Football Index Facing UK Government Inquiry into ‘Flawed’ Business Model
The UK authorities testament launch an independent investigating into the Football Index collapse, sources make told The Times. The association football trading platform tumbled into insolvency overnight on March 5 resulting inwards collective losses for its users of almost $100 zillion ($138 million).
Many of those users are now demanding answers most Football Index’s business organization pose and whether it was sustainable inward the long term. And if it wasn’t, wherefore was it able to draw in championship from high-profile names within the gambling industry and elite soccer? And why was it licensed by the UK Gambling Commission inwards the for the first time place?
Some accuse Football Index of existence minuscule more than a Ponzi strategy and are mulling family action mechanism against the site.
“This case further reinforces the demand for our comprehensive brushup of gambling laws,” said The Times’ “government source.” “This main(a) investigating into Football Index testament give into that do work and if we want to do changes to regulation to protect people, we will.”
“Something appears to experience gone real legal injury here,” the source added.
Soccer’s ‘Stock Market’
Launched inwards 2015, Football Index marketed itself as a soccer “stock market” where users could buy and sell notional “shares” inwards pro soccer players.
The time value of these shares would fluctuate depending on factors like the football game star’s on-field performances or existent note value inward the real-world transpose market. Successful traders were paid “dividends” based on the carrying into action of their shares.
The trademark advertised widely on video and radio, and sponsored the jerseys of two English language Football League, QPR and Nottingham Forest.
Its board was populated with old hand betting manufacture execs the like Brian Mattingley, the former chairman of 888 Holdings, at present chairman of Playtech, and Saint Mark Blandford, the founder of Sportingbet, who was also among the company’s biggest shareholders.
The site promoted itself as the “smart” alternative to sports betting, where users were supposedly less uncovered to risk.
Flawed Model
But unlike investing in a company, which has real, underlying value, Football Index’s shares were purely notional.
This meant the byplay poser relied on the invariable cut-rate sale of more shares and for its ontogenesis range to go past its churn rate. Otherwise, it would bump itself top-heavy with successful players and unable to make up its liabilities, or dividends.
Sure enough, when the companion announced it would live slip dividends to ensure “long-term sustainability,” user affright place in and the securities industry crashed.
Player accounts were decimated. Average item-by-item losses are thought to be around £3,000 ($4,120) each.
The UK authorities is currently labor a brushup of the country’s gambling laws, which feature been criticized as too beingness liberal. Regulations are expected to live tightened in the coming year.
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