The Offence of Cheating – Using Inside Information to Place a Bet

Gambling and the Law – Is Using Inside Information to place a bet a criminal act?

A man walks into a betting shop or uses a gambling website and places a £100 bet on the date of the general election. Three days later, the Prime Minister names the day, and the man wins his bet.

On the face of it, this is unremarkable. People bet on all kinds of things: who will score the first goal, whether it will snow on Christmas Day, and so on.

But this gambler was a man named Craig Williams, who just happened to be a senior adviser to the Prime Minister and is now running as a Conservative candidate in a bid to be elected to parliament.

Mr Williams refused to answer questions about whether he had any inside information when he placed the bet.

He said:

“I will not be expanding on my statement because it’s an independent process. The gambling commission are looking at it now.”

The Prime Minister described news of the bet as “very disappointing” but repeatedly refused to comment on whether Mr Williams knew about the election date when he placed the wager, saying this would not be appropriate while the Gambling Commission’s independent inquiry was ongoing.

Of course, we await the outcome of the Gambling Commission’s inquiry in relation to Mr. Williams, but there is a topic of conversation to be had which may be often overlooked.

If someone does have inside knowledge and uses that to win a bet, is there any potential criminal liability?

The offence of cheating

Section 42 of the Gambling Act 2005 makes it an offence to cheat at gambling.

To cheat [and defraud] is to act with deliberate dishonesty to the prejudice of another person’s proprietary right, which in the context of gambling means defeating the element of chance.

In a recent case before the Supreme Court, involving the casino game of Punto Banco, the court observed:

“It is an essential element of Punto Banco that the game is one of pure chance, with cards delivered entirely at random and unknowable by the punters or the house. What Mr Ivey did was to stage a carefully planned and executed sting. The key factor was the arranging of the several packs of cards in the shoe, differentially sorted so that this particular punter did know whether the next card was a high value or low value one.

If he had surreptitiously gained access to the shoe and re-arranged the cards physically himself, no one would begin to doubt that he was cheating. He accomplished exactly the same result through the unwitting but directed actions of the croupier, tricking her into thinking that what she did was irrelevant.

As soon as the decision to change the cards was announced, thus restoring the game to the matter of chance which it is supposed to be, he first covered his tracks by asking for cards to be rotated at random, and then abandoned play.

It may be that it would not be cheating if a player spotted that some cards had a detectably different back from others, and took advantage of that observation, but Mr Ivey did much more than observe; he took positive steps to fix the deck. That, in a game which depends on random delivery of unknown cards, is inevitably cheating.”

So, there can be no doubt at all that a person with insider knowledge of the date of a general election, who then places a bet, is at risk of being prosecuted.

The offence carries a maximum term of imprisonment of two years.

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