In what could become the biggest scandal in British betting history, punters stand to lose up to £100m with the crash of Football Index, a football player “trading platform” that went into insolvency last week.
And the growing scandal, coming amid the Official Review into the 2005 Gambling Act, threatens to engulf the gaming industry’s regulatory body, the UK Gambling Commission (UKGC), as it seeks new leadership following the surprise resignation of its long-standing Chief Executive Neil McArthur.
Top law firm Leigh Day is now pursuing legal action against the platform on behalf of affected punters.
John Whittingdale, an Undersecretary at the Department of Culture Media and Sport, which oversees UK gambling laws, has held ‘frank discussions’ with the UKGC and the commission has now suspended the licence of Football Index’s Jersey-based parent firm, BetIndex Ltd.
Meantime, the fiercely anti-gaming All-Party Parliamentary Group for Gambling Related Harm (APPG) has described the Football Index fallout as a “scandal”.
Football Index was launched in 2015 as the self-styled “stock market of football”.
Participants bought and sold “shares” in professional footballers and earned dividend payments depending on the players’ performance and fluctuating value.
The novel scheme became a fixture of the sports betting sector and the company sponsored both Queens Park Rangers and Nottingham Forest.
Both football teams have now dumped the brand.
Adding grist to the mill, the parliamentary group says that Football Index’s collapse underlines why the UKGC needs “wholesale” reform.
But it seems that Football Index–by blurring the lines between betting site and stockbroking–was able to exploit and operate in a fiscal grey zone.
Nevertheless, it begs the question of why did the UKGC approve a sports betting licence for a brand that described itself as a “trading exchange platform” — and not a sports gaming site.
Perhaps in an indication of troubles to come, the Advertising Standards Association reprimanded BetIndex in 2019 for failing to explain the financial risks to consumers.
Others have since gone further and accused Football Index–which was never approved by the Financial Conduct Authority, even though it was marketed as a trading platform–of being a pyramid or “Ponzi” scheme, which needed a constant flow of new customers so it could continue to pay dividends to existing users.
“This can only be termed a scandal,” said Carolyn Harris, MP, chair of the AAPG.
“It underlines the need for wholesale reform of the gambling industry and raises significant questions of the Gambling Commission, given they saw fit to licence this platform and failed to enact adequate oversight.”
Nichola Marshall, a Partner at Leigh Day, said: “It is very early days in our investigations on behalf of the thousands of people who have lost money [but] 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.”