ON 20 August 2007 Interactive Gaming Holdings (IGH) announced that its online betting companies had ceased taking bets pending clarification of the company’s financial health. IGH’s shares had been suspended on August 17, after a mooted financial loan had failed to materialise. The death of another online bookmaker, may not have warranted a mention, had that company not recently entered into a strategic relationship with Betfair.
On 10 October 2006, Interactive Gaming Holdings announced that it has entered into an agreement with Betfair, the world’s leading online betting exchange, to integrate its exchange into IGH’s back end betting systems. IGH then operated the online betting sites Premier Bet and Heathorns.
At the time of the deal, IGH said that the deal, the first of its kind would expand the Group’s comprehensive offering and deliver additional benefits to customers such as improved betting odds.
Under the terms of the deal, IGH received an automatic feed from Betfair of events, markets, selections and prices allowing the Group to offer its customers a wide range of markets, including in-running betting. The deal also offered IGH the scope to set prices in relation to Betfair’s current market prices and to hedge either automatically or manually on Betfair, depending upon its current liabilities.
In addition, IGH was to receive an automatic arbitrage alert should its prices offer arbitrage opportunities.
IGH declared that semi and fully automatic modes would allow it to continue to take bets from marked customers regardless of their risk; “With sufficient liquidity in the exchange, bets can be taken with no limit.”
At the time of the deal, Steve Burns, CEO of Betfair, commented: ‘We are delighted to have entered into this agreement with Interactive Gaming Holdings. The partnership will offer clear operational synergies to both companies and broaden the markets currently targeted.’
Commenting on the agreement, John Heaton, the then CEO, of Interactive Gaming Holdings, said: ‘The alliance with Betfair provides Premier Bet and Heathorns with theexciting opportunity of offering customers access to a wider range of bettingmarkets with the additional convenience of being able to access these from a single account.’
It has been alleged that IGH went to the wall owing Betfair the sum of 250K. Were this true, it seriously calls into question the nature of Betfair’s relationships with its market makers and strategic partners. At the very least, one would expect to see further clarification of the matter in Betfair’s forthcoming results. Red faces all round.
