Government ministers are planning to formally investigate Football Index’s collapse.
UK.- The government is to launch an investigation into the collapse of Football Index, the self-styled football player trading exchange run by BetIndex.
According to The Times, ministers are “deeply concerned” by what’s believed to be the biggest collapse in UK gambling history.
Customers are believed to have more than £100m trapped in the platform, which fell into administration just days after announcing changes to dividend payments.
The case could impact on the government’s ongoing review of the 2005 Gambling Act.
A source told the Times: “This case further reinforces the need for our comprehensive review of gambling laws.
“This independent investigation into Football Index will feed into that work and if we need to make changes to regulation to protect people, we will.”
What was Football Index?
BetIndex, the operator of Football Index, had a betting licence from the Gambling Commission, but its product did not involve any traditional form of sports betting.
Instead, 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.
After it entered administration, users’ deposits are now trapped. Some customers claim they had more than £100,000 in open bets when the platform was taken offline.
The British regulator, the Gambling Commission, suspended BetIndex’s licence as a result of its collapse but has been criticised for not acting sooner.
Planned class litigation as a result of the Football Index collapse may target the Gambling Commission itself.
Nichola Marshall, a partner at Leigh Day solicitors, said: “Whilst it is very early days in our investigations on behalf of the thousands of people who have lost money, 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.”
Championship football teams Nottingham Forest and Queens Park Rangers have dropped Football Index as their shirt sponsor.
The collapse of the platform also precipitated Germany’s Footstock to surrender its British gaming licence due to the knock-on effect on the entire market.