No thoughts on appropriate jurisdiction but just want to counter the suggestion that Betfair's Maltese operations amount to a mailbox. They have a very tangible brick and mortar presence here and are a major employer - the apartment I live in was previously rented by them.
Also just to point out the LGA != Maltese courts. The LGA as a licensing body has the ability to suspend licences and impose specific fines for various things but they cannot issue legally binding judgements. From a players' perspective they are at best an ombudsman, or more realistically are there to run interference and to keep issues out of court. Unless Betfair have a massive change of heart a case like this would almost certainly be eventually settled in a civil court and in that case the LGA can be ignored from the outset and civil action brought directly.
The LGA are noted for taking 3 months or more just to confirm RECEIPT of a complaint, so as CM said, "you might as well complain to a houseplant".
You are probably right that the LGA can be kept out of this, and strong claims should go straight to court.
Legal advice should also be sought where the claims are substantial. Failure to follow procedure can sometimes damage a case, so the advice might be to submit a complaint first to the LGA, BUT if (or when

) they don't reply, proceed with the court option. You would then be able to show the court that you DID first try the appropriate channels, but got nowhere. Somewhere on the LGA site should be a set of guidelines, one of which should be how long they are allowed to take in replying to a complaint. If no such guide exists, then it is down to what a court would consider "reasonable". In most cases, 28 days should cover it.
Just a quick reality check here peeps.
Anyone who wants to get their money back should obtain independent legal advice from a LAWYER.
AFAIK there aren't any here so anything said should be treated as conjecture at best. I think you will find that the matter is far more complicated in a legal sense than it appears.
I'm still hoping Buttfair come to their senses and pay up.
Players should FIRST see if they can bring the case in their home country. This is probably only going to be a serious option for players within the EU, since Malta is within the EU, and consumers are not just protected by Maltese law, but EU wide laws regarding business vs consumer issues.
Betfair would prefer action to be taken in Malta, since they would be "playing at home", which as any sports fan knows, gives one the advantage.
It just needs ONE case to go against Betfair for them to be forced to reconsider their approach.
The LGA may even take notice because failure to respond means they are not "running interference" for operators to keep matters out of court.
If players take Betfair on, they are likely to force a compromise agreement, which although not full payment, would be a good deal better than the current position, AND Betfair will have paid a heavy price for being FORCED into making deals, rather than doing so voluntarily.