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ASIC Sports Arbitrage Announcement

Posted by Aegist on April 30th, 2008

ASIC, the Australian Securities and Investments Commission have just posted an article warning consumers to be careful of “Sports Arbitrage Get Quick Rich” schemes. These are the same companies which we here at SAG have been warning consumers about for some time now.

The article observes that ASIC have received complaints about 23 different companies operating as “Sports Arbitrage Investment Opportunities”. I think that is even more than the number of companies that have been brought to my attention!

‘These operators usually ask for an upfront fee or a ‘licence fee’ of up to several thousand dollars to join their scheme and an additional ‘investment amount’ which they say they will use to ‘trade’ with.

Sound familiar?

‘They then try to fool consumers by using terms such as ‘trading’, ‘arbitrage trading’ and ‘strategic investment’ so that consumers believe that the operators are not gambling with their money, but rather ‘trading’ it on their behalf.

‘In some cases, however, there is not even any gambling taking place and the money is simply being taken from consumers’, Ms Rickard said.

The article then goes on to talk about how companies selling sports arbitrage ‘betting systems’ are in a different category to the companies selling ‘Investment programs’ and how complaints made against these companies are outside of the jurisdiction of ASIC. They recommend consumers who have paid large sums of money for arbitrage betting systems (alert services as we call them here on SAG) and feel they have been ripped off should contact the State office of Fair Trading, Consumer affairs, and/or the state Police Service.

‘We want to make it clear that we’re concerned that the language used may lead consumers to believe that this is a form of investment or trading. At best, it is in fact gambling. At worst, it may be a scam. We advise consumers to exercise a great deal of scepticism regarding anything labelled sports arbitrage.’

‘Consumers should also be aware that just because a business is trading as a registered company, or under a registered business name, it is not automatically legitimate. We recommend that consumers make diligent enquiries before investing their money, especially if the offer to invest comes out of the blue. When it comes to money and investments, the old saying that if it sounds too good to be true, it probably is, remains accurate and investors should be wary of investments offering returns that are unrealistic. If you cannot afford to lose the money, don’t invest,’ Ms Rickard added.

ASIC recommends consumers consider obtaining advice from a licensed financial advisor prior to making investment decisions. Consumers should also be aware that it is a legal requirement for a person or company who is selling investments in genuine financial products to hold an Australian Financial Services Licence (AFSL) or to be an authorised representative of a licensee. Consumers can find out if someone holds a AFSL by doing a quick, free and easy check on ASIC’s consumer website, http://www.fido.gov.au.

Read the whole article here.

To see more of our own investigation into these operations, see these articles and this forum at ArbForum.

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