Investors including a Tasmanian government agency, a prominent sports industry investor and a well-known bookmaker are facing large losses after online betting agency Sports Alive was placed into voluntary liquidation.
The company, which was licensed in the Australian Capital Territory but based in Melbourne, called in liquidators on Thursday night, leaving investors in the dark and punters – who are believed to have hundreds of thousands of dollars locked up in Sports Alive accounts – scrambling to get their money.
While Sports Alive was required to have a $250,000 bond to cover punters in the event of a collapse, it is believed that this will not be enough to cover account balances – reports suggest one unlucky punter had more than $110,000.
Investors have lost much more. The Tasmanian Government’s betting agency, TOTE Tasmania, owned 25% of business, a stake valued at $3.88 million according to the agency.
In its annual report for 2009-10, TOTE Tasmania said it had intended to increase its stake to a “controlling interest”.
Other investors include well-known sports industry player Peter Sidwell (an investor in a number of sports-related and manager of Collingwood coach Mick Malthouse) and well-known Victorian bookmaker Gary Walsh.
The big question surrounding the collapse is how the fortunes of the business could have gone south in what appears to be a short space of time.
The valuation TOTE Tasmania placed on its 25% stake implies the company was valued at more than $15.5 million and reports suggest the business produced profits of $4 million in 2008-09 and $5 million in 2009-10.
While competition is intense in the corporate bookmaking industry and the sector is undergoing a period of consolidation driven mainly by overseas-based gambling firms such as Paddy Power, industry insiders says the company appears to have been poorly run, particularly in the last 12 months.
“While the big boys will soon swallow up the smaller Australian bookmakers, this was not the cause of the Sports Alive crash,” one bookmaker told SmartCompany this morning.
“It was more a case of a badly run company.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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