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CAUSE OF COLLAPSE Sporting Options appeared to be matching bets worth up to 15% of those matched at market leader Betfair. But it was alleged the turnover was being financed by the owners of Sporting Options using their own funds to create the liquidity. By late 2004 , it was alleged Sporting Options was in fact Fraud ulently financing its apparent liquidity by using funds from its clients' account. On 15 November, 2004 administrators were called in. By 8 December the administrators had determined that the company owed £ 3.6 million to its clients, but held only minimal funds in the clients' account. BETFAIR RESCUE PACKAGE Soon after Sporting Options went into administration, Betfair announced a rescue package to compensate the 5,342 Sporting Options clients who had lost money. The clients affected must register as customers of Betfair's (if they are not already registered) to be eligible. Each qualifying client owed less than £1,000 will be compensated for the full amount owing (in the form of a credit to his or her Betfair account). Those owed more than £1,000 are to receive either £1,000 or 20 per cent of their Sporting Options account balance, whichever is greater. Any amount owing over and above this payout can be earned back though a commission rebate program which will last until 30 November 2006 . Some have speculated that Betfair's apparent act of generosity is a bid to protect the reputation of the betting exchange industry. Both Betfair and other exchanges have stressed that their clients' funds are ring-fenced to ensure the exchanges' financial integrity. |
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