An interesting story from Canada caught my attention last week and got me reminiscing about the legal status of gambling agreements in Scotland. Sponsiones ludicrae they were otherwise referred to – ludicrous promises.
The Québec Court of Appeal had to consider whether a bet placed on the outcome of a game of rock, paper, scissors was legally enforceable under that Province’s laws. At stake lay a sum of $500,000 and the loser of the bet had taken out a mortgage to cover this. Luckily for him, the Court upheld the judgement of the trial judge who had determined that the bet was not legally enforceable because it was excessive. Strictly speaking, gambling agreements can be enforced in Québec, but under that Province’s laws the bet must not apply to a game of chance; it must require skill or bodily exertion. Admittedly, Justice Chatelain, the trial judge seemed to be split on whether rock, paper, scissors was strictly a game of chance or one which required some element of skill or bodily exertion, but she was eventually swayed by the fact that the size of the bet was excessive.
A link to the story on the Sky News website can be found below:
Gambling agreements are arrangements that people enter into usually by way of placing a bet on a variety of sporting events or other frivolous activities e.g. who will be the latest evictee from ITV1’s I’m a celebrity: get me out of here!
When I started my legal career, I could confidently say to people that gambling agreements had no legal status whatsoever. They were unenforceable.
The introduction of the Gambling Act 2005, however, fundamentally reformed this area of the law of contract (more about this later in the article).
The historical position in Scotland
As Professor Laura J MacGregor of the University of Edinburgh has pointed out the theoretical objections of the Scottish judiciary were often quite nebulous when it came to deciding the grounds on which gambling agreements were unenforceable (Pacta Illicita: A History of Private Law in Scotland; Volume II edited by Reid and Zimmerman (OUP: 2000)).
True, such agreements didn’t quite fall into into the category of pacta illicita or illegal contracts because, after all, gambling was, for the most part, a perfectly legal activity. This, of course, did not prevent certain members of the judiciary (from time to time) placing such agreements in the category of illegal contracts (see Lord Moncrieff’s conclusions in Calder v Stephens (1871) 9 M 1074) in this respect).
England, on the other hand, had taken a different approach from Scotland to gambling agreements. The Unlawful Games Act 1541, passed during the reign of King Henry VIII, had to all intents and purposes made nearly all gambling activities illegal. Although this legislation seems to have been enforced rarely (or never), its influence ensured that gambling contracts had the status of pacta illicita or illegal contracts: they were void and unenforceable in the English Courts. Over the centuries, the laws regulating gambling in England would become progressively liberalised, but the Act of 1541 cast a long shadow.
The end result in both Scotland and England was very much the same: gambling agreements were unenforceable, albeit this conclusion being arrived at on the basis of different philosophical principles (sponsiones ludicrae in Scottish decisions and illegality in English cases).
Historically, of course, successive UK Government were quite hypocritical in their attitude towards gambling activities. They were quite happy to tax the punters, yet the Scottish and English courts consistently refused to enforce such agreements. Typically, the courts regarded gambling agreements as below their dignity and not worthy of judicial scrutiny. In the past, unlucky punters who were slow or refused to settle outstanding gambling debts with a bookie may have found themselves having to do a runner from hired ‘muscle’, that had been engaged by the bookie, to persuade them to pay up.
It also cut the other way: a lucky punter might be outraged to learn that a bookie had no intention of paying out if a rank outsider had romped home in that year’s Grand National horse race.
I remember reading (with much amusement), the writer, John O’Farrell’s face off with a book maker in 1997*. O’Farrell, a life long Labour Party supporter, had placed a bet that Tony Blair would lead the Party to victory at the next British General Election. When the bet was originally put down, the odds against a Labour victory were high. Needless to say that, when Mr Blair won the General Election in 1997, O’Farrell was banking on a large payout. To O’Farrell’s initial consternation, the bookie was not willing to pay out and there was no legal avenue to force him to do so. O’Farrell, who made regular TV appearances on well known shows such as Have I Got News for You, cleverly used his media status to persuade (gently) the bookie to pay out his winnings. The bookie duly complied.
*Things Can Only Get Better: Eighteen Miserable Years in the Life of a Labour Supporter, 1979–1997 (1999, Black Swan).
Arguably, the unwillingness of Scottish (and English) courts to enforce gambling agreements over the centuries seems to stem from the time in which Christianity was a much more powerful influence in society. Although, there would appear to be limited scriptural objections to such activities, many Christian societies were disapproving because it was a means of obtaining a reward without putting in the effort of hard labour. If pushed to think of condemnation of gambling in the Bible, I can really only think of the example of lots being cast by the Roman soldiers for the clothing and possessions of Jesus Christ at the crucifixion on Good Friday (Matthew 27: 35; Mark 15: 24; Luke 23: 34; and John 19: 23-24 fulfilling Psalm 22: 18).
The words of the eighteenth century Scottish judge, Lord Kames come readily to mind when considering how gambling contracts were viewed:
“[Such a contract] ought not to be converted into a serious matter, by bringing the fruits of it into a Court of Justice … Neither doth this court profess to take under its protection every covenant and agreement. Many engagements of various sorts, the fruits of idleness, are too trifling, or too ludicrous, to merit the countenance of law; a court, whether of common law or of equity, cannot preserve its dignity if it descend to such matters.”
Two examples of the way in which gambling agreements were dealt with by the Scottish courts can be seen below:
Robertson v Balfour (1938) SC 207 Robertson had entered into gambling agreements with Balfour, a bookie, to place bets on two horses, ‘Swift and True’ and ‘Scotch Horse’. Both horses won their respective races, but Robertson received a mere £10 in winnings from Balfour. In fact, Balfour owed Robertson another £33 in winnings. Robertson had agreed that he would give Balfour additional time to pay him the balance of this debt.
Held: Robertson could not enforce the outstanding debt of £33 against Balfour. This was a gambling debt and the courts would not enforce it.
Ferguson v Littlewoods Pools Ltd (1996) GWD 21-1183 the members of a football pools syndicate had won several million pounds on a coupon – or so they thought. The syndicate members were completely unaware of the fact that the agent for Littlewoods Pools had not forwarded their stake money because he had stolen it. When the theft was uncovered, the syndicate members not unnaturally demanded that Littlewoods should honour the winning coupon. Littlewoods stated that it had never received the coupon. In response, the syndicate argued that Littlewoods should be held responsible for the dishonest actions of its agent.
Held: by Lord Coulsfield in the Outer House of the Court of Session that the contract between the syndicate and Littlewoods was a gambling agreement and it was, therefore, unenforceable. Lord Coulsfield refused to order to pay out the sum which the syndicate thought it had won.
Gambling syndicates
Despite the previous unwillingness of the Scottish courts to provide a remedy to a party seeking to enforce a gambling agreement, arrangements made between members of a gambling syndicate could be legally enforceable.
The Inner House of the Court of Session had reason to consider legal position as applicable to arrangements between syndicate members in Robertson v Anderson [2002] ScotCS 312 by focusing on an area of contract law known as collateral contracts.
In Robertson, two friends who regularly attended Bingo sessions together had an arrangement that they would share equally between them any prize money that they won. One night, Anderson won over £100,000 and Robertson, her friend, expected to receive her share. Unfortunately, Anderson backtracked on their agreement and Robertson took legal action to secure her share of the winnings. Evidence was led which established that both women had an agreement to divide their winnings equally. As this case occurred before the introduction of the Gambling Act 2005, the Inner House of the Court of Session accepted that, if Anderson had attempted to sue Mecca Bingo for the winnings, she would have been unsuccessful due to the doctrine of sponsiones ludicrae. The question before the Inner House, therefore, centred around whether the agreement between Anderson and Robertson was a collateral contract and, consequently, enforceable – albeit one which was slightly tainted by association with the main gambling agreement.
Held: the Inner House started that Robertson could enforce the collateral contract that she had with Anderson. Collateral contracts are linked to another contract or agreement and give rise to a completely different set of rights and duties. Their contract related to gaming, but was not of itself a gaming agreement. The issue before the court – whether Robertson was entitled to share in Anderson’s winnings – did not involve the enforcement of a gambling agreement. This was the crucial difference between this case and Ferguson v Littlewoods’ Pools (1996) which was discussed earlier in this article. In any event, the introduction of the Gambling Act 2005, to which we shall shortly turn, now means that this discussion is largely of historical interest only.
That said, the decision of the Inner House was hardly surprising given that, as far back as the 19th Century, Lord President Normand (in Knight & Co. v Stott (1892) 19 R 959) could state:
‘There is no legal taint in betting as to infect all the contracts which are in any way related to it.’
In this way, the Court of Session could find in favour of a betting commission agent being allowed to sue successfully for sums owed to him by his principal.
The Gambling Act 2005
Such cases as the two above and the musings of Lord Kames were consigned to the dustbin of history with the passage of the Gambling Act 2005.
This legislation came into force on 1 September 2007 and, as a result, of Section 335, the doctrine of sponsiones ludicrae or ludicrous promises in relation to gambling agreements was repealed.
Section 335(1) of the Act simply states:
‘The fact that a contract relates to gambling shall not prevent its enforcement.’
This important legal reform has meant that Scottish and English courts have jurisdiction to deal with disputes between parties to a gambling agreement and to provide them with a remedy.
Conclusion
Section 335 of the Gambling Act was a very significant development in the law of contract that swept away the doctrine of sponsiones ludicrae. This doctrine had long been an important and well-established part of the Scots law of contract and ensured that those individuals who were party to a gambling agreement had no effective legal remedy should a dispute arise. The Gambling Act 2005 now ensures that such agreements will be regarded as legally enforceable.
Such a reform would have been unthinkable in the past because no doubt the Christian Churches would have railed against it. Given the steep decline of the influence of Christianity in modern Britain, it is perhaps not a huge surprise that the UK Parliament introduced the Act. More generally, there was also greater toleration of gambling amongst the British public possibly as a result of the introduction of the UK National Lottery (introduced by the National Lottery etc Act 1993).
Copyright Seán J Crossan, 7 May 2020
Seán Crossan's Scots Law 