Gambling on shares – don’t bet on it


Want to place a bet with your bookie on the direction of the stock market, interest rates or specific stocks? Those days may soon be over.

Betting agencies have been warned they could land in hot water, if they take bets on sharemarket indices without holding a financial services licence.

Australian Securities and Investments Commission (ASIC) is also concerned about bookmakers taking bets on movements in official interest rates, according to reports in the Fairfax press. A spokesperson for ASIC suggested that betting on financial products could be considered a derivative, and could be used to hedge actual sharemarket transactions or positions. If the bet was used for hedging purposes, then wagering operators would need an Australian financial services licence.

Bookmakers have increasingly offered more bets on movements in financial indicators, with Sportsbet recently offering markets on the share prices of BHP Billiton (ASX: BHP), Billabong International (ASX: BBG) and Qantas Airways (ASX: QAN), as well as Harvey Norman Holdings’ (ASX: HVN) profit for the financial year. Last Friday, Sportsbet was offering odds on whether Fortescue Metals Group’s (ASX: FMG) share price will recover by the end of the year, but it seems to have disappeared when I checked the site this morning. You can still however bet on which listed company Lachlan Murdoch will buy next.

SportingBet (not to be confused with Sportsbet) has said that it was given the green light by the Northern Territory Racing Commission to offer a market on interest rates without a financial service licence, as interest rates aren’t on the ASX. Both bookmakers are currently offering odds on changes to official interest rates by the RBA. According to the report, none of the betting agencies contacted held a financial services licence.

The Foolish bottom line

With intense competition for the gambler’s money in horse-racing and sports, bookmakers are moving into new areas and were bound to eventually come up against some barriers.

If you’re in the market for some high yielding ASX shares, look no further than our “Secure Your Future with 3 Rock-Solid Dividend Stocks” report. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King owns shares in BHP. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

OUR #1 DIVIDEND PICK FOR 2016...

Forget BHP and Woolworths. This "dirt cheap" company is growing like gangbusters, and trading on a 5.6% dividend yield, FULLY FRANKED (8% gross). With interest rates set to stay at these low levels for years to come, for hungry investors, including SMSFs, this ASX company could be the "holy grail" of dividend plays for 2016.

Enter your email below to discover the name, code and a full investment analysis in our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2016.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.