The temporary Chief Executive of the UK Gambling Commission (UKGC), Andrew Rhodes, has released a video reaction to the independent review of Football Index’s demise.
The Commission has developed new standards in how it examines the risks of novel products recommended by the review, as well as a stronger working connection with the Financial Conduct Authority, as reported last week (FCA).
The UKGC noted that it is confronted with numerous issues, and Rhodes wanted to share the commission’s perspective on the review’s findings.
“The Independent Report concluded that the Commission did take a lot of steps in relation to Football Index, to try and bring the product into regulatory compliance, and to try and protect its customers,” he said.
Rhodes, on the other hand, concurred with the ruling that the “Commission ultimately took too long in reaching a final decision” to pursue regulatory action against Bet Index, the business that manages Football Index.
In response to inquiries about why the UKGC licenced Football Index, Rhodes stated that the corporation had modified the product for which it was initially licenced.
Rhodes added: “The product that we licensed was one where customers could place a bet on the future of a football player and be paid a dividend, based on the performance of the player. Those dividends might reach the value of the original bet, but they may not.
“We did not licence the product for the sale of bets, known as shares between users. Once it became clear that Football Index was not operating according to its original licence, the Gambling Commission faced difficult choices in its regulatory approach.”
Complexities of regulatory enforcement
The complexities of pursuing regulatory enforcement against Football Index, according to Rhodes, are highlighted by the fact that the company would have collapsed instantly if the Commission had ordered its licence to be suspended, putting player balances, funds, and open bets at risk of being terminated.
Despite the fact that Football Index’s offering had changed, the UKGC’s compliance teams noted that the company had continued to fulfil its LCCP obligations by safeguarding account balances and paying dividends until the “last minute.”
Rhodes continued: “Although Football Index got into serious financial difficulties, it did meet its liabilities and ensure that cash balances were protected. Though we recognise that isn’t where most customers had their funds.”
In terms of player compensation and loss recovery, Rhodes stated that the Commission had no obligation to cover original stakes.
“I’m afraid the answer is no. Gambling products do not have the same protections as financial services products do,” he said. “Many industries offer a mandatory or voluntary compensation scheme that provides some protection to customers in the event of a company collapse.
“Gambling is not regulated that way, it’s regulated as a leisure activity, it is one of the reasons we recommend that no one bets with more that they can afford.”