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UK Minister Says Govt Won't Bail Out Football Index Victims
By Jeff Osienya Jun 11, 2022 IndustryThe UK government, through its Sports Minister, Nigel Huddleston, has said that it will not compensate users who lost their money on Football Index. According to the Minister, it would not be appropriate to use public funds in that manner.When much of the world’s focus in Britain was on whether Prime Minister Boris Johnson would survive the vote of confidence tabled against him, a group of MPs was set on another agenda. This group of MPs gathered to discuss the catastrophe that was Football Index. The platform in question was a highly successful UK-licensed and regulated gambling product that allowed customers to gamble on the future success of football players.
This once illustrious organization eventually imploded back in March 2021, leaving in its wake a series of unprecedented consequences for all those who had invested money into it. A month later, the UK High Courts ordered the company to reimburse players part of the lost money, and there were talks that the government would also chip in.
Now, the UK Government has come out to set the record straight. Westminster Hall recently played host to a special parliamentary debate on the “Impact of the collapse of Football Index,” where UK sports minister Nigel Huddleston said public funds would not be used to compensate the Football Index victims.
What Happened to Football Index?
Football Index had all the makings of a successful gambling platform. The company came to life in 2015, allowing users to buy and sell virtual shares of real-world football players based on their pitch performances. It experienced a fast rise that was exemplified by seeing £321 million traded on its platform and £4.3 million paid out to its traders during the 2019/2019 football season. At its peak, the company had a commanding presence in football, the country’s most popular sport, to the point of acquiring kit sponsorship rites to EFL teams Nottingham Forest and Queens Park Rangers.
Unfortunately, come March 2021, the platform suffered a market crash after announcing that it was cutting user dividends by more than 80% in a move to ensure its long-term sustainability. Alas, the public did not receive the news too well, and it was a slippery slope from there. Many users rushed to panic selling which led to a drastic plunge in share prices, putting the company in an impossible position. Football Index was left with little to no option other than to pull the plug and go into administration. Amid the crisis, the UK Gambling Commission (UKGC) revoked the license of its parent company, Bet Index.
Many users lost considerable amounts of money through the Football Index collapse. And due to its high-flying profile in the UK, few had seen this coming. Alarming stories have since surfaced of obvious structural flaws that paralyzed the company’s operations and the increasingly desperate attempts to save it in the months leading up to its eventual collapse in March 2021. In a bid to try and make sense of the UK government even published an independent report in September last year.
Why is the Government Saying “NO”?
During the recent debate in the wood-paneled rooms of Westminster, several MPs told upsetting stories of their constituents who had suffered losses from the Football Index collapse. Many dubbed the company a “Ponzi Scheme,” particularly in light of various assurances by the platform to its users, particularly during the pandemic, that it was in sound financial health. The company also held the promise that it was more responsible and favorably risk-averse compared to traditional betting companies.
The emotional and mental impact of the Football Index collapse on its investors also featured prominently in the debate. This was particularly well brought out by MP Jessica Morden, who said:
Quote“Individuals have been driven to the brink of suicide, marriages have collapsed, families have been affected, and life savings for weddings, houses, and retirements have vanished. Over a year on, they are still dealing with scars on their mental health and finances.”
Unfortunately, even after spirited efforts and tragic tales, the government’s representative maintained that public funds would not be used to compensate victims of the collapse of a gambling firm. Secretary Huddleston argued that putting money away for purposes of gambling was not the same as investing in other regulated investment markets. Many have rebuffed this argument, stating that Football Index had highly promoted and packaged itself as an investment avenue rather than a betting platform.
The UK Gambling Watchdog Continues to Face Backlash Over Inaction
The debate on the impact of the collapse of Football Index once again cast a spotlight on the UK Gambling Commission’s inaction in the matter. In fact, a report by Malcolm Sheehan QC revealed that executives had received a prior warning that Football Index operated like a “dangerous pyramid scheme.” sentiments that unfortunately came to be proven right.
Other reports revealed that had the UKGC carried out its oversight role effectively would have possibly stopped the impending disaster. For instance, in May, court documents had disclosed that the company was aware of and was planning to go into administration a whole month before it eventually happened.
Despite the government’s statement, many victims are still clutching onto straws, hoping they’ll eventually get some compensation. For instance, there is an ongoing process by campaigners who have set up a Football Index Action group. The group is keenly following up on research into possible courses of action they may take through the Leigh Day law firm.
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