Is the lottery gaming or a financial service? US regulator FINRA takes a swipe at con artists

There is no doubt that a clear line has been drawn between both regulatory authorities and traders between what constitutes gambling and what constitutes financial services. In many jurisdictions worldwide, gambling is not  legal at all, and in those which allow it, plate glass, respectable financial services firms do their utmost to distance themselves from […]

US regulator FINRA takes a swipe at con artists

There is no doubt that a clear line has been drawn between both regulatory authorities and traders between what constitutes gambling and what constitutes financial services.

In many jurisdictions worldwide, gambling is not  legal at all, and in those which allow it, plate glass, respectable financial services firms do their utmost to distance themselves from the high-street, smoke-filled, duffle  coat-wearing image of the betting shops.

The lottery is the ‘acceptable face’ of gambling, despite it being, in my opinion, a tax on those with no restraint, and therefore it is not blighted by the same lowbrow image as traditional gambling practices.

Raising this point this week is FINRA, the US financial services regulatory authority, which has issued a warning to retail investors to avoid nefarious lottery related schemes.

What is not surprising is that there is a warning relating to lottery related schemes, however FINRA’s involvement in this matter is of interest, as lottery and gaming is usually of absolutely no interest to any segment of the financial sector.

FINRA states in its alert, which is amusingly titled “Sorry, This One’s Not a Winner: Don’t get fooled by a lottery scam” that its aim is to ensure that it does its best to dissuade retail investors to avoid dealing with companies that promise significant cash prizes or gains from participating in lotteries.

Gerri Walsh, FINRA’s Senior Vice President for Investor Education, made a public statement on the matter, stating that

“With fraudulent schemes, there is always a catch. In the case of lottery scams, fraudsters tell you to send money upfront to secure your new riches. Our recommendation couldn’t be clearer: Don’t do it. Remember, if you have to pay first, it’s likely not a prize.

According to FINRA, the regulatory authority took this action as a result of investors calling the FINRA Securities Helpline for Seniors (HELPS) to report that they were being pursued by individuals offering luxury goods, cash prices, investment opportunities and other lifestyle acoutrements in return for a fee, a donation or a purchase.

FINRA stated that recipients of cold calls were being offered prizes of $1.5 million and a new Mercedes-Benz, during pressure-selling calls which involved a battle of wits between the seller and the call recipient in order that the recipient of the call will submit and pay.

What is interesting here is that the financial services regulator got involved, rather than the consumer protection authorities, or a lawyer which provides a service which can establish a class action lawsuit against vendors of such services.

This is quite poignant at a time during which there is a substantial dialog among US regulators and officials to discourage OTC retail trading – as has already become the case some time ago with binary options trading, which is now only available and only legal via dedicated NFA regulated exchanges.

Whilst binary options bears closer similarities to gambling, as it is by nature a fixed bet on an event, FX trading in the US could be subject to restrictions on deposit bonuses or the necessity to operate via an exchange.

Read this next

Digital Assets

Zumo launches B2B ‘Crypto-as-a-Service’ solution for brokers

The new product, Zumo Enterprise, also features an embedded ESG and net zero strategy.

Technology

Top Tools to Add to Your Trading Platform to Delight and Retain Traders

The online trading boom that started during the pandemic-led lockdowns is abating. This is in part due to sustained market volatility which seems to be discouraging new investors. For example, day trading volumes in the US for retail investors declined in the last 2 quarters of 2021.  

Technology

Embedded finance platform Alviere taps Marqeta for branded card issuance in Europe and UK

Alviere has recently raised $70 million to fuel the ongoing expansion across the European region and the United Kingdom.

Retail FX

Overcharts partners with dxFeed for CME Group Market Depth

“More and more traders are using Market Depth while conducting volume analysis. Its primary function is to help traders identify potential support and resistance levels.”

Digital Assets

CoinGecko expands collaboration with CER.live security rating

CoinGecko, one of the earliest crypto data aggregators, has integrated the security score data from the CER.live rating. The trust assessments given to crypto projects will be integrated into their pages on CoinGecko website to draw users’ attention to the importance of security.

Metaverse Gaming NFT

Klaytn taps Parity Technologies to build infrastructure for Klaytn-Substrate

Klaytn has initiated a collaboration with blockchain infrastructure company Parity Technologies to strengthen its tech stack and meet the demands of enterprises looking to harness the crypto technology.

Retail FX

US Retail FX brokers suffer steep fall in client deposits, Trading.com racked up $46K

Retail FX deposits at US brokerages, which have been struggling to eke out a profit in a strict regulatory environment, dropped in March 2022 by $35 million, CFTC data showed.

Retail FX

eToro supports Immutable X (IMX), Livepeer (LPT) and Cartesi (CTSI)

Israeli social trading network eToro has added support for trading three new tokens. Immutable X (IMX), Livepeer (LPT) and Cartesi (CTSI) are the next coins to join eToro’s list of featured digital assets.

Executive Moves

LiquidityBook hires Fintech veteran Jonathan Cross to lead EMEA business

LiquidityBook, a provider of FIX and OMS trading solutions for both the buy and sell-side, has added Jonathan Cross to its business team for the EMEA region.

<