The Football Index debacle has left a bitter aftertaste in legislators and consumers who have accused the UK Gambling Commission of inaction in the matter. In a new blog post, the interim commission boss Andrew Rhodes takes to explain his position as seen through the regulator’s prism, arguing that there were no red flags when the commission originally stepped in to verify the validity of BetIndex and its popular sports betting brand, Football Index.
Rhodes was responding mostly to questions that have been stoked by the Department of Digital Culture, Media and Sport review into the matter. The executive rebutted claims that Football Index had been operated as a Ponzi scheme, citing evidence from the DCMS probe about the operator. In fact, at the time of scrutiny, everything about Football Index suggested that it had been operated as a legitimate entity, notwithstanding lack of diversification in terms of portfolio reach.
Rhodes reminded that an early 2020 financial review attested to Football Index’s liquidity, concluding that the operator was able to cover liabilities for a period of 12 months ahead. In other words, Football Index was a fully functioning entity that had the cash holdings to meet any urgent financial demand quickly. The issues began with COVID, Rhodes explained, but not necessarily because Football Index had been buffeted by a lack of consumers. Rather, it had to do with strategy
Football Index’s Problems Start During the Pandemic
The pandemic may be blamed for many ills in the iGaming and betting industry, but it has mostly helped the sectors evolve and embrace new technologies. In Rhodes’ blog post, the executive argues that Football Index did a couple of things that ended up depleting its cash reserves. Responding to the fire of consumer discontent, Football Index became self-assured that it can douse negative feedback by pouring more money on top.
Customer dividends were increased by 50% and when this seemed to do not as much, the company boosted dividend payments to 100%. Effectively, the company ate through its budget much more quickly than the forecasted 12 months stability it originally enjoyed. The regulator, Rhodes, continued had no way of responding to this as quickly as some may have expected it to.
The simple reason behind this is that the UKGC does not oversee the day-to-day operations of betting companies, but relies on comprehensive reviews undertaken a few times a year instead. Rhodes also explained that because Football Index is a gambling company, there is no legal redress whereby the UKGC can help consumers recover their funds. However, Football Index has sought to remedy the situation.
Rhodes also elaborated on why the commission had “acted slowly,” by arguing that despite some shortcomings, the UKGC allows every operator to take their time and to try and improve its offer by coming in line with regulatory prerequisites prior to suspending a company or revoking its license. Suspending BetIndex and its operations earlier would have resulted in issues for consumers all the same, Rhodes explained and argued that the commission sought to remedy the situation by offering guidance.
Responding to criticism of why people weren’t warned earlier, Rhodes argued that the commission was not allowed to comment on pending investigations and issue recommendations prior to the completion of such probes.