Losing money is a sure bet with sports arbitrage schemes
SCAMwatch is warning consumers to stay away from sports arbitrage 'opportunities'.
Sport arbitrage involves placing bets on both outcomes of a sporting event, with the intention of making a profit regardless of the outcome.
Sports arbitrage schemes lure consumers by typically promising a risk free profit. They promise impressive returns or 'guaranteed returns' for little to no risk. They may claim that the money made on the scheme will 'compound', increasing over time to provide larger returns. In return, consumers are usually required to pay high entry fees and ongoing fees to participate in the scheme.
But it is highly unlikely that promised high returns from these schemes will eventuate.
The ACCC has received numerous complaints about sports arbitrage schemes. Consumers who participate in these schemes usually complain that the promised returns are false.
These schemes often take the form of a 'syndicate' into which you are asked to pay money, the betting then being conducted by the company on behalf of the group. Alternatively, the company might offer to sell you computer software that promises to identify arbitrage opportunities. In both cases, arbitrage schemes typically involve a large, up-front payment and may involve ongoing fees.
These schemes are typically promoted by 'cold calling'—unexpected or unsolicited phone calls that offer a chance to participate in an arbitrage scheme.
Operators will persuade you to join by claiming that the arbitrage scheme employs similar techniques used by large financial institutions or the secret techniques of professional traders. To appear legitimate, arbitrage schemes often distribute glossy brochures and marketing material, with graphs or diagrams depicting an unrealistic rate of return.
Some sports arbitrage schemes are entirely fraudulent. The company will simply disappear after collecting your fees. Some schemes do provide a betting system; however, the returns may be far lower than promised. In some instances it can take participants years simply to recoup the cost of their initial joining fee.
- You receive an unsolicited offer to participate in an 'investment' opportunity that sounds too good to be true.
- The opportunity promises guaranteed or impressive returns for little to no risk or work.
- You are unable to access money paid into the scheme until certain conditions are met. For example, you open an account with the scheme at $5000 but cannot withdraw any money until it reaches $10 000.
- You receive numerous reasons to explain why the scheme is not working as promised.
- You have difficulty in contacting the company.
- Delete all spam emails.
- Get-rich schemes don’t work! The only person that benefits from get-rich schemes is the scammer.
- If it sounds too good to be true, it probably is. Why would someone sell it to you?
You can report a scam through the SCAMwatch website.
You should also be sure to warn your friends, family, colleagues and neighbours about the scam.