UKGC Issue Statement In Response to BetIndex
In a response to the recent news surrounding BetIndex, the UKGC has issued the below response.
Due to the number of consumers interested in our investigation into BetIndex we have taken the decision to publish some further information about the background to our regulatory action. We have focussed this update on the areas where we have received questions about our approach.
BetIndex Limited was granted a licence for Remote General Betting Standard Real Event on 9 September 2015. The operator is also licenced by the Jersey regulator.
The current BetIndex product allows customers (called traders) to place bets (shares) on the future performance of footballers. A bet lasts for 3 years during which time they accrue dividends. After 3 years the bet expires meaning that customers lose their stake and any right to further dividends. The product evolved to enable customers to buy and sell bets with prices fluctuating according to demand. We have identified that the product contains elements that are betting in nature and therefore regulated by us as gambling, as well as elements that are not considered gambling and therefore not subject to our regulatory remit.
Gambling product features
Following concerns about the operator, we began a formal Review of the licensee under section 116 of the Gambling Act on 20 May 2020. The focus of our review was to address issues in relation to the betting aspect of the product At that stage, there were no grounds to suspend their operating license.
During the course of the review, we utilised betting specialist expertise, a Forensic Financial accountant and specialist external QC to examine the business model, the finances of the company and the complex legal questions over the appropriate regulatory framework.
In the early part of March, BetIndex advised of plans to self suspend with a view to restructure and relaunch. Our concerns as to the timings of this and the position regarding customer funds led us to suspend the licence on 11 March 2021. We have acted in tandem with the Jersey Regulator, with whom BetIndex also hold a licence.
We know from experience that the suspension of a license can, of itself, trigger or hasten the financial decline of an operator and put customer funds at risk. That is why we will always consider whether there are steps short of suspension that can still deliver the right regulatory outcomes and address the risks that consumers face without accelerating the financial collapse of a business. We will therefore only turn to suspension when that is the only option for delivering the right regulatory outcome and, indeed, the legislation requires us to exercise those powers in that way. We were satisfied that on 11 March suspension was the only regulatory option left available to us.
Whilst our investigation is ongoing our priority is to ensure the licensee focuses on treating consumers fairly and keeping them fully informed of any developments which impact them.
Information for impacted consumers
BetIndex holds a Trust Account intended to hold dividends to be paid to winning customers. We have been assured by their solicitors that BetIndex has suspended payments from this account whilst customers’ entitlements can be calculated and pending an application to the Court for directions. BetIndex requires a direction from the Court as to the appropriate treatment of those funds. We understand that those legal processes are underway.
The assurance the Commission has is that the funds in the Trust Account will not be distributed to any creditor other than customers. However, its ability to distribute immediately to customers, and if so which customers, is likely to be subject to the directions of the Court rather than the Commission.
Whilst there will be limitations on what information we can publish whilst regulatory investigations are ongoing, we will continue to provide updates whenever we have further information to share.