MPs call for inquiry into Football Index ‘scandal’
The platform went into administration this week, preventing users from being able to withdraw money from their accounts.
The site allowed users to buy ‘shares’ in individual players. The supposed value of a player rose or fell based on a host of different metrics, including their performance on the pitch and the number of articles written about them.
The All Party Parliamentary Group for Gambling Related Harm has now written to Oliver Dowden, the culture secretary, to call for an inquiry into what happened. The group estimated that users of the site had lost an average of £3,000 each as a result of its closure, with chair Carolyn Harris declaring the situation “a scandal”.
She called for the affair to lead to wholesale reform of the gambling industry.
What went wrong?
Crucially, while Football Index presented itself as an investment platform ‒ using typical investment terminology like shares and dividends ‒ it wasn’t regulated by the Financial Conduct Authority, the main financial regulator.
Instead it was overseen by the UK and Jersey Gambling Commissions, and that’s what has led to its administration.
The commissions both ordered its parent firm, BetIndex, to suspend activity.
What happens next?
In an update published on its website, Football Index said that it was working with administrators Begbies Traynor to put together a restructuring arrangement, in the hopes of “continuing the platform in a restructured form”.
It said that this restructure could involve equity in BetIndex being handed out to users, board representation for users, a new management team being installed, and other initiatives. However, further details will only be available once the administrators are formally appointed.
According to reports in the Guardian, Oakvale Capital ‒ a financial advisory group which specialises in the gambling markets ‒ has been brought in to help the business find a buyer.
Meanwhile law firm Leigh Day has said that it is working with the Clean Up Gambling campaign group to investigate whether users of the site can pursue legal action.
Nichola Marshall, partner at the firm, said that serious questions needed answering about what happened at Football Index.
She added: “The suspension of the platform came after Football Index announced much lower dividends were to be introduced in April 2021, effectively changing the terms and conditions of the product overnight, devaluing the original bet and causing the resulting crash which has led some commentators to compare it to a Ponzi type scheme.”