The UK Gambling Commission (UKGC) has released more detail on its inquiry and licence suspension of BetIndex – the managing firm of the under administration Football Index –on Friday in response to public concerns.
According to the Commission, formal licence review hearings started on May 20, 2020, in response to complaints about the company.
Initial review proceedings
The UKGC employed a betting consultant experience, a Forensic Financial accountant, and a specialist external QC to investigate Football Index’s specific business model during the initial review proceedings, which concentrated on “issues in relation to the betting aspect of the product.”
The Commission states that BetIndex has been under investigation for the bulk of 2020 trading, but that in March, the company’s management was “advised of plans to self-suspend with a view to restructure and relaunch.”
Suspension of licence
In response to BetIndex’s notice, the Commission acted to revoke the company’s licence on March 11, 2021, in coordination with Jersey’s gaming regulator.
The commission statement read: “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.
“We were satisfied that on 11 March suspension was the only regulatory option left available to us.”
The UKGC was made aware of Football Index operational problems over a year earlier, when investors had branded the football trading site as a “Ponzi scheme.”
MPs have expressed their dissatisfaction with the UKGC’s acceptance of Football Index’s betting licence despite the fact that the business advertised itself as a financial trading site, necessitating FCA approval.
The UKGC released the following statement about BetIndex’s licencing history: “The product evolved to enable customers to buy and sell bets with prices fluctuating according to demand. We have identified that the product contains elements that are betting in nature, and therefore regulated by us as gambling, as well as elements are not considered gambling and therefore not subject to our regulatory remit.”
The Commission reported that BetIndex had a “Trust Account to hold dividends to be paid to winning customers’ in relation to its continuing administration.
The Commission has been told by Betindex solicitors that funds in the account will not be “distributed to any creditor other than customers” – where interest entitlements are actually being measured.
Court to decide BetIndex insolvency cases
The court’s course will govern the final result of the BetIndex insolvency cases, and the UKGC will have little effect on the court’s decisions.
Leigh Day Solicitors, a London law company, revealed that it had started a review of the UKGC’s Football Index policies, with the goal of defending clients who had been “failed by the Gambling Commission.”
The fallout from Football Index has been far-reaching, putting the government’s reform of the 2005 Gambling Act under much closer pressure, as anti-gambling activists advocate wholesale reforms to how the sector is legalised and regulated.
Following the scandalous crash of Football Index, the All-Party Parliamentary Group for Gambling Related Harm (GRH APPG) recommended that the department take charge of the UKGC duties in a letter to DCMS secretary Oliver Dowden.
Carolyn Hariss, chair of the AAPG, stated: “This can only be termed a scandal. It underlines the need for wholesale reform of the gambling industry and raises significant questions of the Gambling Commission, given they saw fit to licence this platform and failed to enact adequate oversight.”