eToro to end Rugby Australia sponsorship after three years
Israeli social trading and brokerage company, eToro, has decided not to renew its sponsorship agreement with Rugby Australia when it expires this year, ending a three-year partnership.
The exit of eToro as a major sponsor is a blow to Rugby Australia, which is already facing financial challenges. The organization has been struggling to generate revenue from ticket sales and broadcast deals, and has been forced to rely on government funding.
eToro had a three-year sponsorship deal with Rugby Australia, serving as the naming rights sponsor for all inbound Wallabies games. However, the financial services company recently faced regulatory scrutiny from the Australian Securities and Investments Commission (ASIC).
Rugby Australia’s response to the ASIC complaint was measured, acknowledging the issue while also distancing itself from the matter as it is ultimately up to eToro to address the regulatory concerns and take appropriate action. “eToro has outlined the steps that they have taken to address the issues. Any further comment is a matter for eToro,” a spokesperson said.
ASIC’s case against eToro revolves around the suitability of its target market and the screening test the broker used to determine whether retail clients were qualified to trade its Contracts for Difference (CFD) products. The regulator alleges that eToro’s target market was too broad, encompassing individuals with limited financial product knowledge.
The online ‘test’ mentioned by ASIC appears to have been a method for eToro to fulfill its legal obligations. However, allowing customers to change their incorrect answers to pass the test undermines its effectiveness as a genuine assessment of a customer’s understanding and suitability.
Between October 5, 2021, and June 14, 2023, ASIC claims that nearly 20,000 eToro clients incurred losses while trading CFDs. On eToro’s website, to meet disclosure requirements, it is stated that 77 percent of retail investor accounts lose money when trading CFDs with the firm.
Despite these challenges, eToro signed earlier this month a three-year sponsorship agreement with the Australian Professional Leagues (APL), governing body for the highest-level professional men’s and women’s football leagues in Australia and New Zealand.
Under this deal, eToro becomes the Official Trading and Investing Platform of the A-Leagues. The partnership will see the broker’s branding prominently displayed on the back of all men’s playing jerseys for the 2023/24 A-League Men season. Additionally, eToro’s branding will be featured on all substitution boards across both the Isuzu UTE A-League Men and Liberty A-League Women competitions.
The partnership extends into the digital realm as well, with eToro gaining a digital presence across A-Leagues channels. This includes exclusive ownership of the ‘eToro Assist of the Month’ award and all editorial content related to transfers and trades throughout the season.