Some punters will have been crossing off the days to this year’s Cheltenham Festival in March since the morning after the last one but, for many, Trials Day at the track on Saturday will be when the final countdown begins.
It will not be just the backers for whom the excitement and anticipation is starting to build either. For online betting operators, Festival week is the biggest of the racing year when it comes to attracting new customers.
Most firms will dangle various carrots to attract attention: welcome bonuses, cashbacks, free bets, extra places each-way and more. All you have to do is tick the little box that pops up to confirm you have read the terms and conditions.
For 99.9% of new customers life is too short and the next race too imminent to read the Ts & Cs. As a result – and as many punters have discovered the hard way – any money deposited with some sites, even if it is just sitting there waiting for the right bet to come along, is no longer entirely theirs.
Countless punters have had far more difficulty taking money out of betting sites – including endless ID checks, demands to view bank statements and more – than they experienced getting it in. Firms also vary in their treatment of so-called “dormant” accounts, with some feeling free to help themselves, a little bit at a time, via “dormancy fees” until a balance is extinguished. That is before you consider how safe – or imperilled – your money might be if a firm goes bust.
As has been detailed ihere previously, the Gambling Commission – mission statement: to “safeguard players and the wider public by ensuring that gambling is fair and safe” – allows licensed betting firms to choose the level of protection given to customers’ funds in the event of insolvency. They can opt to offer “high” protection, which means all deposits are fully and legally ringfenced from administrators if a firm stops trading; “medium” protection, which generally involves an insurance policy to cover money on deposit but with no cast-iron guarantee that all will be returned; and “no protection”, which, as the name suggests, means administrators can treat deposits as company assets and you can basically kiss it all goodbye.
The Commission has explained in the past that it allows many firms – usually, but not exclusively, at the smaller end of the market – to exert a degree of ownership over deposits in this way because insisting on “high” protection as a licensing condition could be a barrier to entry into the market and therefore anti-competitive.
Unsurprisingly, this means a significant proportion of the 272 businesses listed on the Commission’s website as holders of remote betting licenses choose the cheapest “no protection” option. When the Horseracing Bettors Forum surveyed a sample of the market three years ago, it found 10 firms with high protection for funds, 33 with medium protection and 20 with no protection at all. In all cases, this fact was buried deep in the T&Cs.
Some will argue that it’s a free country and if punters don’t bother to find out whether their deposits are protected, that is their choice. However, as Brian Chappell, the co-founder of the Justice for Punters website, points out, the subsequent fortunes of those 20 firms with no protection in the spring of 2020 could give at least some reason to stop and think before clicking “deposit”.
Three now offer medium protection. Five more remain on no protection. And the remaining dozen? Every last one has left the UK online market, in the space of three years. That includes relatively high-profile names such as Mansionbet and MarathonBet, who had been active sponsors of racing and football shirts.
While the pandemic was a significant challenge, with many sports suspended for several months, it is still remarkable that 60% of the firms in the survey with no protection for funds are no longer in business in the UK. It is important to note none of these 12 firms went bust and all funds on deposit are understood to have been returned. There are often other issues when a betting business shuts up shop, however, including the possible voiding of outstanding bets (and yes, that’s also going to be in the T&Cs).
Since the Gambling Commission is not about to force gambling firms to offer better protection for deposits, perhaps punters should start to think of “no protection” status as a possible warning sign about a firm’s prospects. “One way to persuade companies to offer higher levels of protection would be to impose maximum liabilities that they can accept [at lower levels of protection],” Chappell says. “The Commission could also insist on a minimum publicly-declared asset base before approving a licence.
“During this research, I noted that one operator with no protection had declared £1 in company assets, with no turnover or P&L figures visible. Should this licensee be allowed to take bets with a liability of over £100 or even £1?”