Football Index Collapse - Clean Up Gambling director calls for government action
"When people gamble, they should be gambling on an event; they shouldn’t also be gambling on the viability of the product..."
Some have seen would-be deposits on houses disappear; others, the entirety of their life savings. It's barely been two weeks, yet Matt Zarb-Cousin has already heard countless stories from those who, within a matter of hours, lost life-altering amounts of money as a result of the collapse of Football Index.
"I've spoken to some people whose portfolio value ran into he hundreds of thousands," he tells JOE. " It’s devastated tens of thousands of lives, no doubt."
The Gambling Commission-licensed betting platform, which imitated a stock exchange and allowed users to buy shares in professional footballers, was launched in 2015, steadily attracting a large base of customers. As well as offering them the chance to sell shares on for profit, it also presented users with the opportunity to earn dividends relating to player performance and other criteria.
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But on March 5 came the announcement of a drastic reduction in its dividends pay-outs, sparking widespread panic across its customer base. With player value ultimately tied to potential dividends return, the price of shares plummeted sharply as concerned users rushed to withdraw any remaining money they had in the platform.
Football Index limped on - in spite of the furious social media backlash - for six more days before another announcement confirmed the inevitable: the company had entered administration, its licence suspended by the Gambling Commission.
To Zarb-Cousin, director of Clean Up Gambling, a campaign group pushing for the reform of UK gambling, its collapse was inevitable.
"I don’t think the Gambling Commission really understood what they were licensing," he says. "It was warned in early 2020 about the problems and viability and sustainability of Football Index and it took them five months to commence an investigation.
"We were pretty angered by it when we saw it unfolding. It angered us when we knew how many people were going to suffer because of a lack of basic consumer protection."
I have had permission from the source to tweet in full the document that warned the Gambling Commission about #FootballIndex. I will put it all in this thread
The first page summarises the four warnings, the starkest being what would happen “should user growth stop or decline” pic.twitter.com/9E1ClYQi97
— Matt Zarb-Cousin (@mattzarb) March 23, 2021
Clean Up Gambling are now working with FI Action, a group of disgruntled customers, and law firm Leigh Day to investigate potential legal claims on behalf of individuals who invested in Football Index. Over 7,000 had already expressed an interest in the investigation, with in excess of 1,000 signing up as clients. More are expected.
"It’s one thing to put a bet on and lose that bet: that’s a fair bet," he says. "People who have bought shares in Jadon Sancho, the value of that investment has collapsed. That’s not collapsed because Jadon Sancho’s suddenly turned into a bad player; it’s collapsed because the product, the company was not sustainable. It was not run well.
"When people gamble, they should be gambling on an event; they shouldn’t also be gambling on the viability of the product they’re gambling on.
"It’s important to keep in mind that this was not marketed as a gambling product in the conventional sense. This was marketed as an alternative to investing, it was an investment platform. Unfortunately a lot of people treated it that way and given the market has crashed, the value of their investments has also crashed."
— FootballJOE (@FootballJOE) March 17, 2021
He stresses that seeking redress in the form of money back for customers is the main objective of the investigation, but Zarb-Cousin is clear that this alone is not enough, and hopes it will also prompt government intervention. While clear about his criticism of the way in which Football Index has been run, Zarb-Cousin says that the Gambling Commission must also accept some of the blame for the platform's failings. With the regulator sponsored by the Department for Culture, Media and Sport (DCMS), he believes they too must act.
"There’s clearly a problem with the Gambling Commission and there’s clearly a problem with regulation and I think it falls to the Department for Culture, Media and Sport, which oversees the regulator," he says. "This goes right to government. They need to find a way of getting to the bottom of what’s happened and preventing it from happening again."
The government is currently conducting a major and wide-ranging review of the country's gambling laws, with its recommendations due to be published at the end of the year. As well as questioning whether the DCMS is fit to carry out such a review in light of Football Index's spectacular demise, Zarb-Cousin has called for an inquiry to be conducted into its collapse.
"It does call into question the suitability of the Department for Culture, Media and Sport in leading the Gambling Review if this has happened on their watch," he says.
"While seeking redress is the priority, what we would like to see in parallel to that is a government inquiry into what’s happened. It has to be an independent inquiry and it has to report before the end of the year, when the government is due to publish its recommendations on the Gambling Review."