Lottery boss criticised on how he spent investors’ money while company still in startup phase

Shareholders are criticising the way some of their invested funds have been spent, including the director paying himself a $308,000 salary while the business had yet to launch.

Craig Austin seems like a successful businessman.

The 54-year-old Queenslander at one point drove a classic coupe and a Cadillac escalade, and lives with his second wife at a beachside mansion in a Gold Coast suburb aptly named Paradise Point.

Getting to his home requires crossing a bridge into a gated community in the Sovereign Islands, an exclusive slice of paradise with neighbours like Clive Palmer and superyachts moored in the harbour.

It’s a meteoric rise for Mr Austin, who started out with more humble beginnings by working as a truckie and renting in the rural town of Beaudesert so far inland he couldn’t feel the ocean breeze. But now he has his own private chauffeur driving him in a limousine with custom number plates that read AZBALLS – boasting the name of the business he’s trying to get off the ground.

Mr Austin founded the world’s first ever alphabetical lottery – or a letter lotto as he called it – a new concept where punters could pick letters, like their own name, rather than simply choosing numbers in the hopes of winning the jackpot. Investors poured money in, certain they were onto the next big thing.

But now shareholders are criticising the way some of their invested funds have been spent as transactions emerge, such as Mr Austin using some of the money at a casino on a company card and receiving a $308,000 salary before the lottery website had even launched, while also paying himself a hefty commission off any capital raised.

Gold Coast entrepreneur Craig Austin had personalised number plates made for this car.

“We bought into that Aussie battler story of his,” one person told news.com.au, who requested their name be withheld. “We missed a few red flags.”

“This is ridiculous,” Mr Austin said when news.com.au put claims to him. “All of the initial investors that invested have known me for a very long time and know that I have never intentionally done wrong. I have acted with good intentions all the way through this project, with advisors and consultants every step of the way.”

Mr Austin began raising money for his AZBalls alphabet lottery idea in 2019.

“We believe this is the first new lottery concept to be launched into the world market since Powerball in the early 1990s,” Mr Austin wrote in a prospectus sent to investors.

According to financial documents news.com.au has obtained, he had managed to raise $3 million from more than 100 Aussie mum and dad investors by 2022.

Since then, that figure is believed to be more than $4 million.

With a background in truck driving, Mr Austin approached others with experience in running companies or in the gambling industry. But a number of those people have quit in the following years amid concerns about how investors’ money was being spent.

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The ATM withdrawals on the company card’s bank statement.

Mr Austin is a former truck driver.

Some investors are unhappy with the company.

A bank statement obtained by news.com.au shows that Mr Austin made five $2000 ATM transactions from the company card at the Treasury Casino in Brisbane from July until September 2019, totalling $10,000.

He also took out $500 in cash at an ATM in Logan, Queensland.

Mr Austin said the allegation that he was gambling investors’ money “is nonsense”.

“As you can clearly see by the bank statement on the same day as each withdrawal transaction, I made a deposit or transfer from a personal account, this was my money not from investors,” he said.

However, two $2000 transactions were not reimbursed.

Mr Austin said there was a “huge mixup” between several accounts. He said the AZBalls account was transferred to another director and the original account remained active.

He said he had documentation he provided to auditors that proved this – but would not provide a copy when news.com.au asked for it.

The casino expense wouldn’t be the last one to be questioned by investors.

Another car Mr Austin had. News.com.au understands he no longer drives this car.

The classic coupe.

Adrian and Melissa Jones, 58 and 50 respectively, invested $140,000 into AZBalls through their superannuation fund in 2020.

The company changed its names several times from AZBalls, AZBillions, AZLotts and Lottos one.

The pair met Mr Austin at an intimate dinner with only a handful of other mum and dad investors and they watched as the AZBalls CEO ordered a round of 18 espresso martinis for the entire group.

“I said to my wife ‘I’m not feeling comfy about this’,” Mr Jones told news.com.au. “It’s not his money, it’s our money.”

Kerry and Tony Gibbs, aged 64 and 63, were also concerned when they met Mr Austin at a car show in Coolangatta.

Ms Gibbs said she was worried when she saw Mr Austin “skiting about” at the car show, noting it was very hard to find accommodation nearby.

“All he could find was an apartment for $800 a night for three nights,” Ms Gibbs said.

“I thought ‘Where is that money coming from?’”

Another investor, who asked for their name to be withheld, told news.com.au that the CEO was “living like a king”.

Mr Austin’s spending didn’t end there.

He went to conferences in London and Barcelona. When news.com.au asked him about the expenditures, he said his board of directors advised him to go to London while he paid for the Barcelona trip himself.

“Rest assured none of the investors (sic) money was used in any of my personal spending,” he said.

Then in June 2023, Mr Austin claimed AZBalls was on the precipice of launching and threw a spendthrift party at the Gold Coast’s Surfers Paradise.

In the emailed invite news.com.au has obtained, attendees were promised a night to remember (or forget) at the Mantra Legends Hotel, “a carefully curated menu” with three courses and flowing drinks, plus one night’s free accommodation for attendees. Dozens of people are believed to have taken him up on the offer for the $215 hotel room.

And after the launch party, the lottery business still failed to go live. It didn’t actually launch for another 18 months – not until the end of last year.

The company did not end up launching after this event.

AZBalls launched 18 months later, at the end of last year.

The launch celebration.

A look at the financial documents of AZBalls Jackpot Pty Ltd reveals a lot of money was paid directly to Mr Austin.

A 2019 financial document shows that AZBalls paid $78,000 in consulting fees to a ‘C. Austin’. It also noted that the company had loaned a C Austin $43,595.

In 2021, $200,000 was paid in costs marked “commissions”, according to financial documents news.com.au has seen.

Mr Austin was paid up to 15 per cent of the money AZBalls received from investors as a commission, investors were told at an annual general meeting.

Mr Austin said that early shareholders were “aware” that he was paid a commission on their investment.

“At the time of those early investors, yes, they were aware that was very early days and that was changed before a lot more investor (sic) became involved,” he wrote in an email.

However, Tereasa Chatham, 52, an investor based in Bundaberg, put in money the first year AZBalls began raising capital in 2019 and said she had no idea about the commission.

“I’m really cranky about,” she told news.com.au. “We were never told that a portion of our investment was going to anyone except the investment.

“We’re absolutely gutted. It’s disgusting what (the company) have done.”

Ms Chatham and her husband handed over more than $50,000 to the AZBalls project through a combination of their savings and their superannuation.

Her husband had suffered a cardiac arrest and a hypoxic brain injury months before they made their investment, and she has become his full time carer.

She says the money could go a long way and that it’s galling to see what her investment is being spent on.

According to the same financial document from 2021, a further $212,000 was paid to unspecified consultants.

In 2022, a business which Mr Austin co-directs, Xite Holdings Limited, acquired AZBalls in a share acquisition.

A financial document from the 2023/2024 financial year shows that Mr Austin was paid $308,294 per year to be Xite’s director.

“It was a board decision,” Mr Austin said when news.com.au asked him about the salary.

Ms Chatham and her husband handed over more than $50,000 to AZBalls.

Despite Mr Austin’s high salary, the company’s accounts paint a very different picture.

AZBalls, and then Xite, made no revenue in its development stage.

In fact, in 2021, the total income of AZBalls was $74.70.

In 2022, by the time the company had been absorbed by Xite, it was then recorded to have made losses of $508,000.

An independent auditor raised concerns about Xite’s solvency and its ongoing concern status at the end of the 2022 financial year.

Mr Austin in London.

Mr Austin in Barcelona.

Graeme Creighton, 62, is another investor who bought into AZBalls at $4 per share, putting in about $20,000.

In the years since then, he says the share value has totally dropped. It now shows up as being worth 11c a share on the share registry.

Mr Austin said in support of his company: “I have managed to turn (around) a business that in mid-2019 to late 2021 (was) a private company, that had absolutely nothing and no chance of generating revenue, with a legal bill of almost $90K.

“With my engaged CEO role and directorship, and through legal counsel, in compliance with ASIC and gaming regulators to a now, public (sic) unlisted company owning a fully developed licensed, compliant and operational platform that has been beta tested in several international jurisdictions.”

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Originally published as Lottery boss criticised on how he spent investors’ money while company still in startup phase