This whole "Tom Waterhouse & Macquarie Bank & Shorting" issue with BET has never really been cleared up - and it is definitely a bit confusing!!
So reading the below section of your post (highlighted), this "hedging by Macquarie" would explain why the number of shorts on BET keeps increasing - despite the business continuing to do well, and despite the share price / market cap currently being so low.
"Waterhouse gets to borrow money, Macquarie gets to borrow stock and do whatever it needs to do... like lending some of it to other people, but is also now short a put option. The put option meant that Macquarie was long delta to BET and would therefore need to short BET to remain net zero exposure to BET. The more BET falls, the more they need to short BET to remain hedged"
It shouldn't be long now before the fundamentals of the BET business are just too strong for the shorters.
Hopefully starting with some announcements about further developments / contracts with fixed odd racing in the US.
