How do these betting sites handle real-time events? I believe there was a case recently where a man at the Australian Open tennis in Melbourne was arrested for transmitting point information outside the stadium before it could be broadcast on television (there is always broadcast delay), which obviously could give you a big advantage. I think European football ones go into a vol auction (pause betting) when a goal is scored? But you could have a guy sitting in the stadium, wired up with a buzzer to press when a striker goes one on one with a goalie, or a penalty is awarded, and then just go all-in on the market? The whole thing is a can of worms.
They handle real-time events exactly as your latter example stated: an external (licensed) company provides live data, and orders that were placed during a dangerous situation (e.g. one-on-one) are subsequently voided if a goal is scored.
Why did you edit away your claim that it is to the benefit of the customers? Being a market-maker and being able to void any trades that occur during volatile periods sounds like a dream to me. No need to worry about adverse selection eh? Just printing cash with fat bid-ask spreads and if anyone dares to get the jump on you, they get voided. I wish I could do that in the real markets.
I can't speak for all companies, but some companies I worked with with honour those bets (places just a second before the goal). They try to find a pattern and ban the users after they find them doing this (and it is getting harder since live feeds are faster and faster) but I never saw a company voiding a bet because of this.
