Do betting sites have to pay out by law?
Over the years you’ve probably heard stories of betting sites not paying out winnings. From time to time they even make the national news. Perhaps it’s even happened to you? One of the most frequent questions we get asked is ‘do betting sites have to pay out winnings by law?’
You’d be mistaken for thinking there should be a fairly straight forward answer. A simple ‘yes’ or ‘no’ (preferably yes). But gambling’s complex, and it’s been further complicated by its move online.
In 2005, the Gambling Act was passed to provide the gambling industry with a concrete legal framework with which to operate. It had 3 objectives.
- To prevent gambling from being a source of crime
- To ensure transparency and fairness
- To protect the vulnerable from being exploited
For the first time, the Gambling Act also sought to regulate online gambling. The Gambling Commission was also a product of the Gambling Act, setting in stone a process of accountability for licenced betting sites in the UK.
But back to our question. Do betting sites have to pay out by law? The short answer is yes, they do. However, it’s a little more complicated than that. Meaning there are some large ‘grey areas’. But before we tackle those, let’s start with your rights.
Know your rights
Believe it or not, there was no independent regulatory body responsible for the gambling industry before the Gambling Act. The more you think about it, the more stupid it sounds, after all, gambling is a £14 billion industry. Bets simply weren’t enforceable by law, meaning betting sites were under no obligation to pay-out. Despite this lack of legal protection, bookmakers largely refrained from dubious practices, knowing they’d be bad for business.
Today, all bets with UK licenced bookies are legally binding by UK law. That means if you place a winning bet with a UK betting site, they have to pay up. However, there are certain caveats in place. You must understand these caveats because they could be the difference between a bookie paying out or not.
Only use a UK licenced Bookmaker
Seems simple enough. But many online bookies aren’t licenced in the UK. If you place a bet with an unlicenced bookmaker, they can walk away with your winnings and there’s nothing you can do about it.
Being licenced means being held accountable by the Gambling Commission. If you make a complaint about a licenced bookie, there is recourse. They will (potentially) be hauled over the coals by the Gambling Commission.
Do your research. Make sure your bookie’s licenced.
What is Palpable Error?
This caveat is in place to protect betting shops from human error on their part. Given the sheer scale of bets placed, particularly online, it’s understandable that mistakes are made, and the wrong odds promoted.
For example, if England were to host Italy in the rugby union’s 6 Nations tournament, and the odds were 25/1 for England to win, that would be classed as a palpable error. But why? Well, when the odds are so obviously wrong (which in this case they are), then a human error is assumed, and all bets are null and void.
The reasons for a palpable error are multiple, but the most commonly used is a typo or getting the odds the wrong way round.
However, the IBAS, (Independent Betting Adjudication Services) the UK’s dispute resolution service for the Gambling industry, clearly states that bookmakers must not abuse the ‘Palpable Error’ clause to cover for their mistakes. If a genuine pricing error has occurred, then bookies need to pay up.
What are Bets accepted in Error?
The two most common types of bets accepted in error are, bets accepted after an event has finished and bets related on contingencies.
Although ‘bets accepted after an event has finished’ are straight forward enough, ‘bets related on contingencies’ are more complicated and likely to fall into grey areas.
Related contingencies more often than not involve accumulator bets. These are bets placed together where the result of one bet is related to the result of another. The usual outcome here is that a punter has placed an accumulator bet on outcomes that are related to each other.
For example, placing a bet on Salah to score first for Liverpool, and another bet on Liverpool to win the same game is not an accumulator bet because the outcomes are related. Punters often make this mistake and are shocked to find their winnings are much less than they expected.
However, it can also simply be a case of mistaken identity.
David Smith took Betfred to the IABS in 2018 due to a mix up other the name of a horse. In his six-horse accumulator, Smith had his money on Bailarico to win the final race. Trouble was he had meant to put it on Bialco, the eventual winner.
Smith lost his case. The moral of this story is clear. The devil is in the detail. Double-check your bet details, otherwise, it could cost you £189,000.
Pay attention to the Terms & Conditions
Talking of the devil being in the detail, make sure you read your account’s terms and conditions. It’s called small print for a reason. But taking the time to understand what you’ve signed up to will benefit you in the long run.
The following could prevent a betting site from paying out:
- Single Account – Make sure you are only using one account, especially if taking advantage of any promotions.
- Account Verification – Verifying the authenticity of your account, namely your age and personal details is essential. If you can’t do this, then your betting site doesn’t have to pay you a bean. This is a legal requirement designed to remove fraud.
- System bets & abusing free bets – Anything that can be deemed as ‘free bet abuse’ risks being refused. For instance, backing several related outcomes to guarantee a pay-out.
- The official result – The immediate result is usually honoured by your betting site. If there is a later change to the result, due to some form of technicality, then you may forfeit your prize money.
- Underage Gambling – Gambling underage will guarantee that not only will your winnings not be paid out, but you’ll probably forfeit your stake too.
- Illegal Territories – Simply put, if you place a bet from a country or territory that is excluded in the terms and conditions then you have no rights. Most online gambling sites have geolocation functionality. They will know if you are from an illegal territory or not by collecting your IP address details.
- VPN (Virtual Private Networks) – VPN’s are commonplace and certainly not illegal in themselves, However, they can be used to mask location. Get caught using a VPN to contravene illegal territory rules and you will lose all your money.
- 3rd Party and Syndicate Betting – You are not permitted to bet on someone else’s behalf. It’s a strict no-no. The rules are not so clear-cut for betting syndicates and can differ from bookie to bookie.
- Money Laundering – Bookmakers, especially high street betting shops, are cash-rich businesses. This makes them perfect for money laundering. From time to time you may be asked to prove how you accessed your deposit funds, before withdrawing winnings. In this instance, the law is well and truly in favour of the betting companies. If they suspect criminal activity, then they will keep your money until you can prove otherwise.
- Payment Issues – Also known as the ‘closed wallet system’. Punters will be blocked if they try and use different payment and withdrawal methods. If you think this might be an issue for you, flag it with your bookie and ask for bank transfer options to be applied to your account.
Also known as ‘House Rules’. Although terms and conditions are important to understand, it’s the betting rules that cause bettors more problems. This is because they tend to differ from bookie to bookie, whereas terms and conditions are more uniform. Things you need to look out for, include:
- Pay-out Limits – Double check the pay-out limits, because no matter what your odds are, if your potential pay-out exceeds the maximum, then your winnings will be capped.
- Winnings Deduction Rules – If a team or runner withdraws last minute from an event, then there are rules in place to decide what happens to the odds. For example, in horse racing, Rule 4 dictates that odds should change by an agreed amount if a horse is withdrawn. Take your time to understand how your bookmaker has applied these rules to their business.
- Postponed Events – If your sporting event is cancelled outright, then you will get your stake refunded. However, if the event is postponed then your bet may still stand. Best to double-check should this be the case.
- Dead Heat Rules – Some sports aren’t as simple as others and sometimes results in several contestants finishing first. This is known as a dead heat and will normally reduce your winnings. This is most prevalent in Golf. If you’re not sure on your bookmaker’s dead-heat rules, then make sure you find out before placing your bet.
Winning too much
We all dream of having the Midas touch when it comes to gambling! But believe it or not, this can be more of a blessing than a curse. If you keep winning, then sooner or later bookmakers will limit your ability to win.
Value bettors are masters at exploiting a bookmaker’s weaknesses, either through mistakes or incorrect odds applied because a book needs to be balanced. This isn’t illegal and is within the rules of the game, but bookies will place limits on an account they suspect is from a value bettor.
Remember, bookmakers are like any other business. They exist to create profit for themselves and their shareholders. If they keep having to pay-out large sums, then this reduces their ability to generate profit. This is why they will limit your ability to win.
What can you do if you’ve been unfairly treated?
By now you should have a good grasp of the rules and regulations of the UK’s gambling industry. If after reading this you still feel hard done by, then there are a couple of things you can do. Firstly, the IBAS (Independent Betting Adjudication Service) is your first port of call. They hold licenced UK gambling sites and betting shops to account. Make a complaint, preferably in writing, to the IBAS in the first instance.
If you feel that you want to take the matter further, then also get in touch with the Gambling Commission. It’s important to know they won’t directly get involved with your specific complaint (that’s the IBAS’s job), but they will record the matter and consider it when the relevant betting licence is being reviewed.
Finally, if you’re not happy with the service you get from your bookmaker of choice then simply change your bookmaker. Remember, it’s an incredibly competitive market out there, so use that to your advantage.
The rules and legislation surrounding the UK gambling industry are complex and, at times, open to interpretation. They can also differ from bookmaker to bookmaker. Taking the time to understand them is well worth the investment.
If you’re looking to start gambling, or change bookie then take your time and do your research. Make sure you pick the right bookie for your needs and remember the IBAS is there to help protect your rights and hold the gambling industry to account.
Carl Hughes - Editor
Carl Hughes is a leading expert on sports and casino betting. Carl began his career with a BSc in Sport, Exercise and Health Sciences from the University of Birmingham before working within the industry for some of the bigger names (GVC and Bet365) and has been praised as being "a leading sports betting commentator".