Investors pull plug on Footstock after Football Index collapse

Football trading app Footstock has surrendered its UK gambling licence and ceased trading with immediate effect as the fallout from the Football Index crash reverberates across the industry.

Footstock, which marketed itself as a cross between Football Index, Fantasy Premier League and FIFA Ultimate Team, today confirmed to users it would cease operations and was now in administration.

CEO Oliver Renner confirmed that “expected and necessary funding [was] being put on ice”, leaving the group in a compromised position after investors were spooked by a potential repeat of the now well-documented Football Index fiasco.

Renner said: “The whole sector has been shaken by recent events. As a result, over the last few days, we have suffered significant setbacks.

“Expected and necessary funding being put on ice, we can longer run our Seedrs campaign and valuable partners are pausing cooperations.

“These unprecedented circumstances have crushed our company in this crucial period of growth. But without funding, Footstock cannot survive,” he added.

Renner said the group had strived to find a solution to the funding shortage but was ultimately left with no choice but to suspend operations.

He said: “Over the last few days, we tried incredibly hard to find a solution that allows us to stay operational. But ultimately, I am sorry to announce that Footstock has entered the German equivalent of UK administration and we have had to suspend the platform.

“Over the coming weeks, we will continue to consult with our professional advisors and keep you informed on the next steps as soon as we are able, including information about your cash balances.

“Thank you for your loyal support. It is with great sadness that we have had no option but to take these steps,” he concluded.

It remains to be seen what will happen to customer balances on the platform, which also combined online casino roulette with football player top trumps. EGR has contacted Footstock for comment.

A UKGC spokesperson told EGR: “It is important to note that the regulatory remit of the GB GC does not extend to continuous, real-time monitoring of the financial health of operators within an open marketplace.

“When we license an operator we look at suitability, including their financial circumstances and we may review these aspects as part of any subsequent compliance activity we take, but we are not able to oversee their businesses on a day-to-day basis or monitor the financial health of all licensed operators directly.

“Such an approach would represent a very different form of regulation and would require a significantly different funding model to the one currently set out in legislation.

In May 2019, Footstock secured €250,000 from investors after setting an initial target of just €5,000 and launched a £100,000 marketing campaign ahead of the 2020-21 season.

Sky Sports News pundit Chris Kamara was subsequently hired as a brand ambassador.

Speaking to EGR after the major funding round, co-founder Tilmann Weischer moved to distance Footstock from Football Index.

He said: “We don’t want to be too similar to Football Index. We are similar in that on both platforms you can trade players, but we want to be much more of a gambling platform.”

In an interview on the Footstock website from December 2019, Renner and Weischer moved to ease concerns over the volatility of the platform.

The pair said: “We had a big pool of early Footstock backers, and naturally not everybody wanted to stay involved due to various reasons. The volatility of the market post IndieGoGo did take us by surprise, and as with any new product we’ve seen multiple ups and downs. This did provide opportunities for new users or active traders to reap some profits, but also took many backers who didn’t trade actively into a negative ROI.

“As the number of active users is constantly rising, combined with decent promotions, we are confident that the overall card prices will keep the current upward trajectory. It’s also worth mentioning that cards do not expire and you can use them to profit in freerolls indefinitely.

“Our main focus is now on spreading the word about Footstock and reducing barriers around joining,” they concluded.

Football Index was likened to a Ponzi scheme for allegedly relying on new users to pay out dividends to early adopters. The company has denied those allegations.

Based on the founder’s comments above, it appears Footstock was utilising a similar model that relies heavily on new users signing up to the platform and depositing funds to remain operational.