Online Betting Was rigged

[daveymck]

A Cautionary Tale

Daily business was 'artificially created'

by Graham Green


THE full horror story of the £3.6 million collapse of Sporting Options was revealed on Tuesday when it was claimed as much as 70 per cent of its daily business was artificially created at the request of directors.

The revelation came on the day that administrators for the stricken betting exchange confirmed that instead of the anticipated £3.6 million in clients’ money, the amount discovered amounted to less than £100,000.

It also emerged that in June last year the directors of Sporting Options had a firm offer from a group of Indonesian investors willing to buy the business for £10 million, only for talks to falter.

On a day when punters’ worst fears were confirmed that Sporting Options had folded, there was immediate solace for most in a rescue package offered by Betfair and approved by administrators.

Under the deal, put together with alacrity overnight, 95 per cent of the Sporting Options clients could be compensated in full within the next few days.

The speed of Betfair’s intervention - and the willingness of rivals Betdaq to mount a similar rescue operation - emphasised their determination to restore confidence in the betting exchange industry that threatened to be badly shaken with the discovery of a black hole in Sporting Options’s accounts.

There have been suspicions that the markets on Sporting Options were heavily ‘seeded’ - articificially created to give the appearance of strong liquidity - and it now appears punters’ betting accounts were being used for this purpose.

One source with a close understanding of Sporting Options’ business told the Racing Post on Tuesday night: “Not less than 70 per cent of business was seeded trades, put up on the website by staff to make it look as ifthere was good liquidity.

“It was up to 90 per cent in the evenings when the following day’s racing markets were being seeded.”

Although there has been no police involvement so far, they could be called in as Menzies Corporate Restructing,administrators of Sporting Options PLC, delve deeper into the disappearance of the money.

Joint administrator, Paul Clark, told the Racing Post: “We have 5,500 clients/creditors. They are owed a total of some £3.6 million. There are about 500 of them that are owed more than £1,000 so there are 5,000 or so owed £1,000 or less.

“Under the rescue package, which was negotiated by us, Betfair is going to pay everyone owed up to £1,000 in full, subject to them adhering to their conditions, and anybody owed more than £1,000 will get £1,000 or 20 per cent of their balance, which ever is the greater, with the rest being paid in rebates over a period.

“The amount of money in the client bank account is less than £100,000. If you do the simple maths, the company’s statement, website and other documentation suggests there should be £3.6 million, but it is less than £100,000.”

It is understood that the 20 staff at Sporting Options were unaware of the claim that ring-fenced funds were being used.

Clark added: “What we wanted to do was to get what we regarded was the best deal for the creditors, which with the Betfair deal we think we have achieved, and the second stage now is to get that information out to those creditors at the earliest possible opportunity.”

Neither Sporting Options founder Kevin Griffiths, nor director of communications Paul Cooper, were issuing any comment on Tuesday, while shareholder Tony Bloom admitted having heard nothing from the company to explain its collapse.

“I am afraid I am as much in the dark as you are, but I would imagine this leaves me high and dry as an investor,” said Bloom.

Betfair’s chief executive, Stephen Hill said: “Our rescue package reflects a commitment to the betting exchange punter and to the nascent betting exchange industry.

“The demise of Sporting Options shows why we urgently need the new Gambling Bill, not only to regulate online bookmakers, but also to update regulation for the wider betting industry so that all punters are properly protected.”

Hill pointed out that customer funds at Betfair are held in trust in a separate ring-fenced account which is audited by KPMG.

“Protecting customers funds should be a condition of a bookmaker’s licence and further, the new Gambling Commission should have the power to conduct spot-check audits of online and bricks and mortar bookmakers to ensure that this is the case,” he said.