Airline Threatens To Sue Betting Site For Taking Bets On When It Would Go Out Of Business

from the what's-illegal-about-that? dept

Apparently, a Scottish airline, Flyglobespan, has threatened to sue an online betting site because it was taking bets on what airline would be the next to go out of business, and had odds on Flyglobespan. The site did stop taking bets, but says it was due to a lack of interest, rather than the threat of a lawsuit. However, it's not clear what law it would be breaking to offer such a bet. You can understand that the company is concerned that potential passengers might think the airline is at risk, but it's not clear that's enough to stop any such bets.

Filed Under: airlines, bets, failure, scotland
Companies: flyglobespan

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  1. icon
    Gatewood Green (profile), 7 Oct 2008 @ 1:25pm

    There already is a 'legitimate' market for betting on a company's health

    There already is a 'legitimate' market for betting on a company's health. It is call the credit default swap market. And it basically allows anyone with the cash to take out an 'insurance' on someone else's specific debt.

    If Flyglobespan has a line of credit or a loan from anyone (bank, finance company, company commercial paper), not only can the holder of that debt take out insurance, so can anyone else. So long as some finance/insurance company is willing to take the bet, err, I mean insure the loan. In the US the CDS market is, by law, not regulated so it need not follow the normal insurance rules (minimum liquidity, capital reserve, etc...).

    If Flyglobespan pays back the debt on time, you are out your 'premium' (aka: wager). However, should they default, you get the value of the insurance policy (likely the value of the original debt).

    On a tangent, the CDS market along with sub primes (less of a real factor), have a lot to do with why the market is in the condition it is now. A wonderful explanation...

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