Sportsbet Ordered to Pay Winning Bets It Canceled Because of Pricing Error

  • Sportsbet accidentally gave unusually good prices on nine Australian Football League games
  • Company canceled bets before games, customers filed complaints with regulators
  • Site argued that prices were obviously wrong and could be canceled
  • Betting commission ruled Sportsbet must pay winners at given prices
North Melbourne's Sam Wright kicks during their loss to Collingwood in April 2011
Sportsbet has been ordered to pay all winning Australian Football League bets it canceled in May after what it called an “obvious” pricing error. [Image: Shutterstock.com]

Betting snafu dates back to May

An Australian sports betting regulator ruled on Thursday that Sportsbet must pay customers their winning bets that were purportedly placed at incorrect odds. The wagers were placed on a series of games during the Australian Football League’s (AFL) round 10 in May of this year.

After Sportsbet discovered the mistake, it canceled all applicable bets. According to the site’s terms and conditions, the company can do this in the case of “obvious or manifest errors”. This caused bettors to file complaints with the Northern Territory Racing Commission (NTRC), prompting an investigation and ultimately Thursday’s ruling.

Extremely attractive pricing on “sure thing”

The controversy stemmed from nine betting markets on Sportsbet in which customers could wager on whether or not an AFL player would have 40 more disposals during round 10 of the 2019 AFL season. The “No” lines were more favorable to bettors than normal.

In Australian Rules Football, a “disposal” is a legal pass. Disposals can be made by kicking the ball to a teammate or by holding the ball in one hand and punching it to a teammate with the other. Actual overhand throws are not permitted.

Before round 10, there were only four matches this season in which a player achieved at least 40 disposals. Thus, bettors snapped up the attractive pricing on Sportsbet. Before the first round 10 game, though, Sportsbet canceled the wagers.

No AFL players hit the 40 disposal mark in any of the nine matches. Everyone who bet the “No” side would have won handsomely, leading to the complaints filed with the NTRC.

Sportsbet tried to justify decision

As mentioned, Sportsbet argued to the NTRC that it was justified in canceling the bets because the odds represented “obvious or manifest errors”.

The site presented to regulators the original odds of the nine matches from May 20th, then showed how they were accidentally adjusted sharply upwards on both May 21st and May 22nd. On May 23rd, after the error was discovered, they were readjusted, most to levels just slightly higher than they were originally.

On May 27th, Sportsbet decided to payout the “No” bets using the May 23rd prices, even though it had canceled the bets. The payments totaled $675,000.

85 percent of Sportsbet customers that had never placed an AFL +40 bet did so

Sportsbet also argued that betting volume increased as the result of the pricing error. Wagering on “AFL +40” markets is typically very low. After the upwards odds change, 85 percent of Sportsbet customers that had never placed an AFL +40 bet did so. Over 3 percent of customers who made one of these bets were new customers who opened accounts between May 21st and May 23rd.

Sportsbet said that bettors spread the word on social media about the favorable pricing, arguing that people knew it was a mistake.

Regulators ruled errors not obvious to customers

The Commission said that it did not have reason to doubt Sportsbet’s arguments. It believed Sportsbet was telling the truth in saying that the prices were accidental and that customers flocked to the AFL +40 markets because of the lines.

That does not matter to the NTRC, though. What it needed to determine was

whether the pricing errors were obvious or easily demonstrable without extensive investigation and whether they were clear to the mind or plain to see.”

In other words, the errors had to be “obvious or manifest” to the customer, not Sportsbet.

The NTRC cited historical data as the primary support for its ruling. Its main point was that there were prices each day that were outside of the average rage for AFL 40+ markets. Thus, it was reasonable for customers to think the accidental odds were just great prices and not obvious errors.

“Whilst the prices offered following the 22 May 2019 price adjustment fall outside of the historical data range,” the NTRC’s report said, “the Commission also notes that four of the nine matches with the corrected prices of 23 May 2019 also fall outside of the historical data range.”

All bets were deemed to be valid and Sportsbet was ordered to pay customers in full. Industry insiders estimate Sportsbet could be on the hook for as much as $9 million.