Online bookmaker Sportsbet has scrapped an option to bet on daily ASX200 sharemarket movements after corporate regulator ASIC found the bets were effectively a financial product.
From April 1, Sportsbet allowed punters to bet on whether the leading Australian stock index would make a loss or gain each day.
But less than one month later, the bookmaker’s gamble has failed to pay off, with an intervention from ASIC ultimately forcing Sportsbet to withdraw its offer.
The regulator was concerned the bets “constituted a financial product” and that Sportsbet did not have the correct Australian financial services licence to offer such a service.
Sportsbet blamed the misstep on remote working, saying the work-from-home environment has led to problems implementing the company’s “control framework”.
ASIC said businesses need to remain vigilant throughout the pandemic.
“It is important to maintain robust monitoring and supervision controls to ensure financial services are provided efficiently, honestly and fairly,” the regulator said.
“Firms need to ensure continued compliance with their regulatory obligations in the COVID-19 (coronavirus) context, assessing the effectiveness of their business continuity plans and alternative working arrangements so as to comply with all regulatory requirements.”
‘A serious error of judgment’
With market volatility spiking since the pandemic took hold, market movements have become an attractive proposition for gamblers.
But betting on market movements is illegal for good reason, according to Gordon Legal partner James Higgins.
Speaking to The New Daily, Mr Higgins said firms have historically used ‘gambling’ as a cover to circumvent financial services laws.
In this case, Sportsbet has simply made a “serious error of judgment,” Mr Higgins said, but ASIC still has an obligation to protect consumers.
“The reason you need the numerous laws governing these financial products is you want to make sure the people selling them aren’t crooks,” Mr Higgins said.
“ASIC needs to know that the products are fair in that context, and that all the disclosures they need to make to buyers have been made.”
From AFL to AFSL
ASIC’s action against Sportsbet is not the first time the bookmaker has found itself in hot water.
In May 2019, angry punters threatened legal action after Sportsbet voided multi-bets, including no player getting more than 40 disposals in AFL games.
Sportsbet said the bets had been offered with incorrect odds and the company was within its rights to cancel the bets placed, but subsequently paid punters out at adjusted odds.
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