Football Index Users Lost £90 Million in Crash, ‘Failed’ by Gambling Commission, Say UK Pols
Posted on: March 15, 2021, 08:16h.
Last updated on: March 15, 2021, 10:35h.
Football Index users have collectively lost £90 million ($125.5 million) since the implosion of the soccer player-trading platform on March 5, The Times reports. The news comes as British politicians said they would ask questions in Parliament as to whether a lack of regulatory oversight was responsible for the collapse.
While Football Index is reported to have over 500,000 registered users, only around 30,000 were regular traders, according to The Times, This suggests average individual losses of around £3,000 ($4,120) each.
The company billed itself as a combination of fantasy sports and the stock market. Users could buy “shares” in soccer players and were offered “dividends” based on player performances and fluctuating real-world values.
But the market crashed after the company announced a dramatic cut to dividends in a bid to “ensure the long-term sustainability of the platform.”
Users found their shares plummeted in value overnight. Currently, what’s left of their balances is frozen, and they are unable to withdraw their funds.
Asleep at the Wheel?
Football Index is now in administration, and its parent company, Bet Index, has had its license suspended by the UK Gambling Commission (UKGC). But many are asking whether Football Index should have been licensed at all, and whether the gambling regulator should have intervened.
Some have likened the company to a Ponzi scheme, while others have suggested the decision to cut dividends was a deliberate attempt by Football Index management to devalue the platform’s market to reduce its liabilities.
What was the Gambling Commission doing the times when this dreadful practice was exploiting and conning punters?” Labour MP Carolyn Harris asked The Athletic.
“This is exploitation, plain and simple,” she added. “The Gambling Commission’s actions now are very much bolting gate after horse bolted. Unacceptable. Unprofessional. Unbelievable.”
QPR, Forest End Deals
Questions will also be asked about the due diligence of EFL Championship teams Queens Park Rangers and Nottingham Forest, whose jersey Football Index sponsored. The company was a visible brand around UK soccer, advertising regularly on television and radio.
Last Friday, the two soccer teams announced they would end their sponsorship deals with Football Index.
The scandal comes at a time when a regulatory review by the government promises to reshape the gambling landscape in the UK by exerting stricter controls on the industry. Advertising around sports – and soccer jerseys, in particular – is expected to be severely scrutinized.
People using gambling operators do so at their own risk,” the UKGC explained in a statement to The Athletic. “Although remote operators licensed by the Commission must keep customer funds in a separate account/s, there is no guarantee that this will ensure customers get all their money back if the company runs into financial difficulties.
“When the Gambling Commission licenses n operator, we look at suitability, including their financial circumstances. But we do not oversee their businesses on a day-to-day basis or monitor the financial health of operators directly in real-time. That would impose significant regulatory costs and could give a false sense of security to customers.”
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