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Tuesday, May 17, 2011

ASIC is strange and threatening. Ask Centrebet

ASIC has regained its sense of humour. Fourteen months after threatening directors of the betting agency Centrebet with fines and potential prison terms if they continued to offer bets on Reserve Bank interest rate hikes, it has quietly relented.

The bookmaker is offering $1.20 per successful $1.00 bet on “no change” at the Bank’s June board meeting, and $3.25 for a successful bet on a rate hike.

The standoff between ASIC and the bookmaker has seen its competitors continue to ply their trade on the first Tuesday of every month, with only Centrebet apparently prevented by a range of sanctions including “court orders shutting down your business”.

The difficulties began for the Alice Springs based bookmaker early last year when it announced plans to expand its range of its products to betting on the level of the ASX 200.

ASIC executive Jonathan Coultas wrote to Centrebet’s directors on March 26 saying "it has come to the attention of the Australian Securities and Investments Commission that you may be carrying on a financial services business without holding a financial services licence."

"In particular we believe the financial bets you offer over the ASX 200 share index and RBA interest rate changes may be 'derivatives', as defined in the Corporations Act."

The penalties for trading in derivatives without a licence included up to two years in prison.

“ASIC can take you to court and seek orders that stop you carrying on a financial services business without a licence,” the letter continued. That is, ASIC can seek court orders shutting down your business.”

So threatening was the letter... (it demanded a reply by April 9) that Centrebet abandoned its market on Reserve Bank rate moves and put on ice its plans for a market on the ASX-200.

Throughout all of this time competitors such as sportsbet.com.au continued to offer odds on Reserve Bank board decisions without attracting ASIC’s attention.

Even after the Herald alerted ASIC to Sportsbet’s widely publicised market, sending it as copy of a Sportsbet press release and asking it whether it intended to act against it as had Centrebet, ASIC it took no action.

The royal wedding and the Queen’s hat brought about the thaw.

Centrebet’s Neil Evans approached ASIC in the leadup to the wedding seeking formal approval to offer a market on the colour of the hat.

He found ASIC surprisingly accommodating and pressed his luck by asking about the Bank.

“They said yes,” he told the Herald. “After all this time they didn’t mind.”

Mr Evans says he does not have the approval in writing, but he was told very clearly he could safely trade in Reserve Bank rate moves.

“But not in ASX indexes. They won’t approve that. It was our move on the ASX they after all along,” he said.

ASIC itself wouldn’t comment last night, taking questions about its assurance to Centrebet on notice. (it demanded a reply by April 9) that Centrebet abandoned its market on Reserve Bank rate moves and put on ice its plans for a market on the ASX-200.

Throughout all of this time competitors such as sportsbet.com.au continued to offer odds on Reserve Bank board decisions without attracting ASIC’s attention.

Even after the Herald alerted ASIC to Sportsbet’s widely publicised market, sending it as copy of a Sportsbet press release and asking it whether it intended to act against it as had Centrebet, ASIC it took no action.

The royal wedding and the Queen’s hat brought about the thaw.

Centrebet’s Neil Evans approached ASIC in the leadup to the wedding seeking formal approval to offer a market on the colour of the hat.

He found ASIC surprisingly accommodating and pressed his luck by asking about the Bank.

“They said yes,” he told the Herald. “After all this time they didn’t mind.”

Mr Evans says he does not have the approval in writing, but he was told very clearly he could safely trade in Reserve Bank rate moves.

“But not in ASX indexes. They won’t approve that. It was our move on the ASX they after all along,” he said.

ASIC itself wouldn’t comment last night, taking questions about its assurance to Centrebet on notice.

Published in today's SMH and Age


Asic to Centrebet


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