Pressure is mounting on the UK Gambling Commission (UKGC) to explain the fallout of Football Index – the football player trading platform which entered insolvency proceedings last week citing that it could no longer maintain its business due to liquidity issues.
John Whittingdale, DCMS’ new undersecretary overseeing UK gambling laws, is reported to have held ‘frank discussions’ with the Commission’s leadership ranks on Football Index’s fallout – which garnered widespread media coverage as disgruntled traders took to social media detailing the loss of thousands of pounds due to the exchange’s price collapse.
Whittingdale’s intervention follows the sudden resignation of Neil McArthur as the Commission’s Chief Executive, with the UKGC announcing his departure to stakeholders yesterday afternoon.
Thus far, the Commission has only suspended the licence of ‘BetIndex Limited’, the operating company of Football Index, issuing a short statement relaying that ‘Football Index may not be suitable to carry on with licensed activities’.
Meanwhile, the All-Party Parliamentary Group for Gambling Harm (APPG) stated that Football Index’s collapse demonstrated why the UKGC was in need of wholesale reforms with regards to its oversight of gambling operators and how it checks the suitability of licensees.
Concerns have been drawn as to why the UKGC would approve a sports betting licence for a brand marketing itself as a trading exchange platform, maintaining no traditional sports betting services.
In 2019, advertising watchdog ASA reprimanded BetIndex for publishing a series of promotional videos judged to have promoted Football Index as a ‘reliable source of income’ without explaining financial risks to the consumer.
Though marketed as a trading platform, at no point was Football Index approved by the Financial Conduct Authority (FCA) which meant that its player prices were simply bets, that could not be protected as shares commodities.
Football Index’s collapse has been branded as the UKGC’s biggest governance failure, as DCMS moves to review the Commission’s regulatory structure and operational frameworks as part of its ongoing review of the 2005 Gambling Act.
Last year, a review conducted by the National Audit Office (NAO) underlined that in many instances the Commission was ‘simply outpaced and outgunned by betting companies’.
The NAO recommended a significant increase in the UKGC annual budget, stating that the agency was significantly undermining the task of regulating an £11 billion sector with a budget of £20 million.