Slick operation…authorities say the marketing materials used in the scams usually look very professional. (ABC Online: Michael Janda)

Sport is an Australian national obsession, but it seems some con men are taking advantage of that passion for their financial gain.

Moreover, some of the firms conducting the scams remain registered as companies long after suspicions first surface about their bona fides.

The Australian Securities and Investments Commission (ASIC) registers companies and regulates investment schemes, but does not regulate gambling schemes, even when they pose as investments.

Betting scheme crackdown

The authorities that are responsible for regulating gambling schemes are the Australian Competition and Consumer Commission (ACCC), the state departments of fair trading and, in the cases of criminal fraud, police.

The ACCC and the Queensland Police and Office of Fair Trading this week launched a joint campaign against sport arbitrage and gambling schemes and scams based on the Gold Coast.

They say hundreds of Australians have fallen prey to such operators, and buying into investment schemes which claim to give you access to computer software which will help you gamble successfully, is likely to be a losing bet.

“It’s estimated that up to $20 million may have been lost by Australian consumers in these schemes. It’s hard to tell at this stage exactly how much, but we’re talking about a lot of money,” ACCC deputy chairman Peter Kell said.

He says up-front fees of $3,000 to 19,000 are commonly charged for access to gambling software, or syndicates that place the bets for you.

And the Queensland Police say they have had one unlucky punter come forward who invested $146,000 between two of these companies.

While it may seem ridiculous for anyone to invest so much money into such a scheme, the authorities say the marketing materials usually look very professional, and these organisations occasionally pool resources to avoid the appearance of a one-man show.

“We found an office where six companies were located where they shared telemarketing staff and other facilities,” said Joe Camilleri from Queensland’s Office of Fair Trading.

The ACCC says a loss of confidence in the mainstream markets during the financial crisis is tempting consumers to look for alternatives.

“We’ve seen a 60 per cent increase in scams reported to us over the last year, and a 67 per cent increase in the number of people reporting losses,” Mr Kell said.

Take the money and run

While some of these companies do actually bet on your behalf, Mr Camilleri says others just walk away with the cash.

“About 50 per cent of complainants are telling us that, once they pay their money to the operators of these schemes, they are no longer able to contact these companies,” he said.

Even where the companies do actually place bets, the authorities say the returns are rarely anywhere near those promised or hinted at, and they have had staff from some of these operations come forward and tell them that the bets came straight from the newspaper form guide.

Fair Trading and the Queensland police tried to visit 39 sports betting schemes based on the Gold Coast, but they found only 8 operating at their registered addresses.

Authorities say more than 650 complaints have been lodged since the beginning of last year, and Detective Superintendent Brian Hay say the schemes have been multiplying rapidly.

“There’s a whole plethora of different circumstances, environments, entities. This is not one or two people, it’s not one or two companies, it’s almost if you like a nefarious, insidious industry that has populated a certain landscape,” he said.

First hand experience

Although Queensland based, the schemes do not just target Queenslanders, but the authorities say most of the complaints have come from there and New South Wales.

Recently I received a call from a Brisbane-based company claiming past returns of between 26 and 95 per cent a month on its horse racing scheme.

I cannot name it, because it may be one of the organisations currently under investigation, but I was only too happy to hear their spiel so I could share it with ABC News Online readers.

In return for having this company manage a gambling account using their computer system, I was asked for an $8,800 dollar sign-up fee, and between $1,000 and $10,000 in capital to start the gambling account.

In their sales pitch, the company claimed its software system was developed by a former employee of Kerry Packer, who their salesman said used to help Mr Packer with his horse racing picks.

The company also claimed it had been around for 15 years, but a quick search of the ASIC database revealed it was only registered in May last year.

When I searched internet investor forums, dozens of people had been given similar offers from the same company.

Nick Miller from South Australia responded to my post on the forum and gave me a call. He says he was rung about eight times over a period of several weeks by this company.

“It was heavy pressure selling,” he said.

“It was, ‘we’ve only got so many spots left for South Australia, we’ve got one left in South Australia, and one for NSW so you’d better sign up now or you’ll miss out,’ and then I just said, no I’m not interested in it.”

Company registration

While Mr Miller smelt a rat and did not invest despite their persistence, he is concerned about how easy it is for such businesses to set up and remain as legally registered companies.

“When I was talking to this Tom guy he said, ‘as you know we’re regulated, we’re required, every year we have to register with ASIC’, he made some reference to that,” he said.

“It sort of shocked me a little bit to think that there could be rogue operators like this that have obviously got a registration.”

ASIC told the ABC that gambling schemes are not classified as investments and therefore do not fall under its jurisdiction.

But ASIC is responsible for company registers, and ASIC’s database reveals that the regulator got information last November that the Brisbane company which contacted me and Mr Miller is no longer at its registered address.

Mr Kell says that is a good reason why consumers should not rely solely on the companies register when checking the legitimacy of a firm.

“One of the messages we have to send here, because it has been used in the marketing by these companies, is that simply registering a company doesn’t make it immediately trustworthy,” he said.

The length of time taken to investigate dodgy companies, and the apparent difficulty in shutting operations down until well after they have swindled thousands of dollars from investors, raises some serious questions about consumer protection regulation, and the funding of investigation and enforcement in Australia.

Given that it seems unlikely that regulators will be given the resources needed to better filter companies when they first start up, the ACCC says consumer awareness is the best defence.

“With these sports investment schemes the only certain bet is that you’ll lose money,” Mr Kell said.

Michael would be interested in hearing from anyone who has invested in a horse racing or sport gambling scheme. You can contact him via email at abcbiztips@gmail.com.