Carlo Salizzo, Lawyer in the Technology and Innovation Group, along with Deirdre Kilroy, Partner and Head of Intellectual Property discuss what to look out for when running prize-givings and promotions, based on a recent UK case on cheating and dishonesty.
When Customers Play to Win – Tips for those running promotions
A recent decision of the UK Supreme Court over millions of pounds in ill-gotten gambling gains is the latest case on a favourite theme for legal rubbernecks: tales of cunning consumers trying to find a loophole in the terms and conditions of a game or promotion. It reminds us that anybody running a contest or promotion should ensure that its terms and conditions are airtight – for more than just regulatory compliance reasons.
When advising on promotion terms and conditions, we at Matheson tend to focus on two key elements: first, the need to carefully and precisely set forth the rules of the contest; and the second, giving the promoter adequate catch-alls and discretions to avoid any customers who do manage to find a loophole (some strategies for putting these into action are set out below). In Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67, a casino found itself in the unenviable position of attempting to do both of those things with the traditional card game of baccarat – no easy task.
Top tips for avoiding cheats in promotions
- Exhaustively document the terms on which the promotion will be run.
- Include clear eligibility rules and exclude anyone connected with the promotion from entering.
- Clearly state that the award of prizes is at the promoter’s final discretion.
- Include a general right to exclude any people suspected or found trying to cheat or cheating (including by using automated means to participate).
- Include a precondition that participants will not try to bribe or influence employees of the promoter.
- Test the terms and conditions to make sure they work, test them again to see if you can find the loopholes – then close them.
In the Crockfords case, Mr Ivey was a professional gambler who devised a cunning scheme by which he was able to greatly improve his odds of winning at high stakes Baccarat. While the exact details of the gambit read a little bit like something out of the film Casino Royale, the gist of it was that Mr Ivey and his accomplice were able to convince the Crockfords dealer to position certain useful cards upside down before placing them in the shuffling machine. Due to minute printing differences on the backs of the cards, the sharp-eyed Mr Ivey was able to predict when a good hand was coming his way and place his bets accordingly. Over the course of two days, Mr Ivey racked up winnings of £7.7 million using this method. It was not until the casino’s back room experts reviewed footage of the winning streak that the trick was detected and the casino refused to pay out.
What the court had to decide was whether Mr Ivey’s trick amounted to “cheating” as a matter of law. Mr Ivey admitted every detail of the scheme, but maintained that what he was doing was not cheating but instead a form of “legitimate gamesmanship”. Ultimately, the court accepted that while Mr Ivey was sincere in his belief, that belief was irrelevant to the question of whether or not he had “cheated” according to the law and ruled in favour of the casino. The fact that Mr Ivey’s accomplice had misled the dealer by feigning superstition meant that the duo had deliberately “fixed” the deck which went against the “essential” element of baccarat – that the game is one of pure chance.
While the case has wider implications for the gaming sector (and those interested in the legal test for dishonesty), its significance for those of us who don’t frequent baccarat tables is the danger of a loose set of contest rules. It’s also a useful reminder of the lengths to which individuals will go when they sense an opportunity to ‘beat the system’ – and like Mr Ivey, they may feel completely entitled to do so. After all, they are simply playing the game by the promoter’s rules.
Both Mr Ivey and the Casino agreed that there was an implied gambling contract between them that neither party would “cheat” – but it took an expensive trip all the way to the Supreme Court to decide exactly what that meant. When facing a motivated “advantage player” like Mr Ivey, particularly one who is self-represented, there can be very few incentives for settlement as they seek to maximise their return. Against this background, surely it’s worth putting in the work to craft the right terms and conditions to minimise the risk of costly litigation and fees – an ounce of prevention would have been worth several hundred thousand pounds of cure for Crockfords casino, for instance.
It can be tempting to focus on the regulatory hurdles when drafting promotional rules, but it helps to remember that customers and players can be just as clever as the Revenue. While the casino was ultimately vindicated by the court’s decision, it bears remembering that litigation can also be a game of chance. When the stakes are high and the risk can never be fully eliminated, you will sleep better at night knowing that you hold all the cards.