Betfair offer punters help over rival firm's failure

Betfair has ridden to the rescue of thousands of punters who have money tied up with the ill-fated Sporting Options betting exchange.

But the British betting industry was alive with speculation today as to why the third biggest operator in the exchange market should have gone into administration in mysterious circumstances.

Based in Sussex and launched by former City trader Kevin Griffiths in 2002 with the aim of cashing in on the person-to-person internet betting boom, Sporting Options tried to make inroads into Betfair's market domination by offering lower commission rates on a range of sports.

However, persistent adverse rumours about the health of the company came to fruition last night when administrators moved in to oversee a situation in which an estimated £3m of client funds are believed to have gone missing.

Betfair spokesman Tony Calvin, speaking on the day when his company unveiled profits of £11m in its first annual report, stressed that discussions with lawyers have indicated that Sporting Options are in no position to make refunds to any of their existing clients.

However, he added that Betfair have initiated a rescue package which will enable those owed money to claim a refund provided they transfer their business in the coming weeks.

"It is our understanding that Sporting Options are effectively dead and that there will be no return for any clients with money tied up there," he said.

"Their collapse does the industry no favours, but there is a big overlap between our customers and the customers of Sporting Options and this package gives those who have lost out the chance to recover their money provided they register with Betfair."

Punters who had up to £1,000 in a Sporting Options account will receive an immediate refund under the package, while those owed in excess of £1,000 will receive a lump sum plus a reduced Betfair commission offer designed to help them secure a full refund over time.

However, the demise of Sporting Options will come as a serious blow to the exchange industry, especially if the inquiry into the collapse of the company unearths evidence that client funds were misused.

Internet bookmaking company Blue Square pulled out of a deal to buy Sporting Options in September after looking into the financial problems of the firm, which are believed to centre around the practice of "seeding" markets in order to give the impression of greater liquidity. According to one industry expert, much now depends on whether that practice was carried out using company funds or client funds. "Seeding markets isn't illegal, but using client funds to run your business certainly is," he said.

Paul Cooper, who has been acting as head of communications for Sporting Options, was unavailable for comment this morning.

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