Andrew Rhodes, the British Gambling Commission’s interim chief executive, has again responded to questions about BetIndex, this time in the form of a blog post.
UK.- Following criticism of the Gambling Commission’s regulation of Football Index before its collapse this March, Andrew Rhodes has again responded publicly to questions about the case.
Writing in a blog post, he said he wanted to provide answers to frequent questions the regulator has received following the Department of Digital Culture, Media and Sport (DCMS)’s investigation into Football Index’s collapse. He also said he wanted to clear up misunderstandings regarding the Gambling Commission’s role.
Rhodes denied claims that the Gambling Commission had licensed a product it didn’t understand, but said BetIndex had added functionalities that were not part of its licence terms, including allowing users to sell bets.
He also denied that Football Index was a Ponzi scheme, as indicated in the DCMS review, and he said its operating model at the time it gained its Gambling Commission licence was not significantly different from that of other operators, other than the fact it relied on a single product rather than a portfolio.
He said BetIndex was able to cover its liabilities in bet dividends for at least 12 months according to a detailed financial assessment early in 2020 and was not relying on new customers to meet obligations as would a Ponzi scheme.
However, he noted that during the Covid-19 pandemic BetIndex had failed to inform the Gambling Commission when it increased its dividends by 50 and then 100 per cent and reduced its cash holding requirements from 12 to one month’s worth of dividends.
He said the Gambling Commission would have suspended the operator’s licence sooner had it been notified. This decision led to a rapid reduction in the company’s reserves since the speed at which it paid out money doubled.
Rhodes defended the Gambling Commission’s lack of knowledge of the matter, noting that the regulator does not assess an operator’s business on a day-to-day basis or monitor financials in real time. He also noted that, unlike in the financial services sector, the regulator has no statutory powers to provide redress for funds lost through a gambling product
He also repeated the argument that suspending BetIndex’s licence earlier would have led to customers losing large amounts of money.
The UK parliament’s All-Party Betting and Gaming Group (APBGG) has launched an inquiry into the Gambling Commission’s “competence and effectiveness” after receiving a number of complaints from the industry.