In an attempt to quell a row and avert potential legal action, the betting exchange operator is honouring the wagers of some gamblers who bet on the Christmas Hurdle, won by Voler La Vedette on December 28.
In an embarrassing incident for a company that prides itself on its technology, Betfair's systems permitted one customer using an automated trading system – known as a 'bot' – to lay bets in-running at 28-1 on a horse that started 13-8 second favourite. Worse, Betfair was still taking bets on the horse after it had crossed the line.
The layer was overrun with bets, leaving a potential payout of £23m. Had enough punters got on, Betfair's systems were actually pricing up a potential liability of £600m.
On Wednesday, the company – still reeling from its disastrous £13-a-share float – said after discussions with its regulator, the Gibraltar Gaming Commission (GGC), it had decided that "in the interests of fairness, certain categories of voided bets will be compensated".
Betfair shares slipped 7.5 to 827.5p.
Senior Betfair sources said it would pay out on all punters who had placed or laid bets before the 58.2 seconds point of the race – the moment the glitch occurred.
They denied there had been any pressure from the regulator to pay up, saying it went "beyond the GGC's" recommendations.
Despite threats from big gamblers to sue over the incident, Betfair is yet to receive any legal claims.
This is not the first technical problem to hit Betfair. Shortly before its October 2010 float, cyber thieves made off with an encrypted copy of its customer base.
Befair is confident it has resolved all issues relating to the Leopardstown fault.
