The British regulator has defended its decision not to suspend Football Index’s licence earlier.
UK.- The Gambling Commission has defended itself against criticism after Football Index operator BetIndex entered administration.
BetIndex fell into administration last week in what is reported to be the biggest failure of a gambling business in British history.
Customers are reported to have £58m tied up in the platform after it suspended activity.
The British regulator, the Gambling Commission, suspended BetIndex’s licence following the announcement that it would enter administration but has come in for criticism for not stepping in sooner.
The commission has revealed that it put Football Index under review last May due to concerns about the business but found no grounds to suspend its licence.
The Gambling Commission said an accountant and barrister had looked into BetIndex’s finances as well as legal questions over the appropriate regulatory framework.
It suggested that an earlier suspension could have worsened the company’s financial position.
The commission said: “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.”
It said that its decision to suspend BetIndex’s licence on March 11 was taken as a last resort as “the only regulatory option left.”
The commission said it had been assured that player funds are held in a trust account and won’t be used to pay other debts, but courts will have the power to decide that.
Meanwhile, Neil McArthur has stepped down as chief executive of the Gambling Commission, a decision the regulator says is not connected to the fate of Football Index.
Leigh Day Solicitors has announced that it is considering a class action against BetIndex on behalf of up to 7,000 customers. The move has been backed by gambling reform campaign group Clean Up Gambling.
Clean Up Gambling said: “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.”
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.”
What is Football Index?
Football Index was billed as a “stock market of football”, allowing gamblers to buy “shares” in footballers and receive dividends based on their performance. Customers could trade shares with others for profit, paying a small commission to the Football Index platform.
The Advertising Standards Authority criticised Football Index in 2019 for “creating the impression the product was a lucrative investment opportunity”.
Adam Cole, who founded Football Index in October 2015, stepped down as CEO in January and was replaced by Mike Bohan.
Earlier this month the platform announced a reduction in the dividends it paid to customers for transactions. It announced it would enter administration several days later.
Users’ deposits are now trapped. Some customers claim they had more than £100,000 in open bets when the platform was taken offline.
Championship football teams Nottingham Forest and Queens Park Rangers have dropped Football Index as their shirt sponsor.