Football Index slips into administration

BetIndex, the company behind the beleaguered Football Index product, has called in the administrators after running into financial difficulties, leaving up-in-arms customers fearing their funds have gone up in smoke.

In a 400-word statement issued on the Football Index website, the BetIndex board said that “after a difficult and challenging week” insolvency practitioners Begbies Traynor have been appointed and that the goal was to continue with the platform in a “restructured form”.

The Jersey-based outfit also stated that the restructure could involve equity in BetIndex “being distributed to customers, board representation for customers, and a new management team”.

BetIndex suspended the Football Index platform and prevented users from withdrawing existing cash balances, however the UK Gambling Commission (UKGC) subsequently suspended the firm’s licence.

Standards body the Betting and Gaming Council (BGC) has also suspended BetIndex’s membership.

The UKGC confirmed the move follows an ongoing review into the operator as activities may not have been conducted in accordance with its licence conditions and that “Football Index may not be suitable to carry on with licensed activities”.

The regulator, which earlier this week would “neither confirm nor deny” it was conducting an investigation, is working closely with its counterparts in Jersey, where BetIndex is also licensed, as part of the review.

BetIndex insists customers’ cash balances are held in a segregated account to be managed in conjunction with the company’s advisers and protected by trust arrangements reviewed by the administrators.

Up until the suspension of its platform, the operator provided what the UKGC deems to be “medium protection” when it comes to how customer funds are managed.

Section 11.2 of the T&Cs on the Football Index website said it had trust arrangements in place with its bank to ensure funds in this account are distributed to customers in the unlikely event of insolvency.

However, it continued: “This means that steps have been taken to protect your funds but that there is no guarantee all funds will be repaid in the event of insolvency.”

If a buyer can’t be found for the business and it does collapse, it would be raise serious questions about how the company was managed and regulated.

Launched in 2015, the platform allows users to buy and sell “shares” in footballers, which is a three-year bet on whether a player’s value will rise, while dividends are paid relating to on-field performances and media buzz.

The operator had faced a fierce backlash among users on top of negative press coverage when it was announced a week ago that these dividend payments were to be slashed. The fact it came after new shares in players were “minted” and players “IPO’d” only intensified that outrage.

The move sparked a crash similar to the market collapse last year when order books were introduced to try to make the platform more akin to a peer-to-peer stock exchange.

Last night, a thread appeared on Twitter where Football Index customers posted screenshots of their losses and revealed the extent to which the value of many customers’ portfolios had plunged.

Several posters laid bare five-figure losses, while one customer with the handle CanaryF1 uploaded a screenshot that showed his portfolio had lost 85% or, more importantly, more than £141,000. It is thought users have lost tens of millions of pounds collectively.

#Footballindex gone into administration.

From a 35k portfolio to nothing in 9 months, what an epic collapse this has been bought on by greed and mismanagement. https://t.co/XX6b4qyWTG

— Dom (@InkedWalker) March 11, 2021

Customers have accused Football Index and its CEO, Mike Bohan, of not being upfront with them over the firm’s financial plight and question why a customer support agent wrote in a message on 10 February 2021 that “Football Index is in a strong financial position”.

Then, on 6 March, a statement on Football Index’s site admitted the business had sustained substantial losses in recent months. Users and critics of the platform have labelled it a Ponzi scheme – an accusation management has vehemently denied.

#Footballindex gone into administration.

From a 35k portfolio to nothing in 9 months, what an epic collapse this has been bought on by greed and mismanagement. https://t.co/XX6b4qyWTG

— Dom (@InkedWalker) March 11, 2021

The brand is the main shirt sponsor of Championship clubs QPR and Nottingham Forest, although it is not clear at this stage if these deals will continue.

BetIndex said Begbies Traynor will release a statement regarding their formal appointment, which is anticipated in the next 10 days.