Football Index Collapse: The British Government Didn’t Understand the Dangerous Pyramid Scheme

By John Isaac,
Editor at online-gambling.com

John Isaac Editor at online-gambling.com

John Isaac is an editor with many years of experience in the gambling industry. He writes expert articles on card games like blackjack and poker. In addition, he is also well aware of the US gambling laws and the Indian and Dutch gambling markets. You can rely on verified information and insightful details.

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Last updated: October 16, 2021

In the British government statement on the failure of the Football Index, the country’s financial and betting regulators are to blame. The UKGC was in no hurry to understand the intricacies of the new gambling product and therefore provided the wrong type of license, the report says.

The Football Index was promoted as a “virtual exchange” for football lovers, where fans can purchase and trade fictitious “stocks” of favorite football players. The worth of these shares will vary based on the actual performance of the athletes they represent. The winning traders will get profit or payments depending on the performance of their actions.

The User’s Gave Up

Although the company operated in “difficult conditions,” in August 2020, the report indicated the company decided to increase its dividend for successful clients by 100%.

Unlike firm stock, which has a real underlying asset, Football Index stock was theoretical. Its business model was based on the regular trade of several shares to new clients to pay off their debts and prevent collapse.

And it collapsed in March 2021, just hours after the organization declared a dividend cut to make sure “permanent continuity.”

Several clients panicked and withdrawal money due to this, the market collapsed overnight. Those users who have not seen the price of their shares disappeared. Around $4120 was the average individual loss.

Betting Platform Collapse

The UK’s financial regulator and UK gaming supervisor were heavily criticized in a report written on the order of Boris Johnson’s Government. It blames the authorities for incompetence in the collapse of the Football Index.

According to the document prepared by Malcolm Sheehan, lawyer and Adviser to the Queen, it is clear that the number of clients victims of this collapse, and the amount lost (about 174 million dollars), could have been mitigated. If the British authority had stopped the Game had, at least, prohibited the “Football Index” from using nomenclature related to financial markets to describe realities that had nothing to do with it. The platform even called itself the “stock market.”

The site allowed users to bet on the performance of football players through an interface designed to look like an order book focused on the stock market.

In a statement, both regulators reacted to the regulation, stating that they had numerous legal difficulties in intervening in this case.

Despite everything, the authorities agreed that they should have acted sooner, but even if they did there would be people who would lose money on this site anyway.

More about Football Index

Football Index is a UK-based betting platform. It allowed traders to bet on the future success of football players. It was possible to place fixed odds bets, known as stocks, for the chance of winning daily payouts – more commonly called dividends. Dividends were calculated based on the player’s performance on game days and their presence in the platform’s media rankings.

In March of this year, Football Index filed for judicial intervention and suspended its platform. The market, at the time, collapsed after the company changed the payment scheme for these dividends, and the company was accused of maintaining a Dangerous pyramid scheme.