The UK government has announced the launch of an independent inquiry into the collapse of Football Index which took place last month.
This comes after groups such as the All-Party Parliamentary Group for Gambling Related Harm (APPG) called for a review on the collapse of the betting platform.
Earlier this month, Begbies Traynor, the insolvency practitioner of Football Index operator BetIndex, began processing customer claims against the company
The government inquiry
Minister for Gambling and Lotteries John Whittingdale, who recently took over the review of the 2005 Gambling Act, made the announcement yesterday.
The inquiry will look at how the betting platform collapsed and the lessons that can be learned from its collapse. It will also look at the role, decision, and actions of the Gambling Commission in relation to the collapse of the betting platform.
In March, a report from the Guardian revealed that the UK regulatory body had been warned about Football Index in 2020.
According to the announcement, the period under review is between September 2015 and 11 March 2021, which is when the Gambling Commission suspended BetIndex’s licence after concerns over customer funds. BetIndex is the parent company of Football Index.
The findings of the review will be published in the summer and be used to help inform the Department for Digital, Culture, Media and Sport’s (DCMS) review of the Gambling Act.
In a statement, Whittingdale said: “We know how difficult it has been for people affected by the collapse of Football Index with some losing significant sums of money. We are setting up an independent inquiry so that we can find out how this happened.
“We are determined to ensure that regulators have the right tools to protect customers and to deal with novel products. The gambling landscape is evolving rapidly and so we are also taking action by reviewing the Gambling Act to make sure our laws are fit for the digital age.”
The government will appoint an independent expert to lead the review and specific terms of the review will be announced soon.
Gambling Commission’s investigation to continue
The Gambling Commission’s own investigation into the collapse of the betting firm will continue as planned.
The regulator said it hoped to shine a spotlight on products that blur the lines between gambling financial products.
A Commission spokesperson said: “We strongly welcome the Government’s independent review into the regulation of Football Index and the focus it will bring on the way that those complex products, which to consumers can have the appearance of both gambling and financial characteristics, are currently regulated.
“Alongside other regulators, we look forward to fully engaging with the review.”
What happened to Football Index?
On 12 March the betting platform Football Index announced it would enter administration following a mass player exodus the same week.
The exodus was sparked by a new policy that involved an 80% reduction in dividends paid for each player transaction made on the platform. This led to a significant drop in asset value (player price) and in turn lowered the returns for customers.
Some users reportedly lost tens and in some cases hundreds of thousands of pounds. One bettor claimed to have lost £250,000 due to the company’s decision.
When Football Index took its platform down it did so with the intention of restructuring and relaunching at a later date. However, the Gambling Commission suspended BetIndex’s licence on the same day.
BGC welcomes the inquiry
The inquiry into Football Index has been welcomed by the Betting and Gaming Council (BGC), of which Football Index was a member. When the operator went into administration the BGC suspended its membership.
A spokesperson for the Betting and Gaming Council said: “We strongly welcome this independent review of the regulation of Football Index, up to the point where its operator’s licence was suspended in March.
“Following the suspension of BetIndex Ltd’s operating licence by the Gambling Commission last month, we immediately suspended their membership of the BGC.
“We have been concerned about reports that the Gambling Commission was made aware of issues surrounding Football Index’s business model as early as the start of 2020, something the BGC was not made aware of at the time.
“The top priority remains consumer welfare and we hope that the inquiry leads to vital lessons being learned for the future.”