Concerns raised over football trading site operating without a UKGC licence
SportsBroker bears similarities to the defunct Football Index, yet the regulator insists the site doesn’t meet the definition of a gambling firm
SportsBroker, a platform that allows customers to “trade virtual shares that rise and fall based on team performance”, does not hold a UK licence from the Gambling Commission (UKGC) but is still operating in the market.
The platform, which recently extended its commercial partnership with Huddersfield Town, has raised fears among Football Index users given the dramatic collapse of the parent company BetIndex along with customer portfolios worth a total of around £115m.
SportsBroker is adamant its model is “entirely different” to that of Football Index in that the company does not add liquidity to the pool via minting of shares, and that it is a closed loop in which users play against one another.
EGR understands that SportsBroker has held a licence with the Malta Gaming Authority since 2018 and had applied for a UKGC licence, only to be informed it did not meet the definition of a gambling firm and would therefore not require a licence.
EGR also understands SportsBroker applied to the Financial Conduct Authority and was similarly told the platform did not meet the definition of the body’s requirements to be licensed as a financial product.
"SportsBroker is a new real money real time game, a virtual stock market for sports." https://t.co/RvzMBSYg2V pic.twitter.com/UFqfe8RC32
— Joey D'Urso (@josephmdurso) June 27, 2022
Matt Zarb-Cousin, the founder of Clean Up Gambling, said: “The Gambling Commission now has a memorandum of understanding with the Financial Conduct Authority to ensure we don’t get another Football Index situation. SportsBroker is a gambling platform that requires proper oversight from at least one of these regulators.”
Speaking to EGR, a UKGC spokesperson confirmed: “We advised SportsBroker Ltd, at the time the application was made, that the product that they advised us that they were offering did not fall within the Commission’s remit to regulate because it did not provide a product that meets the definition of gambling, in accordance with Section 3 of the Gambling Act 2005.
“If an operator is regulated by us then we require it to display its licensed and regulated status to provide clarity for consumers.”
However, EGR understands SportsBroker holds the ambition to eventually become a licensed gambling product, noting it was the “right direction” for the company to go in, despite several insistences it is not a gambling product on its UK-facing website.
In the company’s terms and conditions, it states: “Sport Brokers UK Ltd is not licensed and regulated and not considered a gambling product. It is a real-time game with virtual shares.”
However, EGR understands the platform follows “all safer gambling practices” including no under-18s, KYC and AML checks, as well as player behaviour monitoring and that players’ funds are “ring-fenced” during the process.
The firm’s UK-facing site also has a footer directing players to GambleAware, despite insisting the platform is not considered a gambling product and SportsBroker not having donated to GambleAware.
The footer reads: “This is a real money gaming app. Please play responsibly and only play with what you can afford. For gaming addiction help and support, please contact Be Gamble Aware.”
Have you seen this one too? Not even licensed by the GC. And they’re supposed to have an MOU with the FCA now to prevent another Football Index style regulatory arbitrage. I’m pursuing whether they’ve ruled on it https://t.co/NuOuabioZz
— Matt Zarb-Cousin (@mattzarb) June 27, 2022
Elsewhere in the group’s terms and conditions, it states: “Whilst SportsBroker is not a gambling product we want players to have support services if they feel they are developing addictive behaviours.”
In the latest accounts for the company for the year-ending 31 March 2021, SportsBroker’s directors elected not to include a copy of the profit and loss account within its financial statements.
Instead, it was revealed the company had net liabilities of minus £426,211.
The two directors of the company are named as James Robert Mackenzie Dulieu and Reham Fouad Alghanim.
Fouad Alghanim is the CEO of Fouad Alghanim & Sons Group, a multi-billion-dollar Kuwaiti conglomerate with interests in engineering, oil, automobiles and real estate.
The SportsBroker site reads: “SportsBroker allows you to trade virtual shares that rise and fall based on team performance. The aim is to buy shares and sell them for a higher price, teams will rise in value if they perform well.
“SportsBroker is a peer-to-peer gaming platform, this means you are trying to win money from players who have backed the opposite team – we only take a small commission if your team goes up in value.”
EGR has contacted SportsBroker for additional comment.