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From his latest article on the sporting options failure:

"Though we may read about another sportsbook going under practically once a week, it is important to understand the difference between a "fly-by-night" operation and one that is endorsed by *******.com.* The later must be in business for at least four football (NFL) seasons.* *******.com's standards are among the most stringent in the industry today.*"*
 

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UK-based online betting exchange Sporting Options has halted its operations as it was placed in administration yesterday. Police have begun an investigation possible misuse of punters accounts.

According to The Guardian, the investigation followed negotiations over Blue Square, an online division of gambling group Rank, with Sporting Options over a possible £4m acquisition of the privately owned business.

The successful set up of Sporting Options, that was founded by former City options traders, Robert Byrne and Kevin Griffiths, immediately attracted enormous attention. The company was matching bets worth between 10% and 15% of those matched by Britain's main exchange business Betfair. Many of Betfair’s other rivals would like to acheive similar results and to increase their liquidity at this rate.

The betting exchange business model uses a rather peculiar system, whereby punters barter their bet for another punter’s bet. Obviously, gamblers prefer sites that can always provide them with a matching counterbet. Therefore, the larger and more developed gambling operators are the most successful in this business.

A thriving betting exchange business by small operators like Sporting Options is often considered dubious. Several rivals accused the owners of Sporting Options of using their own funds to create the liquidity necessary to keep it growing, although this is illegal.

At the moment, the police will be investigating growing concerns that punters' betting accounts could have been used to support the liquidity of Sporting Options. Menzies, the administrators appointed to Sporting Options Corporate Restructuring, said: "At this early stage we are currently assessing the financial position of the company and reviewing its business operations." The company has already been thrown out of the Betting Exchange Trade Association.

"The decision was taken by the Beta executive committee on the basis of Sporting Options having been found to be in material breach of the code of practice for betting exchanges," Menzies said.

The company, primarily owned by co-founder Mr. Griffiths, has other shareholders including members of Griffith's friends and family. Accounts filed with Companies House for the year to April 2003 show a loss of almost £1m and the company was well known to be suffering from a funding strain.
 

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