Third-party arbitrage – Bowling in the social media age

Scrolling through popular social media platforms such as Instagram and TikTok, there is no end of people trying to convince you they can make you rich.

Twenty-somethings boasting lifestyles beyond your dreams, with six or seven-figure incomes, with taglines of “I just made $100 in five minutes and you can too”.

If you are a punter at this time of year, then you will inevitably find “the algorithm” is serving you a lot of betting and tipping-related content. Bookmakers and touts alike are becoming better and better at getting their “content” in front of you.

Amid the offers, a growing band of companies is brazenly offering payment for your betting accounts.

The age-old art of the bowler, betting on behalf of someone else, has evolved to an era where people are now requested to not only hand over control of their accounts, but also identification and, in some cases bank accounts, for operation by third parties.

Bookmakers spoken to by The Straight believe these are not fly-by-night entrepreneurs, but sophisticated companies designed to industrially exploit the opportunities to abuse their bonus bets and deposit match systems and reap profit.

However, a corporate search on at least two of these companies reveals that they were registered as businesses only in recent months, with the same “brands” seemingly changing ownership regularly.

These operators are taking to social media and forums like Reddit to offer punters anything from $100 to $500 for the “sale” of their account. And it is more than just a casual market, with bookies reporting literally hundreds of new accounts this spring that they reasonably suspect of being operated by third parties.

How do they know? We will get to that shortly  

Is it legal? Good question.

Firstly, the practice of selling access to your betting account, while a clear breach of the terms of service with almost every bookmaker, is not expressly illegal.

Third-party betting constitutes a breach of most racing bodies’ integrity rules and may leave an account holder liable to investigation for fraud, money laundering, or terrorism financing.

But the legal liability for these accounts generally rests with the bookmaker. AUSTRAC issued a warning in September last year about third parties using betting accounts to bookmakers, highlighting a range of indicators to look out for.

The potential for legal action and fines has incentivised the major wagering players to up their game and keep out those looking to use bowler accounts. For smaller bookmakers with much fewer resources, it is one of the major pain points in their operations.

What about third-party operation of bank accounts?

The Australian Banking Association issued a warning in June this year to people not to rent or sell access to their bank accounts for cash, with the Australian Federal Police saying the act of using “mule accounts” was illegal.

“Doing so supports the criminal ecosystem,” AFP Detective Superintendent Marie Andersson said. “Your account may be housing money derived from scams, extortion, drug trafficking and terrorism.”

It cited the example of a woman in Sydney who was jailed in April for renting out 10 bank accounts used for money laundering.

So, how does selling your betting account generally work?

Sometimes the accounts are used by third parties who are restricted or banned by bookmakers because they are profitable. They are used for “genuine” betting and trading purposes, within the minimum bet limits that bookies must adhere to.

However, these accounts can also be used for the process of “matched betting”. That is the concept of arbitrage on betting bonuses and deposit matches to generate a profit.

Matched betting uses a pretty simple methodology. Use a bonus bet of a match deposit to bet on one side of an outcome and then take a bet for the equivalent return on the opposite outcome with another bookmaker. Repeat the dose a few times over and you have a systematic way of producing money without risk, or so they tell you.

Some companies offer subscription services, where those interested in “matched betting” masterclasses can pay in advance to get “advanced strategy lessons” in arbitrage. These subscriptions can cost more than $1000.

This consumer-fronted approach is just one model.

Other operators, particularly those utilising the social media channels mentioned earlier to promote their products, are driving people to sign away access to their accounts and authorise them to open bank accounts on their behalf.

They are also asking for identification documents such as driver’s licences so they can verify both the bank accounts and the betting accounts. Tellingly, given that bookmakers can track IP and Mac addresses, they also ask for any old “factory reset” mobile phones.

It is this method, facilitated through something as unsophisticated as a Google Docs form that asks users to effectively sign their identity away, which should cause most concern.

One of the key “tells” for bookmakers trying to filter out these third-party accounts is the use of specific banks to fund the account. There is one particular bank of choice for these third-party operators. The Straight has chosen not to name the financial institution.

It is the overrepresentation of accounts from that bank that some bookmakers have taken as an indicator that an account holder is utilising a third party to operate their account.

The other “tell” for bookmakers is the use of the “matched betting” strategies discussed above to leverage returns from bonus bets and deposit matches.

A typical strategy sees a bonus bet placed on an outcome of odds of between $4 and $7, followed by an immediate withdrawal. This strategy is seen as a red flag.

One relatively new online bookmaker suspects that at least 10 per cent of its account holders may fit this user profile. The bigger bookmakers have sophisticated algorithms to try to prevent such accounts from operating.

Of course, the bookies can choose not to offer bonus bets or deposit matches.

There are also plenty of people who think that offering such bonuses to entice punters, and the reported practice of banning winning punters on AML/CTF grounds, make bookmakers a fair game.

The argument that flows back from bookmakers is that the additional compliance and cost of these accounts is a material factor to increasing bookmaker margins.  

“They are taking money away from real punters,” one bookie said.

Professional punters spoken to by The Straight have also indicated that as little as $100 for a “bowler” is well under the previous market rate where account holders were offered a minimum 10 per cent return on profit.  

Bookies’ tears are unlikely to generate much sympathy. But at a time when consumer protection is a key political priority, the proliferation of an unregulated market for betting accounts and the stated ability of third parties to open bank accounts should spark concern.