Football Index Could Be Sold to Rescue Investor as Anger Mounts Over Market Crash
Posted on: March 17, 2021, 07:50h.
Last updated on: March 17, 2021, 12:57h.
Football Index is looking for a buyer. The stricken soccer gambling platform could be facing a UK government inquiry as anger mounts among former customers who lost money when the Football Index market collapsed earlier this month. But it seems the company’s owners are eager to salvage something from the flames.
The Guardian has learned the owners have enlisted the services of Oakvale Capital, a financial advisory group specializing in gambling. Oakvale is seeking an investor to come in and rescue Football Index, which styled itself as “the stock market” of soccer.
The platform enabled users to buy “shares” in professional soccer players, which could fluctuate in value depending on player performances or real-world value in the soccer transfer market. Players were offered “dividends,” based on the performance of their shares.
Panic Selling, Shares Plummet
But Football Index’s synthetic stock market crashed overnight on March 5. That came after the company announced it planned to slash dividends to ensure the platform’s long-term sustainability.
Panic selling ensued, causing the value of shares to plummet, losing around £90 million in value ($125.5 million). The Times estimates that regular traders lost an average of £3,000 ($4,120) each.
Currently, what’s left of traders’ balances is frozen. Parent company Bet Index’s license has been suspended by the UK Gambling Commission and Football Index has gone into receivership.
Some critics have denounced the company as a Ponzi scheme. This is Money reports that former Football Index users are directing their anger at the company’s founder, Adam Cole.
Porn Baron Founder
Cole, 70, made a fortune in the VHS softcore porn boom in the 1980s. He launched Football Index in 2015 and became its public face, marketing the site as being “safer and more predictable than financial markets.”
Football Index was admonished in 2019 by the UK’s Advertising Standards Authority for “creating the impression the product was a lucrative investment opportunity.”
On Tuesday, Neil McArthur, head of the UK Gambling Commission, resigned as politicians asked questions about whether the company should have been licensed at all.
Meanwhile, Law firm Leigh Day told The Guardian it was exploring the possibility of legal action on behalf of traders who lost money.
“Whilst it is very early days in our investigations on behalf of the thousands of people who have lost money, there are serious questions which will need answering regarding what has happened at Football Index and what the Gambling Commission understood of Football Index’s activities,” Leigh Day partner Nichola Marshall said.
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