Following public concerns, the UK Gambling Commission (UKGC) has this afternoon published further information on its investigation and licence suspension of BetIndex – the operating company of under administration Football Index.
The Commission states that its formal license review proceedings began on 20 May 2020, following concerns about the business.
Initial review proceedings focused on ‘issues in relation to the betting aspect of the product’ for which the UKGC hired a betting specialist expertise, a Forensic Financial accountant and specialist external QC to examine Football Index’s unique business model.
The Commission underlines that BetIndex had been under review for the majority of 2020 trading – however, this March company management ‘advised of plans to self-suspend with a view to restructure and relaunch’.
Acting on BetIndex’s notice, the Commission moved to suspend the firm’s licence on 11 March 2021 – acting in tandem with Jersey’s gambling regulator.
“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,” the commission read.
“We were satisfied that on 11 March suspension was the only regulatory option left available to us.”
Under the media spotlight, this morning The Guardian reported that the UKGC was made aware of Football Index operating difficulties over a year ago, as customers had branded the football trading platform as a ‘Ponzi scheme‘.
MP concerns have been raised as to why the UKGC approved Football Index’s betting licence as a company that marketed itself as a financial trading platform, requiring FCA approval.
Providing a statement on the licensing background of BetIndex, the UKGC stated: “The product evolved to enable customers to buy and sell bets with prices fluctuating according to demand. We have identified that the product contains elements that are betting in nature, and therefore regulated by us as gambling, as well as elements are not considered gambling and therefore not subject to our regulatory remit.”
With regards to BetIndex’s ongoing administration, the Commission stated the company held a ‘Trust Account intended to hold dividends to be paid to winning customers’.
Betindex solicitors have assured the Commission that funds in the account will not be ‘distributed to any creditor other than customers’ – in which entitlements are currently being calculated with regards to compensation.
Final outcomes on BetIndex insolvency proceedings will be governed by the direction of the court, for which the UKGC holds no influence in its decisions.
London law firm Leigh Day Solicitors stated that it had begun a review of UKGC’s procedures related to Football Index, considering whether to represent affected customers ‘failed by the Gambling Commission’.
The fall-out of Football Index has been far-reaching, placing the government’s review of the 2005 Gambling Act under further scrutiny, as anti-gambling campaigners demand wholesale changes to how the industry is licensed and governed.
Writing to DCMS secretary Oliver Dowden, the All-Party Parliamentary Group for Gambling Related Harm (GRH APPG) demanded that the department take control of the UKGC duties following the scandalous collapse of Football Index.
AAPG Chair Carolyn Haris said: “This can only be termed a scandal. It underlines the need for wholesale reform of the gambling industry and raises significant questions of the Gambling Commission, given they saw fit to licence this platform and failed to enact adequate oversight.”