Footstock has surrendered its licence and begun insolvency proceedings following the collapse of its rival.
UK.- The fallout from the collapse of Football Index continues. Just weeks after the football player “stock exchange” collapsed, its rival Footstock has surrendered its British remote betting license and announced that it will begin insolvency proceedings.
Germany-based Footstock said the collapse of British rival Football Index caused an impact on the entire sector and left it unable to acquire the additional funding necessary to remain in business.
It said: “The whole sector has been shaken by recent events. As a result, over the last few days, we have suffered significant setbacks.
“Expected and necessary funding being put on ice, we can no longer run our Seedrs campaign and valuable partners are pausing cooperations. These unprecedented circumstances have crushed our company in this crucial period of growth.
“But without funding, Footstock cannot survive. Over the last few days, we tried incredibly hard to find a solution that allows us to stay operational.”
Like Football Index, Footstock keeps customer funds separate from its business accounts, but there is no additional protection around these funds in the case of insolvency.
Sports Betting or stock trading?
The collapse of Football Index and now Footstock has thrown a spotlight on a product that some had questioned from the start.
Both platforms billed themselves as football “stock markets” rather than traditional betting platforms, allowing customers to trade shares in players and reap dividends based on performance and to make a profit through selling their shares.
Football Index often compared itself to a trading exchange, resulting in criticism from the UK advertising watchdog, ASA.
Footstock, meanwhile, promoted itself as a blend of player trading platform, fantasy football and EA Sports’ Fifa Ultimate Team.
The British regulator, the Gambling Commission, has come in for criticism over its handling of Football Index after it emerged that it had concerns about the platform’s business model almost a year ago.
Some have questioned why such platforms were granted remote betting licences from the Gambling Commission when their products do not involve traditional sports wagering.
Matt Zarb-Cousin, of Clean Up Gambling, said there were “very serious questions to answer about why this product was licensed in the first place” and “why the regulator took so long to investigate concerns.”
Clean Up Gambling is supporting a possible class action over Football Index’s collapse.