The Gambling Commission of Great Britain has revealed that stricken operator Football Index had been under review for almost a year, though it originally saw no grounds to suspend its licence.
The Commission said it commenced a review into Football Index parent BetIndex on 20 May, 2020, as a result of concerns about the business.
This review saw an accountant and barrister look into BetIndex’s finances as well as the “complex legal questions over the appropriate regulatory framework”.
However, it said there was no grounds to suspend its licence at this time. It pointed out that the move could have worsened the business’ financial plight, and in turn put more customer funds at risk.
“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,” the Commission explained.
“That is why we will always consider whether there are steps short of suspension that can still deliver the right regulatory outcomes and address the risks that consumers face without accelerating the financial collapse of a business.”
However, after Football Index said it would take its platform offline to restructure and relaunch the business, the regulator ultimately took the step of suspending its licence.
This came in the wake of the operator making significant changes to its payout system, claiming that its previous dividend structure was unsustainable.
The Commission said it only turns to suspension as a last resort, as outlined by British legislation.
“We were satisfied that on 11 March suspension was the only regulatory option left available to us.”
It added that it has also received assurances that player funds won’t be used to pay other debts, though it pointed out that courts may have a final say in this area. There have been widespread concerns that customers may lose money held in their Football Index accounts.
This has prompted Leigh Day Solicitors to announce that it is considering representing these customers in a group claim against the operator. This action is being supported by gambling reform campaign group Clean Up Gambling.
Leigh Day said these players had been “misled by the platform and failed by the Gambling Commission”.
However, the Commission said that BetIndex holds customer winnings in a trust account. It has been given assurances by the operator’s solicitors that payments have been suspended to allow customers’ entitlements to be calculated.
It did add that the courts would have final say over how BetIndex funds are distributed and so these assurances may not be guarantees.
“The assurance the Commission has is that the funds in the trust account will not be distributed to any creditor other than customers,” it explained. “However, its ability to distribute immediately to customers, and if so which customers, is likely to be subject to the directions of the court rather than the Commission.”
While player account funds are held in the trust account, Football Index’s terms and conditions said that funds invested in players on the platform have no such protection, as these were considered sums at risk.
Earlier this week, Neil McArthur stepped down as chief executive of the Commission, with immediate effect. A Commission spokesperson told iGB his decision to leave was not related to Football Index.
