The Legality of Betting Contracts

A wager or bet is defined as where something valuable is placed on the outcome of an uncertain present or future event, to which the wagering parties have conflicting views.

A bet is legally regarded as a contract, and it is an essential feature of such contract that there are no more than two parties to the agreement, and that one party will win and the other lose upon the determination of the event.

Many gaming transactions are not legally wagers. It has been determined in the UK that a bet placed with the Horseracing Totalisator does not constitute a wagering contract within the meaning of the Gaming Act 1845. Multipartite agreements such as lotteries and sweepstakes are not regarded as betting contracts, as it is not considered that the organizing bodies actually lose, as their function is to divide a net aggregate amount of the monies received.

It is an essential feature of a betting agreement that the stake must be the only interest which the parties have in the contract. The question of whether the parties are interested in more than the winning or losing of the stake depends on the substance rather than the form of the agreement.

The Gaming Act 1845 renders all betting agreements, whether oral or written, void and no action can be brought in the UK courts for the recovery of monies allegedly won on a bet. Although such contracts are voided by statute, they are not illegal.

Decided cases have held that no rights under law are conferred on either party, so even if the loser pays a dishonoured cheque in satisfaction of the bet to the winner, no right to sue under the betting agreement exists. However, if in the case of non payment of bets, the parties make a new agreement to pay, such as a promissory note, subsequent to the original betting agreement, this new contract can be enforced in court. Whether a new agreement has been made, or whether the action is based on the betting contract, and thus void, is one for the determination of the courts, and judges will look at the nature of the transaction and ascertain the true intentions of the parties.

Specific rules exist dealing with betting on licensed or registered premises. Gaming and betting on streets and public places, subject to the exception for certain games played on licensed premises, is prohibited and legislation in the UK sets out penalties for contravention.

In conclusion, betting agreements are generally unenforceable in court and such contracts are per se void under statutory law, despite the fact that the betting industry is worth hundreds of millions of pounds annually to the UK economy.