Gambling Commission comments on Football Index investigation22nd March 2021 11:22 am GMT
Britain’s Gambling Commission has provided background information into its recent regulatory action against BetIndex’s Football Index.
The regulator suspended the operator’s UK licence earlier this month after initiating a formal review into the licensee under section 116 of the Gambling Act in May 2020.
The focus of the review was to address issues in relation to the betting aspect of the Football Index product, which allows customers or ‘traders’ to place bets on the future performance of footballers. A bet lasts for three years and accrues dividends.
After three years the bet expires, meaning that customers lose their stake and any right to further dividends. The product evolved to enable customers to buy and sell bets with prices fluctuating according to demand.
During the course of the review, the Commission utilised betting specialist expertise, a forensic financial accountant and specialist external QC to examine the business model, the finances of the company, and the complex legal questions over the appropriate regulatory framework.
In early March, BetIndex advised of plans to self suspend with a view to restructuring and relaunching.
“Our concerns as to the timings of this and the position regarding customer funds led us to suspend the licence on 11 March 2021,” said the Commission, which acted in tandem with the Jersey regulator, where BetIndex also holds a licence.
“We know from experience that the suspension of a license can, of itself, trigger or hasten the financial decline of an operator and put customer funds at risk,” the Commission added. “That is why we will always consider whether there are steps short of suspension that can still deliver the right regulatory outcomes and address the risks that consumers face without accelerating the financial collapse of a business.
“We will therefore only turn to suspension when that is the only option for delivering the right regulatory outcome and, indeed, the legislation requires us to exercise those powers in that way. We were satisfied that on 11 March suspension was the only regulatory option left available to us.”
The British regulator noted that BetIndex has a Trust Account intended to hold dividends to be paid to winning customers, and has been assured by the operator’s solicitors that BetIndex has suspended payments from this account while customers’ entitlements are calculated and pending an application to the Court for directions.
“The assurance the Commission has is that the funds in the Trust Account will not be distributed to any creditor other than customers,” said the regulator. “However, its ability to distribute immediately to customers, and if so which customers, is likely to be subject to the directions of the Court rather than the Commission.”
Law firm Leigh Day is investigating claims on behalf of Football Index ‘traders’ who believe they have been misled by the platform and have lost large sums of money as a result of the company’s actions.