Documents lodged in Victoria's Supreme Court by liquidators Bent and Cougle allege that the thousands of Sports Alive clients owed money by the bookmaker are not entitled to the usual protections because the betting agency failed to properly set up its client bank accounts.

But the ACT Gambling and Racing Commission disagrees with the liquidator's assessment and is arguing for its day in court to try to prove that the clients, still owed up to $2.8 million, are entitled to legal protection.

If the commission is successful, Sports Alive punters might be able to recover up to 34c in the dollar from money they had lodged with the agency or from winning bets that were never paid out.

But one gambler, who has been active in the campaign to recover funds, told The Canberra Times that he and his fellow punters held out little hope of ever seeing any of their money again.

The betting agency, which was registered in the ACT but operated from Melbourne, collapsed in August last year with debts of more than $10 million, including about $327,000 to the ACT Revenue Office.

Bent and Cougle estimate that nearly $3.9 million is owing to more than 18,000 punters, although about $1 million of that sum is understood to have been honoured by online bookmaker Tom Waterhouse.

Under pressure from Sports Alive customers who said that Gambling and Racing failed in its duty to regulate the bookmaker, the ACT Ombudsman launched an investigation into the matter in May. Victorian fraud squad detectives are also inquiring into the events leading up to the betting agency's collapse.

According to a Bent and Cougle affidavit lodged in the Supreme Court, Sports Alive had more than $1.6 million in customer balances and unsettled bets on its books as of June 2009, but the firm only had $800,000 in cash, just half of what it needed to cover its liabilities.

Bent and Cougle also assert that the Gambling and Racing Commission could not call in a $250,000 bank guarantee provided to it by Sports Alive as a condition of its licence because the money, held by Bank of Queensland, might be available to ''other creditors''.

The Gambling and Racing Commission declined to comment yesterday and Sports Alive directors could not be contacted.

The Sports Alive client, who did not wish to be named, said he and his fellow punters welcomed the commission's attempt to intervene in the Victorian case but did not believe the action would achieve much.

''I don't hold out much hope, the ACT government was probably asleep at the wheel at the time it was occurring and despite a lot of questions from myself and others, they were adamant that our money was safe,'' the client said.

''Then, when it wasn't there, they were very naïve.

''Now to have them turn around and support u, is good, but it's too little too late.

''It feels like the horse has bolted.''

The case will be heard next month.