MPs from the All-Party Parliamentary Group for Gambling Related Harm (GRH APPG) have directed further criticism at the UK Gambling Commission (UKGC) regarding the collapse of betting exchange Football Index.
Writing a letter to Culture Secretary Oliver Dowden, the group of legislators described the demise of the operator and the losses its customers suffered as a ‘scandal,’ and have cited the case as further evidence of the need for greater gambling reform focused on regulatory and licensee duties.
As reported by the BBC, GRH AAPG Chair Carolyn Harys 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.”
Taking over as DCMS’ new undersecretary charged with overseeing the review of the 2005 Gambling Act, John Whittingdale is reported to have held ‘frank discussions’ with the Commission’s leadership regarding the Football Index’s situation.
Whittingdale’s intervention came shortly after the sudden resignation of Neil McArthur, the former CEO of the UKGC, who had held the position for over 15 years.
Football Index’s collapse was primarily the result of an ‘exodus’ of both players and investors, after the operator made the decision to reduce dividends on footballers from 14p to 3p, resulting in countless customers losing thousands – in some cases hundreds of thousands – of pounds in share investments.
BetIndex, the operator behind Football Index, subsequently suspended all trades on its platform and entered administration, whilst its gaming license was suspended by the UKGC, in a move criticised as being far too late. The firm’s membership of the Betting and Gaming Council (BGC) was also suspended by the standards organisation.
Marketing Football Index as a trading platform, BetIndex has faced prior criticism from the Advertising Standards Agency (ASA), as it was not recognised by the Financial Conduct Authority (FCA).
Despite its own financial and regulatory troubles, BetIndex remains hopeful that the brand could ‘be recused as a going concern,’ stating: “Our priority is to safeguard the interests of our customers and to seek the best outcome for our community with the goal of continuing the platform in a restructured form.”
In addition to the parliamentary response, a group of bettors affected by the downfall of Football Index have also begun to prepare for legal action, enlisting law firm Leigh Day.
“Football Index ended up in a situation where they needed new customers to honour the dividend payments to existing users,” remarked Matt Zarib-Cousin, a member of the Clean Up Gambling campaign and a former spokesperson to Jeremy Corbyn, who is cooperating with Leigh Day and Football Index traders.
“It was a business run in an entirely unsustainable way, which people do not expect of a licensed operator in a regulated sector. The Gambling Commission has been asleep at the wheel.”
According to Leigh Day partner Nicola Marshal, scrutiny of the UKGC will take a central role in the firm’s legal challenge on behalf of Football Index customers, many of whom lost thousands due to the dividend drop.
“Whilst it is very early days in our investigations on behalf of the thousands of people who have lost money, there are serious questions which will need answering regarding what has happened at Football Index and what the Gambling Commission understood of Football Index’s activities,” Marshal commented.
The situation appears to mirror the collapse of Addison Global’s MoPlay in February of last year, which also saw its operator licence suspended, halting customer withdrawals as a result.
The Commission’s regulatory oversight of MoPlay’s licence suspension and insolvency proceedings would be criticised, as Addison Global the operating company was allowed to MoPlay’s player database to competitors, in breach of consumer right protections.
However, in stark contrast to the situation regarding MoPlay and other licensee fallouts, the UKGC has borne the brunt of criticism from various observers, including legislators, reform advocates and customers on social media.