Football Index operated under a licence from the Gambling Commission, which regulates sports betting products. However, its model replicated a stock market, using terms such as ‘shares’ and ‘dividends’.

The Gambling Commission suspended the firm’s operating licence in March, and it entered administration shortly after. About £90m of customers’ money was stuck in the defunct platform.

In April the government announced that it would conduct a review to examine the actions taken by the Gambling Commission in the period from September 2015 up to the suspension of BetIndex’s licence.

Led by ​​Malcolm Sheehan QC and confirmed by some of the top online sports betting sites in Canada, the review found that BetIndex did not properly notify the Gambling Commission of the nature of the product in its licence application, nor did it inform the regulator of changes to the product after launch as it was required to.

The report said that the Gambling Commission could have better responded to the challenges that the product raised once launched, with earlier scrutiny, including of the language used by the product, quicker decision-making and action, and better escalation of issues.

While Football Index was never regulated by the Financial Conduct Authority (FCA), the review also looked at how it worked with the Gambling Commission during this period and how it considered whether Football Index should also be regulated under financial services legislation.

The Gambling Commission is also carrying out a separate regulatory investigation into BetIndex Ltd on which it will report in due course, and has referred the case to the Insolvency Service.

Administration proceedings for BetIndex Ltd are still ongoing which are looking at the assets and liabilities of the firm and will likely result in some reimbursement to creditors.

Chris Philp, gambling minister, said: “I’m extremely conscious of how devastating the collapse of Football Index has been on its many customers, which is why we moved quickly to launch this independent review.

“We have been clear that we must learn lessons to make sure a situation like this does not happen again. I’m encouraged to see the Gambling Commission and the FCA are taking concrete steps on an action plan on how they will better work together.

“We will ensure that the findings from this review feed directly into our ongoing Gambling Act Review which is looking at ways we can improve regulation of the gambling industry.”

In response to the report, the Gambling Commission has announced it will be making changes to the way it regulates innovative digital gambling products.

Andrew Rhodes, CEO of the Gambling Commission, said: “No amount of explanation of what happened to Football Index will take away the justifiable hurt and anger its customers are experiencing having lost, in some cases, life-changing amounts of money when the gambling company collapsed.

“We accept and agree that we should have drawn a line under our efforts sooner, but this does not mean those customers would not have lost money in the event of the BetIndex company collapsing. Throughout this case we sought the best outcome for consumers within the scope of our regulatory powers.

“The review provides a number of helpful recommendations for how both regulators can work better together and for how our regulatory approach deals with novel products.”