Tipsters risk liability under Australian Consumer Law if they fail to offer a genuine opinion

By Natalie Hickey, November 3, 2015

Wherever we are, listening to the radio, watching television or in front of a screen, there is someone telling us the likely result, before the event has taken place. Now, there are so many avenues to help us decide who or what will win, thinking for ourselves is an optional extra.

The days when a friend of a friend would provide tips on the back of an envelope have, for many of us, become a warm memory. As we sift through the punting options during the Melbourne Cup Carnival, we can explore television or radio shows with panels of bantering tipsters, newspaper columns with tables of tips, websites and Twitter feeds. We can ring phone numbers and pay extra to be told what to do.

We want to know the likely winner, sometimes for the entertainment, sometimes to be educated, but most of the time, to enhance our betting chances.

What happens though, if the tipster deviates from the public plan? What if we are told one good thing, but the tipster backs another?

This is the scenario that led stewards to penalise a racing journalist in New South Wales recently. It leads to bigger questions about whether and, if so, when tipsters who ‘go off the grid’ will be liable to the public for their private actions.

First, let’s examine what happened to the New South Wales journalist. Secondly, and as a gentle warning to tipsters, we will examine tipsters’ potential liabliity under the Australian Consumer Law.

Brent Zerafa investigation

Brent Zefara was a journalist for TVN, the now defunct racing industry television broadcaster in New South Wales and Victoria. The ensuing investigation by stewards cost him his job with Sky Channel and caused him to be disqualified as a licensed racing person until 21 December 2015.

The occasion was 17 January 2015, a Saturday afternoon broadcast at a Sydney metropolitan meeting held at Royal Randwick. Mr Zerafa provided expert comment for TVN from the mounting yard.

He fancied I Am Zelady for Race 3, he told punters, tipping the horse from those parading in the ring before the race.

Not included in Mr Zerafa’s assessment was her stablemate, Palazzo Publico. And yet an hour earlier, Mr Zerafa had received a couple of text messages from racing identity John Camilleri (implicated in the cobalt doping saga which led to trainer Sam Kavanagh being banned from the industry for many years).

The communications Mr Zerafa received included the following:

JC: Wonder who’s been help Kav (Mr Sam Kavanagh) for the past 5 weeks

JC: I’ve been helping him

—

JC: Watch Palazzo in Race 3

However, Mr Zerafa did more than watch Palazzo Publico in Race 3. He bet on the horse, placing a $200 bet with Betstar via his iPhone at odds of $6.

Palazzo Publico won the race. This led to a series of text messages between Mr Zerafa and Mr Camilleri after the victory. A ‘high point’ was Mr Zerafa’s text: “Like how I threw off in the yard??” followed by “Couldn’t stop the train”. Mr Camilleri then asked: “Don’t say nothing to no1 please” to which Mr Zerafa responded: “Won’t. All sweet”.

Mr Zerafa later acknowledged to stewards that “it’s a bad mistake from my part and an error of judgment, knowing what I knew now… it was probably a stupid thing to say”.

The stewards found Mr Zerafa guilty of a charge of conduct prejudicial to the image and/or interests of racing. In penalizing Mr Zerafa, they explained that racing relies on the confidence of the betting public for its mere existence. Betting turnover is the lifeblood of the industry, they said. The stewards added that his conduct would give rise to suspicion in the minds of a reasonable racing observer as to the integrity of the information that was being provided, and accordingly would impact upon public confidence in the industry,

How the Australian Consumer Law can catch tipsters

True it is, Brent Zerafa was penalized. However, this offers little joy for those who backed I Am Zelady at his behest. This is where the Australian Consumer Law might help.

Application of section 18 ACL to tipsters generally

Legal enthusiasts are likely aware of section 18 of the Australian Consumer Law (ACL). This is the oft-cited provision essentially setting a standard to help judge when people cross the line. If a person’s conduct is likely to mislead or deceive consumers, then the conduct will be unlawful. Typically, the law interprets ‘mislead or deceive’ to mean ‘lead into error’. So, if a tipster were to provide a false tip, causing punters to back a horse they might not otherwise have done, such conduct might well be misleading or deceptive.

The section 19 ‘Get Out Clause’ for information providers

Is that the end of story? Absolutely not.

This is because there are some big hurdles for the disgruntled punter relying on section 18 ACL. One of them is the very next section in the ACL, section 19. It is entitled “Application of this Part to information providers”. Broadcasters such as television networks are typically information providers. Tipsters likely satisfy this description too, by making “the publication in the course of carrying on a business of providing information”.

Information providers are given a helping hand by section 19. In short, if a person or entity satisfies the description of ‘information provider’, then section 18 of the ACL will not apply unless the information applies to a publication of an advertisement.

Putting to one side the detailed discussion we could have about the meaning of ‘advertisement’, reasonably this suggests that there are some occasions in the ‘tipping world’ closer to advertisements than others.

So, if a representative from a bookmaker offers tips on a television or radio show, or the tips are supplied in conjunction with an offer to phone a ‘pay-per-call’ number for more tips, this conduct could constitute ‘advertising’. This means that section 18 would likely apply, so that liability could be attracted if the conduct is misleading or deceptive.

Contrast this to unaffiliated experts who sit on a tipping panel because they are, say, a retired trainer, former jockey or race caller. No advertisements here. This means that section 18 would be unlikely to apply to the conduct of such people.

Does section 29 offer a loophole?

Is that the end of the story? Absolutely not.

This is because the ACL contains numerous other helpful provisions. Section 18 is not the only option if conduct is misleading. We just started with the most popular section! For example, section 29 prohibits false or misleading representations about goods or services.

There are numerous sub-sections to section 29. An intriguing illustration is section 29(1)(f) which provides as follows:

“A person must not, in trade or commerce … in connection with the promotion by any means of the supply or use … of goods or services make a false or misleading representation concerning (i) a testimonial by any person; or (ii) a representation that purports to be such a testimonial; relating to goods or services”.

Put generally, tipping is intended to encourage people to use betting services, and betting is an activity clearly in trade and commerce. The concept of a ‘testimonial’ is also typically understood to refer to an opinion. It follows that section 29 might prove a safe bet for a disgruntled punter, if the tip (namely, the ‘representation’ about who will win) is false or misleading.

Even more importantly, the section 19 ‘get out clause’ for information providers does not apply to section 29. In other words, broadcasters and media publishers, and likely tipsters, will be generally subject to section 29, whether or not the conduct can be described as ‘advertising’ or not. Simply put, if the conduct satisfies the language of section 29, liability will attract.

What about the fact that the opinion concerns a ‘future matter’?

How can a tip be misleading? After all, it is an opinion about a future matter. At the time the tip is made, no one knows whether it is true or not. Even if there are nefarious shenanigans in the background, the race has not yet taken place. It is there to be won, but it has not been won or lost when the tipster publishes his or her point of view.

The ACL has an answer to this as well. According to section 4, if a person makes a representation about a future matter, and the person does not have reasonable grounds for making the representation, it will be taken to be misleading.

Accordingly, and applying the facts of the Brent Zefara affair, at the time he tipped I Am Zelady, it appears he preferred another horse. Yet he put forward I Am Zelady as the potential winner. It could be said he did not have reasonable grounds to do so, because his opinion was not genuinely held.

What are the lessons we take from this?

Here are a few:

First, it is legally plausible under the Australian Consumer Law to contemplate a case against a tipster who tips one horse but backs another.

Secondly, there are numerous reasons – on the right side of the line – why a tipster might tip one horse but back another. For instance, the tipster might offer a tip, then see another horse in the yard that looks terrific.   The other horse might have a glossy sheen, be up on the toes, and look ready to go. The original tip was reasonably based (good form, good barrier, good trainer, good jockey, loves the track, loves the distance), but now there is a sensible reason to back another horse. No problem there.

However, if a tipster does not have reasonable grounds for tipping a horse, then this will be deemed misleading conduct under the ACL. There are numerous circumstances where this might happen; it does not require dishonesty. Provisions like section 18 and/or 29 could then apply, leading to potential liability.

Thirdly, proving that a tipster does not have reasonable grounds for tipping a horse might be difficult indeed. In the case of Mr Zerafa, the stewards had access to phone records in somewhat extraordinary circumstances. Without hard evidence, a case of misleading conduct might be hard to get off the ground.

Fourthly, there seems little point mounting some kind of class action against a tipster unless that person has deep pockets. The responsible employer or media publisher or broadcaster might present a more suitable target.

The upshot is that tipping is now a serious business. Tipping shows are popular. They promote networks and media outlets. They also promote business for the horse racing industry including totalizators and bookmakers.

Of course, one can sense the expertise, dedication, passion and research offered by most tipsters. That said, the Brent Zerafa case offers a timely warning for tipsters that irresponsibility can equate to legal liability.