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In March of 2021, the Football Index, a gambling website that touted itself as a “stock market” for football, experienced a crash in its share prices. This ultimately led to the website going into administration and leaving at least £100 million of customers’ money trapped in open bets. Sadly, many users suffered significant financial losses, with some losing sums in the five- and six-figure range. The strain of these losses even caused some relationships and families to fall apart. This collapse remains the most expensive and remarkable downfall in the history of Britain’s gambling industry.
After some time had passed, information arose about disarray, breakdown and ineptitude at Football Index, going back to when it first started in 2015. It was clear that the platform had been creating and selling new assets just prior to its downfall.
It was evident that the Gambling Commission, responsible for overseeing and authorizing Football Index as a form of betting, was also under scrutiny because it had been notified 14 months prior to Football Index’s collapse that the platform was a highly risky pyramid scheme. The warning stated that “thousands of users” had been deceived into thinking they were investing instead of gambling, without fully understanding that their entire investment was in jeopardy.
Unfortunately, the story eventually lost attention. After Malcolm Sheehan KC, an expert in product liability and group actions, conducted a review of the case, both the Gambling Commission and the Financial Conduct Authority -which oversees financial products- were criticized. However, the review did not address the main concern for FI’s previous customers: when or if they would receive their funds back.
After three years, a few dedicated people who were determined not to give up have been tirelessly working to seek some form of fairness – and resolution – for the struggles and pain endured during FI’s downfall.
Finally, there are indications that progress is being made. Members of the all-party parliamentary group on gambling related harm will be receiving testimonies on the controversy next month, while a complaint against the FCA’s behavior is slowly making its way through the process with the Financial Regulators Complaints Commissioner.
“It took some time for interest in our cause to pick up, but that’s because it deals with complex technicalities,” says David Hammel, the primary representative of the Football Index Action Group. “When I met with my MP to discuss the issue, he remarked, ‘It’s not the most thrilling topic, is it?’ I replied, ‘I apologize that a mere £104k, my net investment in a regulated Ponzi scheme, isn’t captivating enough for you.’ We both laughed and had a good conversation from then on.”
Many members of the [FI] community fail to comprehend why it isn’t making headlines and being considered the most significant scandal. However, in a time of numerous scandals, it can be challenging to attract attention in the media.
The argument put forward by the campaigners is that they were subject to a significant lack of oversight, resulting in Football Index operating under the guise of a regulated football betting site by the Gambling Commission. In reality, however, it functioned as a trading platform for high-risk derivatives, similar to high-risk spread-betting, which should have been regulated by the FCA.
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They claim that Football Index’s marketing strategies, such as advertising on popular television channels and displaying share-price updates during Premier League games, promote it as an “investment” opportunity instead of a gambling site. The only indication on its website that it is a betting platform is a small tagline, which was only added after pressure from the Advertising Standards Authority, years after the site’s creation.
Despite the attractive marketing and celebrity endorsements, there were deep-rooted issues in the business structure that resembled a pyramid scheme. These problems were rapidly escalating and getting out of hand. While the Financial Conduct Authority’s regulations did offer a way to recover losses through the Financial Services Compensation Scheme, the oversight of the Gambling Commission was not as strict and left a large portion of the funds in Football Index vulnerable and unprotected.
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Some may find it uncomfortable to label those who suffered financial losses on Football Index as “victims”. Unlike the post office employees caught up in the Horizon scandal, these individuals willingly created accounts and checked a box agreeing to the website’s terms and conditions, although many did not actually read them. However, consumers also have rights, such as the right to seek compensation for a product that was falsely advertised. Additionally, customers in regulated industries like gambling have the right to expect thorough and effective regulation.
The Sheehan report revealed that the Gambling Commission had conducted meetings in February and March of 2020, a full year before Football Index met its downfall, to discuss concerns that the site was operating as a pyramid scheme and was heading towards an inevitable collapse. Despite these concerns, the Commission ultimately determined that there was not enough evidence to prove fraud, as it was evident that existing customers were not solely profiting from new customers joining the scheme.
One year later, the warning from January 2020 turned out to be accurate. The commission not only failed to recognize the potential danger, but also approved and allowed the hazard to continue. The speaker, Hammel, states that they do not blame the government or DCMS, but rather the regulatory group.
The authorities do not impose any financial burden on the taxpayer as they are supported by license fees and also generate revenue for the Treasury through fines and settlements. Since Football Index received its first license in 2015, there has been a surplus of nearly £1.3-1.4 billion that has been added to the government’s funds. We are seeking only 10% of that amount as compensation, which we believe is a fair deal for the taxpayer.
This goal is very ambitious, to say the least. Even though three years have passed since its failure, the feeling of unfair treatment among the victims of Football Index still burns strongly, and we are not likely to stop hearing about it until justice is served.
Source: theguardian.com
