What was the Football Index scandal and will customers get their money back?

Traders could sell their share in a player to another trader, and the price of a share fluctuated as a result of the performance of the player. Credit: ITV News

Football Index, where investors could bet on the success of footballers, was run by Jersey-based BetIndex, and went into administration in March 2021.

Its collapse left thousands of people out of pocket, some of them losing their life savings.

What was Football Index?

Football Index called itself the Football Stock Market. Customers bought shares in football players that were bets that a player would become successful, their share value would then increase and users could sell their shares for a higher price.

Shares could be sold to other customers - “traders” - or they could effectively cash out by selling their shares back to Football Index. There were also cash bonus payments known as dividends, these were paid if players performed well in real life on the pitch and in the media.

What happened to it?

In March 2021 it went bust with £124m of customers’ money in open bets. The company is currently in liquidation and those in charge of that process, Begbies, say “this is a complex case.”

What happened to the company’s directors?

The company’s directors are being investigated by the Insolvency Service, Parliamentary records confirm. That investigation will look into their actions and determine if there was any misconduct.

“If misconduct is found, the Insolvency Service may bring disqualification proceedings against one or more of the directors under the Company Directors Disqualification Act 1986. Disqualification proceedings are a civil, not criminal, process, however further civil or criminal proceedings could be brought by the Insolvency Service or other relevant agency or authority,” an Insolvency Service spokesperson explained.

ITV News wrote to three of the company’s co-founders, Adam Cole, Ciaran Rowan and Mike Bohan for their response to customer allegations that Football Index was mis-managed. None of them responded.

Was it regulated?

Football Index was licensed and regulated by the Gambling Commission. But it was a novel product that resembled a stock market and used financial markets language, so in May 2019 the Gambling Commission approached the Financial Conduct Authority to see if they would also regulate Football Index.

At the first the FCA said yes, but later changed its mind. There was nearly two years of back and forth between the Gambling Commission and FCA about who should regulate Football Index and protect its customers – who during this time were unaware and continued to pour money into the site.

Was there any protection for customers?

The Gambling Commission has told ITV News: “The central product always involved consumers staking money on the performance of football players and as such this product was regulated as gambling.

“Because gambling is a leisure activity and not an investment opportunity its regulation does not extend to continuous, real-time monitoring of the financial health of operators, and neither does it provide significant financial protections should a gambling business fail."

Will they get their money back or any compensation?

Begbies, the company’s liquidators say: “We are unable at this point to accurately determine when all matters will have been concluded or the level of return to creditors.”

If there is little or no money left from winding up Football Index, some customers have indicated they will seek redress and are currently appealing to their MPs for support in a campaign to the government.

The government has previously said it would not compensate gambling losses.

But many customers argue these were not bets that lost, the bets were open while the company collapsed meaning they did not have a chance to win or lose.

Could it happen again?

The Gambling Commission has said that in recent years “the lines between what is gambling and other types of products, such as financial services or computer games, has become increasingly blurred and no longer neatly fit into existing statutory definitions of gambling".

But add that they have “put new processes in place to pick up on novel products to ensure we hold ourselves to account in an ever-changing environment".

Both the Gambling Commission and FCA insist they are working better together now.