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It was "depressing - who wants to sit through something like that," he added.
Four pairs - two from South Korea, one from China and one from Indonesia - face a disciplinary hearing by the Badminton World Federation.
Meanwhile, Team GB rowers Helen Glover and Heather Stanning have won Britain's first 2012 Olympic gold medal.
And crowds are gathering along the route of the Olympic cycling time trials to see British gold medal hopeful Bradley Wiggins.
Earlier, London Games' organiser Locog confirmed it would not refund tickets for the badminton matches.
Speaking at a press conference, Lord Coe said the scandal was bad news for the games: "The sadness of it is I was actually at badminton yesterday afternoon and I saw some... I saw a British competitor narrowly fail to progress, but the games were incredibly competitive in front of really large, enthusiastic audiences.
"I know the badminton federation really well. They will take that really seriously... it is unacceptable."
Spectators booed the two badminton matches played at Wembley Arena on Tuesday, in which the four accused pairs of players appeared keen to lose.
China's Yu Yang and Wang Xiaoli and South Koreans Jung Kyung-eun and Kim Ha-na are among those facing charges.
Both pairs were already through to the quarter-finals. Reports have suggested they both wanted to lose to secure an easier draw.
Responding to news of the charges, Culture Secretary Jeremy Hunt said: "It's a matter for the sporting federation to decide that, but I feel very, very disappointed for the crowds who were going along expecting to have a fantastic time watching the best sport in the world and I think they have a right to feel very, very let down by what happened."
In other developments on Wednesday:
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