UK Gambling Commission Suspension of licence - BetIndex Limited

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Information notice: Suspension of licence - BetIndex Limited

12 March 2021

The Gambling Commission has decided to suspend the operating licence of BetIndex Limited (t/a Football Index) pursuant to section 118(2) of the Gambling Act 2005.

The suspension follows an ongoing section 116 review into the operator, as we had concerns activities may have been carried on in purported reliance on the licence, but not in accordance with a condition of the licence, and that Football Index may not be suitable to carry on with licensed activities.

We have made it clear to the operator that as the investigation progresses, we expect it to focus on treating consumers fairly and keeping them fully informed of any developments which impact them.

Football Index can be contacted via their website and as part of our review we continue to work closely with colleagues from the Jersey Gambling Commission.

The Gambling Commission will not comment any further whilst this investigation is ongoing.

https://beta.gamblingcommission.gov.uk/news/article/information-notice-suspension-of-licence-betindex-limited

https://www.gamblingcommission.gov.uk/home.aspx

The UK Gambling Commission, the public body which regulates the country's gambling industry, has suspended the licence of Football Index, a "virtual stockmarket" which has come under increasing fire after a week of chaos.

The company had become ubiquitous in the world of football with adverts on podcasts, TV and even on QPR and Nottingham Forest shirts. It offers trading on “shares” in virtual footballers, with the prospect of making money if players rise in value or earn “dividends”.

Last week the company announced big changes which meant the share price crashed, meaning users lost big sums of money, some in the tens of thousands.

It is now in administration and its operating licence is suspended.

The Athletic published a lengthy account this week on the struggles of the company likened to a ‘Ponzi scheme’.

What has just happened?

On Friday morning the Gambling Commission put out a press release announcing its decision to suspend the operating licence of BetIndex Ltd, the Jersey-based company which holds the licence for Football Index.

This decision was made with reference to the 2005 Gambling Act which regulates the industry. A government review is currently looking at updating the country’s laws, which critics say are not up to speed with the digital age.

The release says the commission “had concerns activities may have been carried on in purported reliance on the licence, but not in accordance with a condition of the licence, and that Football Index may not be suitable to carry on with licensed activities.”

What else does the Gambling Commission say?

“We have made it clear to the operator that as the investigation progresses, we expect it to focus on treating consumers fairly and keeping them fully informed of any developments which impact them.

“Football Index can be contacted via their website and as part of our review we continue to work closely with colleagues from the Jersey Gambling Commission.

“The Gambling Commission will not comment any further whilst this investigation is ongoing.”

What happened last night?

The company announced that it was entering administration, “consulted with external legal and financial advisors, and the UK and Jersey Gambling Commissions. The decision has been made to suspend the platform”.

The statement acknowledged that the dividend changes have “not been well received” and so the company is pursuing a “restructuring”.

As part of this process, the site’s trading platform will be suspended and no trading, deposits or withdrawals will be possible.

The suspension of withdrawals is of huge concern to users who have thousands of pounds trapped in the platform.

As users’ portfolios crashed, many had been weighing up whether to pull their money out at a huge loss, or to hang on and hope the market improves.

This announcement has made the decision for them in the short term. It clearly stated that no withdrawals will be possible until further notice.

What does Football Index say?

The statement added: “We are pursuing a restructuring arrangement to be agreed with our stakeholders including, most importantly, our community. We are preparing this through an administration with insolvency practitioners Begbies Traynor, to seek the best outcome for customers with the goal of continuing the platform in a restructured form.

“The restructure could involve equity in BetIndex Limited being distributed to customers, board representation for customers, and a new management team put in place, along with other initiatives.”

What has gone wrong?

Many UK consumers have lost vast sums of money in what was frequently marketed as an investment product, and a virtual stock market, rather than a conventional gambling product.

Damning evidence has emerged in recent days of the company’s leadership saying the product had a “guaranteed yield” and even encouraging fans to take on credit card debt to put into the site.

The company also gave repeated assurances about its financial health, before giving wildly contradictory statements about long-running difficulties in recent days. It is unclear when the company realised things were going so badly wrong, and if it was honest about it, with users and investors.

The Athletic has spoken to numerous users who have lost vast sums of money, leading to financial and mental distress.

The UK Gambling Commission, and Department for Culture, Media and Sport, also has very serious questions to answer about why the product was licenced in the first place, and why it did not respond earlier to complaints from users.

Many are also pointing the finger at the world of football, which carried Football Index ads so prominently for so long. They were ubiquitous on TalkSPORT and Sky Sports, and even on black cabs and the London Underground. (The Athletic has sponsored the Football Index Guide podcast since February 2020, which had an “affiliate link” with Football Index until last week, while adverts for the company have appeared on The Totally Football Show, too.)

QPR and Nottingham Forest have not yet announced any change to their shirt sponsorships. They play each other on April 5th, in a fixture that Football Index billed as the “Index Classico” back in September.

What will happen next?

Football Index users are desperate to find out whether the administration proceedings may be able to put the company on a surer short term footing so they can recover their (massively devalued) deposits.

The upcoming gambling review will also surely take a close look at this sorry saga, which does not reflect well on the government or the regulator.

https://theathletic.com/news/football-index-gambling-commission/nFg9X2Tsq6dg