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UK High Court Orders Football Index to Repay Players £3.5m
By Jeff Osienya Jun 14, 2021 LegalityFootball Index, the recently crashed Jersey-based soccer trading platform, has received an order from a UK High Court to pay back about £3.5 million to players. Not all account holders will be fully reimbursed, but investigations are still underway.The High Court of England and Wales in London has offered relief to some of the account holders who lost money in the Football Index crash. The London High Court has issued a new court order instructing the Jersey-based soccer betting company to compensate some of the users of its platform, to the tune of about £3.5 million ($5 million).
The refund to be issued to players will be deducted to the website’s “player protection account,” which held a total of £4.5 million ($6.35 million) at the time of its untimely crash. As standard practice for UK licensed gambling sites, the “player protection account” is usually held by a trusted third party to keep the funds separate from the operating costs of a gaming platform. Thus, if unforeseen events (such as the crash) render the gaming platform temporarily or permanently inoperable, there will be some funds reserved for player compensation.
This account will effectively be handed over to administrators of corporate recovery firm Begbies Traynor LLP following the High Court’s ruling. The money shall then be reallocated to 280,000 former account holders of the scandal-ridden soccer trading site.
Administrator Announcement: The Way Forward
On March 26th, Adrian Rabet, Richard Toone, and Adrian Hyde of The Begbies Traynor LLP were appointed as joint administrators of BetIndex Ltd, the parent company of Football Index, after a High Court order. The Begbies Traynor trio wrote to the Business and Property Courts of England and Wales on behalf of BetIndex Ltd in a bid to find a solution as to how the money from Football Index’s player protection account should be distributed.
It’s also worth pointing out the London High Court picked March 26th as the cut-off date to pay accrued dividends as that is when the administration process commenced. Therefore, affected account holders will only be receiving refunds from their Football Index payment channels up to that date.
In light of the new developments, Football Index published an update on its website dubbed ‘Administrator Announcement’ on June 8th, which reads in part:
QuoteAs confirmed by the UK High Court this morning, the date of 26th March 2021 has been agreed as the final date on which dividends will be payable. We would now like to provide further clarity on next steps. Begbies Traynor will now approach the Jersey court in order to have the UK High Court ruling accepted and The Viscount in Jersey will be asked to release the Trust monies. We anticipate an additional 5 - 8 working days for the funds to be moved from the Trust fund currently held in Jersey into our payment provider’s account, from which customer payments can be made.
The statement also outlined how the affected players shall be getting back some of their lost money after the funds are transferred from the “player protection account” or Trust as follows:
QuoteAs soon as these funds are received customers will be notified by email and at that point customers will be able to log into their Football Index account and make a withdrawal request. The process to withdraw funds has not changed. Customers will need to login to their Football Index Account and go to the Account area, where they can select to withdraw funds. From the date of requesting a withdrawal, customers should allow between 2 and 10 working days for your withdrawal to be received into your nominated bank account.
The BetIndex subsidiary ran a model that let players place bets by buying ‘shares’ in real-life footballers and cash in returns based on how they performed on the pitch. However, the operator moved to slash dividend payouts dramatically, effectively devastating user account values, which pushed the users to cash out in large numbers. This resulted in a domino effect that led to a scandalous crash, where account holders lost up to £90 million ($125 million).
The Football Index Case is Far From Over
Despite the High Court’s order for Football Index to refund player dividends that had accumulated up to March 26th, players who had portfolio investments on the platform are still going to lose out. At the time of the site’s collapse, about 35%, 9%, and 4% of its patrons had small, medium, and large portfolios, respectively. At least five account holders under the fraction of large portfolios had invested up to over £50,000 (~ $71,000) on the Football Index platform.
Furthermore, the soccer betting and trading platform disclosed that 159,075 of its users had some money left in their account balance when the operator was placed in administration. These are part of the users who qualify for the court-ordered refund.
Last Monday, UK’s Department for Digital, Culture, Media & Sport (DCMS) revealed that it had appointed barrister Malcolm Sheehan QC to lead an independent review into the regulation and eventual collapse of the Football Index product. This review will start as far back as September 2015, when the UK Gambling Commission awarded BetIndex an operator license and cover up to March 2020 when the regulator suspended the operator’s license.
Barrister Sheehan and his team will look into the gaming watchdog’s actions in the assessment, licensing, and monitoring processes of BetIndex. On top of that, the audit will investigate what actions the Financial Conduct Authority took to determine whether the Football Index product should fall under the regulation of the Financial Services and Markets Act. The UK Gambling Commission is also conducting its separate regulatory investigation into the license issued to BetIndex. The outcome of these investigations is expected to offer valuable insight into the ongoing Gambling Act Review.
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