Paddy Power decided to make early payments on Tiger as the winner when he opened a four-shot lead in the second round.
However, the decision to pay out the $2.1 million turned to disaster as Woods blew his lead to South Korea's Y.E. Yang.
"It takes a special kind of dimwit to turn what should have been our best-ever golf result into our worst," said a spokesman for Paddy Power.
"Paddy Power punters are obviously the big winners here and have made like bandits getting paid out on Tiger as a winner."
This is the worst loss ever for Paddy Power on an early payout. Paddy Power uses the early payouts to attract more bettors.
The winning Yang said: "Tiger's good, but he could always have a bad day. I guess yesterday was one of those days."