As Casino Guardian already revealed, Ministers have started an investigation into the collapse of the operator that provided “a stock market for football” that has cost £90 million to customers and has been described as the largest gambling firm failure in the history of the UK gambling market.
It all started on March 5th, with an announcement of huge reductions in dividends made by the UK gambling platform Football Index. The surprising statement was made only a few days after some new shares were issued to players and resulted in thousands of raging customers who felt misled. The massive slump in dividends also led to a crash in the market on the following day and raised questions about what was actually going on with the company.
The announcement of Football Index blocked the customers from the opportunity to sell their shares, or at least, they were unable to do that without suffering major losses. This led to a massive wave of hate comments and personal threats online, with the gambling platform eventually disabling the comment section on its official account on Twitter.
Football Index Quickly Rose in Popularity among British Punters
At the time when Football Index made the announcement and revealed that it had reduced dividends, many customers of the betting platform shared they were frustrated by the fact that they seemed highly unlikely to be able to recover the amount lost because of the reduction.
The day following the announcement about the reduction in dividends saw the company’s shares experience a sharp decline. As mentioned above, this happened only days after Football Index sold 15,000 new shares in the top eight footballers on its platform. At the time, the move was considered as an action taken by the gambling operator to improve the liquidity of the company. The overall number of new shares that were issued on the betting exchange website was almost 300,000.
Football Index, also known as BetIndex, started offering its services in the country in 2015 under a licence granted by the UK Gambling Commission (UKGC) and became extremely popular in the country because of the unique betting options it provided to UK customers. The operator allowed punters to buy and trade shares in professional football players, for which they were given dividends. The service was considered a one-of-a-kind alternative to traditional betting on football offered by many sportsbooks across the country.
Furthermore, the online gambling brand has been having a pretty aggressive advertising campaign and could be seen literally everywhere – from public transport to TV advertisements. Reportedly, the marketing approach followed by Football Index helped the company grow its customer base to about 500,000 users.
Still, the online gambling operator faced some criticism for its business model that some described as unsustainable to such a point that it could have brought extremely negative effects on the country’s entire gambling sector.
UKGC Faces Criticism for Doing Nothing after Reports of Fraudulent Investment Product
Following the collapse of the online gambling operator in March, a couple of Ministers criticised the country’s gambling industry watchdog for failing all users of Football Index. At the time, they described the case as the most serious disaster that has affected British punters so far.
After the company entered administration, the UK Gambling Commission suspended its operating licence in the country, leaving hundreds of punters with their money trapped in BetIndex’s platform. This, however, was not the reason why the gambling industry regulatory body faced criticism from some Members of Parliament.
As it was reported at the time, in January 2020, the UKGC was warned that the gambling operator was a fraudulent pyramid scheme that has been running its services masked as a football stock market. The Commission was then called to take immediate action into the gambling platform’s operations to gather more evidence and make sure the company’s users were protected.
The report received by the UKGC suggested that the online gambling company had been offering its customers an imitation of an investment product misleading people into believing they had been making an investment rather than actually gambling. Some critics have gone further, saying that the Gambling Commission should have never provided the company with an operating licence, considering BetIndex’s complex structure and the possibility of the shares losing their value.
Later in March, the UK gambling regulator revealed that it started a formal review into the operations of Football Index under section 116 of the Gambling Act on May 20th, 2020. However, the watchdog defended itself, saying that, at this stage of the investigation there was no evidence for it to suspend the operating licence of the company. The UKGC also said that expertise from an independent expert was appointed not only in the business model of the gambling company but also in its finances and some other legal issues.
Hundreds of Users Consider Starting a Legal Action Against BetIndex
At the beginning of April, it became clear that hundreds of punters were considering starting legal action against BetIndex following the company’s recent collapse.
The anti-gambling group Clean Up Gambling revealed that it was working in partnership with Leigh Day law firm and the customer group FI Group Action to investigate potential legal claims of some people who spent money on the gambling operator’s platform. At the time, over 7,000 people had said they would like to participate in such an investigation.
About a week later, Leigh Day confirmed that a total of 336 Scottish people have signed up with the law firm because they could start legal action against the online gambling company. Even though the consideration and investigation process has been in its early stages, the law firm shared it has already spoken with hundreds of people who had made an investment in the company, and respectively, lost their money.
UK Government Rolls Out Independent Review of Football Index’s Business Model
Most recently, the UK Government announced that it is to roll out an independent review into Football Index following the company’s collapse.
Shortly after the online gambling operator went into administration and the Gambling Commission decided to suspend its operating licence, a group of peers and Members of Parliament addressed Prime Minister Boris Johnson and urged him to roll out a public inquiry into the operator.
A few days ago, some Ministers shared that an independent expert is to be appointed to lead the review into the circumstances that resulted in the collapse of BetIndex, including the decisions and actions of the country’s gambling regulator. The review is set to be held separately from the ongoing investigation that the UKGC started in the operator.
The independent review was welcomed by the UK gambling industry trade body – the Betting and Gaming Council (BGC) – that ceased the membership of Football Index after the company’s licence was suspended by the UKGC. A spokesperson of the organisation said they had been concerned about reports that the regulatory body did nothing at the beginning of 2020 when it had been made aware of some issues associated with the business model of the company. The trade body explained that consumer welfare should remain the top priority of the gambling sector and all operators learn their lessons for the future.
The UK Government shared that the findings of the newly unveiled independent review would be made public in the summer of 2021. Furthermore, the results of the probe would form part of the evidence gathered during the wider-scale review of the country’s 2005 Gambling Act.