Gambling Contracts

Table of Contents

Gaming

Gaming and wagering contracts are generally void. The legislation provides that a contract to recover money or winnings is unenforceable.

No legal action lies to recover money alleged to be won or paid upon a wager or which has been deposited as security for it. A promise to pay a person money in respect of a gambling or waging contract by way of commission, fee or reward for services connected is void.

Under gaming and lotteries legislation, gaming means playing a game of skill or chance or both, where stakes are hazarded by the players.

At common law, gaming was legal if the element of chance was minimal and the outcome depends on the skill of the participants. Certain gaming and wagers are lawful, subject to conditions by the terms of the Gaming and Lotteries Act.

Wagering / Betting

Wagers were valid at common law before being rendered void by the Gaming Act. This provision is now contained in the Gaming and Lotteries Act, 1956. Every contract by a way of gaming or wagering is void. No action shall lie for the recovery of any money or thing which is alleged to be won or to have been paid upon a wager or which has been deposited to abide the event on which a wager is made.

A promise, express or implied, to pay any person any money paid by him under or in respect of such a contract or to pay any money by way of commission, fee, reward or otherwise in respect of the contract or of any services connected with the contract is void and no action lies for the recovery of any such money.

This invalidation does not apply to any agreement to subscribe or contribute to any plate, prize or sum of money to be awarded to the winner or winners of any game, sport or pastime not prohibited by the Act provided that the subscription or contribution is not a stake.

Statutory Regulation of Gaming

At common law, gaming was legal if the element of chance was minimal and the outcome turned on skill.

By statute, gaming is not unlawful if no stake is hazarded with the promoter or banker other than the right to take part, provided that

only one charge is made in respect of the day on which the game is played,
the charges are the same amount for all players and
the promoter derives no personal profit from promotion of the game.

The gaming is unlawful if the chance of all players, including the banker, are not equal, or if part of the stakes is retained by the banker.

A person shall not promote or assist in promoting or provide facilities for any kind of gaming

in which by reason of the nature of the game, the chances of all the players, including the banker, are not equal, or
in which any portion of the stakes is retained by the promoter or is retained by the banker otherwise than as winnings on the result of the play,

Gambling and Gaming Contracts

A gambling contract is unenforceable. It is not possible to sue the bookmaker, notwithstanding that the bookmaker may be lawfully licensed.

Where a transaction is repudiated before the party performs, the stakeholder must return the money to the person entitled, usually the person who placed the bet. It is recoverable on a restitutionary basis, as money had and received.

A person is not entitled to an indemnity in relation to a gaming and wagering transaction. Where money is paid to the stakeholder, he is an agent for both. Action may not be taken for monies paid by the stakeholder by a way of winning, even if it breaches his authority.

Promise to Pay

A promise to pay a person a sum of money by way of a gaming or wagering contract or to pay any commission fee or award in respect of it or services in relation to it that are connected with it is void. No action may be taken to recover the money, or any accounts stated in relation to it.

The fact that the person seeking to recover the money is not a party to the contract or even the fact that he is ignorant that his payment is made by way of wager, does not allow him to recover from a principal. This is unless the principal is estopped from setting up the unlawfulness of the wager or gaming by a representation that the payment is not in respect of a gaming transaction.

Recovery of Payments

If money is paid at the request of the party to a wager, to the winner or stakeholder as a deposit to abide the event, no action for repayment lies against those who requested its payment.

Money paid to the winner at the loser’s request is not valid consideration. However, it is not an illegal consideration unless it is paid in respect of a game and in pursuance of a previous arrangement for that purpose.

Even if the wager is valid in the country in which it was made and could be recovered there; it cannot be recovered in the State. Loans made abroad for the purpose of gaming and lottery abroad are recoverable.

Agents Joint and Partners

Even though the agent may not recover on behalf of his principal, he may remain liable to the principal for bets, which he has received. An agent is not liable for failure to carry out a principal’s instructions even if the bet has been made as the principal would not have been able to recover from the loser and no damage can be proved.

An agreement to enter into a betting transaction jointly or partnership in a betting business is not a wager, nor it does not appear to be a contract way of gaming. Although a partnership in a betting business might be theoretically possible, it is limited in practice by the fact that a partner cannot sue a partner or claim credit for sums spent by way of lost bets. The promise to repay, expressly or implied, is void.

Loans

Amounts of money or things lent for the purpose of gaming or betting to those gaming is not recoverable. This principle is limited to money lent directly for the purpose of betting to such as at the time or place of play to persons so placing a bet.

This principle does not apply to money generally lent for the purpose of betting. A loan to enable the borrower to repay a bet is not recoverable if it is made at the time and place of play to the player.

A loan is not recoverable if it is the term of the contract that the money is to be applied in payment of the bet. It is recoverable if the money was lent without any contractual requirement as to the purpose for what is applied or with a contractual requirement that it be used for another purpose.

Securities

Securities bonds and transfers given in whole or part of consideration for which is money or other things won by gaming or playing at a game or betting on the sides or repaying money knowingly lent for the same or lent at the of the time and places of such play was deemed given for illegal consideration (Gaming Act 1710)

Securities given for other consideration connected with betting transactions depend on the validity of the consideration, Security for money lost by wagers, which are not upon games are given for no consideration with the betting void but no illegal. On the other hand, money lent from making bets is good consideration.

Security given for illegal consideration or no consideration, may not be enforced by the immediate parties. However, in certain circumstances, it may be recovered by third parties by holders in due course, who give value.

Bare Security

An agreement to buy and sell a security with the right to redeliver is legitimate. This is so when parties enter the contract with the intention of repurchasing, resellers and realising the profit from its fluctuation in value. Security given for the performance of an obligation without consideration is not enforceable.

Where the agreement, however, is between ostensible buyers and sellers of stocks and shares to pay and receive the difference between the prices in one day and prices on another, they may be contacts in way of gaming and wagering so the differences cannot be recovered at common law. The winner does not have the right to recover damages for the loser’s failure to pay or purchase or call for delivery of the shares or stock.

The contract may be impugned only where persons stand in the relationship of principals, and there is a wager between them. The wager may be on the face of a contract, or it may be implied. There can be no wager between a principal and an agent. Accordingly, if a person employs a broker to buy himself tock, they are principal and agent. The broker obtains a commission for a service, and a change in the price of the stock does not affect him. There is nothing at stake between the parties.

Lotteries I

A lottery is a scheme for distributing prizes by lot or chance. In its basic form, parties contribute a find which they agree will be divided between sales. The organizer may or may not be a participant, Between the participants, the agreement is likely to constitute gambling in that all stand to lose what they subscribe

Lotteries are generally unlawful. A lottery includes all competitions for money or money\’s worth involving guesses or estimates of future events or of past events the results of which are not yet ascertained or not yet generally known. The courts have held that games which involve no skill constitute a lottery.

Each participant need not make payment to enter. In deciding whether a lottery exists, it is necessary to look at

the distribution of prizes
the fact that the distribution by way of chance
that there is some contribution by the participants in return for obtaining the chance to take part in the lottery.

Lotteries II

No person shall promote or assist in promoting a lottery. No person shall import, print, publish or distribute sell, offer or expose for sale, invite an offer to buy or have in his possession for sale or distribution any ticket, counterfoil or coupon for use in a lottery or any document containing any information relating to a lottery.

A lottery shall not be unlawful if the sale of chances is confined to—

the members of one society established and conducted for purposes not connected with gaming, wagering or lotteries, or
persons all of whom work or reside on the same premises, and
there is no written notice or announcement relating to the lottery except a notice on the premises of the society or other persons concerned or to members of the society.

Lotteries at dances, concerts, carnivals and similar events, the National Lottery, and lotteries held under licence are lawful.