actually need to hold a bookmakers licence, even if the subject of the bet is a financial instrument, market or indices – when we set up such a business at Man Financial [now MF Global] at the time when I was on its’ Board, we had to make an application for a bookmakers licence to the local magistrates. Moreover, winnings/losses fall outside of the tax regime unlike even instruments like contracts for difference.
As such, the outcome of the case would have a direct bearing on spread-betting firms and might open the way for financial investors to seek recourse to their broker for their losses. Clearly, one might need to demonstrate comparable circumstances or compulsions to qualify, but it would be of great concern to every firm if such a precedent were set.
The papers also happened to report as an after thought that the former greyhound trainer is also awaiting trial on unrelated firearms and drugs charges at Newcastle Crown Court.