The amount they offered him (which he has until now refused) is the sum of his deposits minus his withdrawals. In effect he would be getting a full refund, and they would go about their business, quite literally. Somehow it's not ringing the "scam alarm" to me.
This is not my understanding. The OP placed bets with his deposit, that Sportsbet appeared to have accepted that turned out to be winning bets. The net winnings are excluded from what is being offered to the OP.