Last year I wrote with concern about the company setting up what may have been the world's first sports trading investment fund. Those doubts seem to have borne fruit as this week the company have gone into voluntary administration.
Here's the Betfair forum thread which includes details of the letter to clients.
Sounds like a contradictory mix of what they were trying to achieve, combined with high overheads. Why operate in a London office? Why try to train Betfair punters - I can tell you from experience that is very costly with limited return. And they came from a tipping background. Bad, bad mix. You trade or you punt. Mixing a punting mentality with highly-disciplined trading is extremely risky. A select bunch of individuals can do it. People hired off the street to make money for a fund are not going to manage it. And if you get too successful at it on Betfair, you attract the super Premium Charge. My guess is that the Premium Charge was the least of their problems...
Always feel sorry for the staff in circumstances like this, but having worked for a couple of firms who have gone under over the years - there are always signs of trouble.