The recent collapse of betting exchange “Sporting Options” drew the attention to risks involved with ‘seeding’ business on exchanges with deposited funds from account wagering. It turned out that around 70% of the daily business at Sporting Options was artificially created by the company with funds from punters’ deposits.

"Account wagering" is the form of betting where punters have to deposit money on an account managed by the (online) betting operator. Future betting transactions are then paid from this account. Needless to say that this involves some risk as money is tranferred from punter to operator in advance of a transaction.

The risk seems higher in the case of betting exchanges, which all run their business on the basis of account wagering. It is in the interest of betting exchanges to have sufficient business on their website to attract punters, which leads to the temptation to use punters' deposits for this purpose.