 There’s no such thing as
a free bet in Australia
When Bet365 prominently displayed $200 FREE BETS FOR NEW
CUSTOMERS* on the Opening Page of its website, it was
targeting new customers who shared the Australian love for a
punt.
The “FREE BETS” display was a successful marketing strategy,
but fell foul of the Australian Consumer Law.
The article looks at the pitfalls of the way Bet365
displayed the “FREE BETS” offer from a legal perspective,
followed by the benefits of using the word free from a
marketer’s perspective.
The liability decision
In Australian Competition and Consumer Commission v Hillside
(Australia New Media) Pty Ltd trading as Bet365 [2015] FCA
1007, the Federal Court of Australia (Beach, J) found that
the “FREE BETS” display between 18 March 2013 and 13 January
2014 was misleading or deceptive or likely to mislead or
deceive contrary to s 18 of the Australian Consumer Law (Sch
2 to the Competition and Consumer Act 2010 (Cth)) (ACL) and
conveyed false representations contrary to paragraphs
29(1)(b), (i) and (m) of the ACL.
Justice Beach made these observations on how the “FREE BETS”
offer drew new customers into what he called Bet365’s web of
deception:
- the word "free" has a particularly strong attraction and
unless adequately qualified can produce a wrong
understanding
- it is important to prominently and clearly spell out any
conditions which apply so that the magnetism of the word
"free" is appropriately qualified
- in this case, the message was not appropriately and
proportionately qualified by the applicable terms and
conditions, because none of the key conditions were
displayed on the Free Bets Opening Page
- the asterisk used was an orphan; it was not referenced to
and was disconnected from the terms and conditions, and so
it was not effective to dispel the misleading character of
the dominant message
The penalty decision
In Australian Competition and Consumer Commission v Hillside
(Australia New Media) Pty Ltd trading as Bet365 (No 2)
[2016] FCA 698, Justice Beach ordered these penalties:
Hillside Australia, which held the licence to transact with
Australian consumers for sports betting and which was
involved in marketing the “FREE BETS” offer, was ordered to
pay a pecuniary penalty of $1,500,000. It was also ordered
to email a corrective notice to each individual who had
responded to the “FREE BETS” offer within the relevant
period.
Hillside UK, which was responsible for marketing, setting
the value of the offer and preparing promotional material
and the development of the offer’s terms and conditions for
the Bet365 website, was ordered to pay a pecuniary penalty
of $1,250,000. It was also ordered to email a corrective
notice to each individual who had responded to the “FREE
BETS” offer within the relevant period.
The corrective notice sets out the terms and conditions that
applied to the “FREE BETS” offer, which were:
- the customer had to pay a deposit and risk that deposit
before being entitled to make any “free” bet
- the customer had to risk three times the value of his or
her deposit and the “free” bet prior to making a withdrawal
- the offer was not available for bets at odds less than ½
(1.50)
- a 90 day time limit applied
- the value of the “free” bet was limited by the size of the
customer’s first deposit
These conditions heavily qualified the “fee bets” offer.
According to Justice Beach, they should have been
prominently displayed on the Free Bets Opening Page of the
website, as they now are, and not ‘hidden’ until the
customer had clicked through to the Free Bets Welcome Page
then to the Free Bets Open Account Page then to a Funds
Deposit Page, which led to a Free Bets Welcome Email which
contained a link to the ‘Terms & Conditions’.
Justice Beach concluded that Any customer who managed to
find those terms had by that stage been fully drawn into the
marketing web by the headline offer.
Was the “FREE BETS” marketing successful?
The answer must be a resounding yes. This is what Justice
Beach said:
Hillside Australia’s directors’ report for the financial
year to 30 March 2014, which covered most of the
contravening period of 18 March 2013 to 13 January 2014,
recorded that:
- overall wagering revenues (the gains or losses from
wagering activities) had increased to $29,100,000 from the
previous year’s total of $7,700,000;
- total amounts wagered had increased to $1,475,000,000,
an increase of $842,000,000 from the previous year; and
- active users had increased to 73,000, an increase of 83%
over the previous year, of which customers who took up the
“Free Bets” offer were a significant proportion of active
users.
Despite these statistics, the Australian Competition &
Consumer Commission (ACCC) failed to demonstrate that the
“FREE BETS” marketing was carefully planned. Instead, Bet365
persuaded the Court that the benefit was accidental and due
to deficient systems which omitted the “*See Terms and
Conditions below” disclaimer from the “FREE BETS” panel on
the Opening Page.
How Bet365 laid the blame upon deficient systems and
different rules in the UK
The Bet365 Group is based in the UK. It provides online
bookmaking services to customers in over 200 countries.
Senior management in the UK were responsible for the design
and implementation of the systems which the Court found to
be inadequate.
As part of its case, the ACCC quoted a 4 August 2010
adjudication by the UK Advertising Standards Authority (ASA)
on Hillside UK’s website advertisement - “£200 FREE BETS FOR
NEW CUSTOMERS”. The ASA had found that the banner was
misleading because the disclaimer “Terms & Conditions apply”
was not ‘one click away’. Therefore new customers were not
aware that they could only claim £200 in free bets if they
staked a significant amount of their own money first and
that they could only withdraw winnings if a number of
conditions were met first.
The ACCC was seeking to demonstrate that Bet365 had
previously engaged in the conduct before the Court. But
Justice Beach dismissed this: The ASA decisions exist in a
different regulatory prism, apparently pursuant to some form
of voluntary code, in circumstances in which the UK does not
have an ACL equivalent. Accordingly, what is and is not
permissible by way of advertising in the UK has reduced
relevance in Australia.
Was the omission of a reference to Terms & Conditions
reckless?
Justice Beach accepted that the omission was the result of
an error, as opposed to being intentional. He accepted that
a ‘systemic deficiency’ occurred during the implementation
of a software upgrade of the Australian website in March
2013 (to improve functionality). During the upgrade,, the
“BONUS BETS” panel was mistakenly changed to the “FREE BETS”
panel in which the words ‘Terms & Conditions Apply’ were
omitted. That omission was not corrected until January 2014.
Justice Beach concluded that although the behaviour was not
reckless subjectively, it was objectively reckless: The
respondents took a risk by not investing in appropriate
systems. The risk eventuated. They must accept the
consequences.
He noted that in 2014, Bet365 had adopted an ‘adequate’
compliance program which should mean that the behaviour is
unlikely to be repeated, and this applied to reduce the
penalty.
The Australian Consumer & Competition Commission (ACCC)
perspective
The ACCC Media Release is revealing in terms of how the
Bet365 display came to its notice –
The free bet claims came to the attention of the ACCC as
part of a coordinated sweep of ‘free’ representations on
websites targeting Australian consumers. This initiative was
part of a larger global effort through the International
Consumer Protection and Enforcement Network.
Conclusion
There is no such thing as a ‘free bet’ – there are always
conditions attached. In this case, one condition was that
the customers had to gamble their deposit and bonus three
times before being able to withdraw any winnings.
The decision stands as a warning to all marketers - Unless
the Terms & Conditions are prominently displayed, a free
offer is misleading or deceptive in breach of the ACL and
heavy penalties will apply.
MARKETING COMMENTS
By Michael Field From Evettfield Partners
‘Free’ is one of the most powerful words in the marketer’s
arsenal. Despite its overuse in advertising generally, it
still has a very strong hold on the mind of the consumer and
taps into the universal desire to ‘get something for
nothing’. Although as consumers our rational brain suspects
there may be a catch, our human instincts of greed override
the rational and want to believe we are getting a bargain.
Who can resist something for nothing?
Recent research by respected behavioural scientist Dan
Ariely, and author of Predictably Irrational and The Honest
Truth about Dishonesty, suggests that free has no downside
for the consumer, only upside as it creates an emotional
reaction. He says “We don’t think of ‘zero’ as having any
downside. It’s a category by itself and we think about it
very differently.”
Personal finance writer for Time Magazine Martha C. White,
says that brands win five ways when they share free
products:
- Consumers are inclined to buy more.
- Customers become willing to pay a higher price for it
later.
- Items increase in value when they’re free instead of when
they’re discounted (e.g. every tenth coffee is free).
- Brands can leverage freebies to upsell other goods (e.g.
buy one, get one free or get a free gift bag when you spend
$75 or more).
- Recipients are 20% more likely to spread word-of-mouth.
So, is there any such thing as a ‘free bet’? I would argue
there isn’t and any marketer worth their salt knows that
that ‘free’ offers must be funded by an increase in sales
revenue generated by the campaign. The costs are usually
built into the purchase price or are simply a redeployment
of existing marketing spend towards the additional ‘free’
service in the hope the offer of something free will entice
enough new customers to neutralise the cost.
Bet365 offered $200 FREE BETS for new customers. The
consumers were not made aware of the multitude of
conditions, that if fully disclosed would have substantially
reduced the appeal of the free offer. As such, the marketing
potentially exploited the consumers’ desire for ‘something
for nothing’ and the brand benefited handsomely with
increased sales revenue and new customer sign-ups.
It would appear to me that the fine is manifestly
inadequate, given the substantial sales uplift achieved by
the promotion. You could almost write off the fine of as a
modest ‘marketing investment’, or as the courts put it, a
‘cost of doing business’.
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