Stricken Soccer Platform License Suspended
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Posted on: March 12, 2021, 08:03h.
Last updated on: March 12, 2021, 10:06h.
Football Index announced Thursday it will enter into administration, as the UK Gambling Commission (UKGC) pulled the license of its parent company, Bet Index.
The platform billed itself as a combination of fantasy sports and the stock market. But last week, it suffered a market crash when it announced a cut to dividends for users “in order to ensure the long-term sustainability of the platform.”
The announcement caused a stampede of panic selling, leading share prices to plunge and, ultimately, the suspension of the platform. Users lost vast sums of money overnight. Now, they remain in limbo, uncertain whether they will ever be able to withdraw their suddenly diminished balances.
Ponzi Scheme Accusations
Because of its high profile, at least in the UK, the collapse of the Football Index could be one of the biggest online gambling scandals since Black Friday and the implosion of Full Tilt Poker. Some users are now questioning whether its demise was inevitable, likening the platform to a Ponzi or pyramid scheme.
Football Index invited its users to buy and sell “shares” in soccer players, in the same way you might buy shares in a company. These would rise and fall in value based on a player’s performance over time, or increase or decrease in actual monetary value in the real-world transfer market.
The platform had extensive advertising visibility in and around soccer, including on the jerseys of EFL Championship teams Queens Park Rangers and Nottingham Forest.
Football Index continually reassured users about its financial health, especially during the pandemic. The company also claimed to be less risky and more “responsible” than traditional betting companies.
‘Seeking Restructuring’
On Thursday, it assured users that what’s left of their balances would be held in a segregated account, but that withdrawals would be suspended until administrators were in office.
“The dividend restructure announced on Friday was a necessary step in a business recovery plan to seek the long-term sustainability of the platform,” the company said on its landing page. “However, it is clear that this has not been well- received, and we need to find a more agreeable way forward.
“We are pursuing a restructuring arrangement to be agreed with our stakeholders, including, most importantly, our community,” it continued. “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 UKGC said it had suspended Bet Index’s gambling license pending an investigation into the company. However, questions are already being asked as to whether Football Index should ever have been licensed at all.
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