Punter Protection (or lack thereof) in the ACT
As a member of the Australian fixed odds betting fraternity I have always been one to take pride in the way responsible wagering has added colour to our sports and racing industries. I believe the highly regulated nature of the industry has made it is socially acceptable to have a flutter on the Melbourne Cup or back your favourite player to score the first try in the NRL Grand Final. There is nothing wrong with either however the events of the past week have left me absolutely flabbergasted with how punters are treated by the ACT Government.
If you are unaware, a corporate bookmaker by the name of Sports Alive went into voluntary liquidation last Thursday. Sports Alive, licensed in the ACT, was well down the pecking order when it came to Australian bookmakers but just like TAB SportsBet, SportingBet, CentreBet or even SportsBet.com.au it was a 24-hour online bookie who accepted bets on sports and racing. However, they were a big enough organisation to leave thousands of customers out of pocket to the tune of $1m+.
I am aware that companies of all types fail on a consistent basis so I will not shine the torch on the collapse of Sports Alive. Sure, its experienced bookmakers were shrewd enough to win $4m and $5m from customers in the past two financial years. Sure, it received a windfall of $5m from TOTE Tas for a 25% share in the business. Sure, it had a lucrative deal with BetFair.
However, without knowing most of the facts I will refrain from saying anything more than the fact Sports Alive was reportedly let down by shady practices from senior management and owners. It was a good company making decent returns in a competitive and growing industry but I will allow the staff and investors they left out of pocket to tug the coat tails of the administrators. I will focus on the clear-cut issues of punter protection.
Sports Alive was licensed with the ACT Gambling and Racing Commission (GRC). Neither Sports Alive nor the GRC has contacted punters as to the whereabouts of their funds. Sports Alive have shut down their website and phonelines while the GRC are not replying to emails or phone calls. While I can understand that the Sports Alive owners are on their proverbial way to Brazil with suitcases of cash, I am disappointed with the actions of a supposedly reputable Government agency.
Punters are clearly in the dark as to the whereabouts of their funds. These are not just simple betting balances, they are akin to bank accounts, with customers required to provide 100 points of ID along with placing bets on recorded phonelines or encrypted Internet pages and even mobile devices. This is a highly sophisticated industry.
On top of these balances I haven’t even mentioned the outstanding futures bets. With the AFL and NRL seasons almost over there has been widespread confusion on social media sites such as Twitter where rank and file punters are wondering what will become of their Port Adelaide wooden spoon bets or Melbourne Storm minor premiership investments.
Bear in mind, all bets are paid for up-front so winning punters will not only be prevented from collecting their winnings but have also lost their initial outlay. One shrewd client placed $6k on Geelong to make the AFL top-4 at $2.60 while another had $1k on the Wallabies to win the Tri Nations at $4.00. These are a drop in the ocean but the point is that clients of Sports Alive placed these bets in good faith several months ago on the belief they were protected by the ACT GRC.
There is supposedly a $250k bond to cover punters’ funds but this will probably account for less than 20% of account balances and live bets. To those punters hoping for a sympathetic ear from the ACT Government, then think again. GRC CEO Greg Jones showed a complete lack of understanding when he said there was no guarantee beyond the $250k “and nor should there be”. It seems Mr Greg Jones is a real softie. In his defence, he may not be capable of understanding the situation, but then again, he could be covering his tracks.
The process of gaining a sports and racing bookmaking licence with the GRC is long and extensive however it seems once you are in the door you can run amok. The GRC assured punters that Sports Alive was required to keep all account balances in a dedicated trust account that cannot be touched.
This is a salient rule that the Northern Territory Govt also insist upon. However in the NT, they audit accounts monthly. Greg Jones on the other hand worked on what seemed like an honesty policy. This is a wonderful initiative that may work in a pre-school for special needs kids but in the modern business world I do see a few flaws.
As we now know and suspected for many years, Sports Alive breached this agreement but as Mr Greg Jones made clear, why should he care. I doubt a government official would be so brazen if a bank or Super fund went under but because ACT taxpayers choose to spend some of their recreational money on punting, they are clearly not deserving of protection.
Sure, punters helped fill the coffers for ACT bookmakers who in turn paid handsome licensing fees to the ACT Government but Mr Greg Jones still thinks that there should be no help afforded to punters left out of pocket. It was a comment not becoming of someone in such a position of trust.
This is the kind of situation one may find themselves in if they bet in offshore betting havens such as Vanuatu or the Caribbean. Or perhaps even with the SP down at the local pub back in the 1960s.
What is stopping anyone coming in, paying the $250k surety then running away with $500k worth of account balances? Greg Jones surely won’t mind. The trust in the ACT regulators is gone and furthermore the ACT Government has let down the ACT ratepayers. No longer will any punter open an account with an ACT licensed bookmaker. In turn there will no longer be ACT licensed bookmakers. In turn there will be no revenue generated for the ACT Government.
Those funds will go straight to other states in what is a highly competitive and lucrative industry. But I guess Mr Greg Jones, who is obviously one of the smartest CEOs in Australian state Govt history, knows better. Perhaps he can pinch some chocolate brownies from the local Girl Guides and sell them to make up the shortfall.
There is nothing to fear more than a punter scorned. It is hard enough to win at the best of times but when your funds in a betting account are stolen from under you, then that is hard to cop. I wonder if Greg Jones will make public the findings of the 30/6/2011 audit that his department is required to make. Sports Alive clearly don’t have these funds now and didn’t have them two months ago. Several recent visits by GRC staff into the Sports Alive offices obviously meant they knew things weren’t quite right but no punters were warned of this. Shame on Greg Jones and the GRC for not alerting Sports Alive’s customers.
I guess an ACT wagering licence is not worth the paper it is printed on and my advice to all punters is to shift your funds to a reputable company that is NOT licenced in the ACT. Believe it or not Mr Greg Jones, this is a $3 billion industry that attracts involvement from a vast majority of Australians over 18 years of age. But, feel free to turn your back on these people for your short-term benefit.
Someone with a grasp of reality at the GRC should explain what is going on before a class action is launched into their ongoing lack of duty of care to all clients of Sports Alive - a company they licensed and received fees from for well over 15 years. Why didn’t the GRC continually check this magical bank account containing the account balances of Sports Alive clients? At the end of the day, over $1m in funds have been taken from everyday Australians. It makes you wonder: Were the GRC simply asleep at the wheel or was it something a little more sinister?
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