Gambling horror stories are hardly newsworthy – for many of us, these self-induced nightmares are merely a coming of age experience. However, when the failing entity is the bookmaker, questions must be asked.
This week a significant football gambling company has entered administration; you won’t find them on any High Street, and you would be hard-pressed to find it under a directory of bookmakers.
A thinly veiled-scaffold of the allure and aura of Wall Street was seemingly enough for “Football Index”, a relative newcomer to the gambling scene. Whether first exposure came online or through logos emblazoned on a QPR or Nottingham Forest shirt, Football index seemingly developed the reputation as the place to be for the educated, analytical bordering on “hipster” football crowd who prefer dividend payments and shares to accumulators.
The company, based in Jersey, is a self-styled “stock market of football”, where you buy and sell “stocks” in footballers, with their prices corresponding to real-world performances. It was undoubtedly successful, finding a niche of football fans who rejected the traditional gambling experience and prefered the NASDAQ-style approach.
The company’s relative early success has come to a screeching halt, as the company filed for administration last week, with players losing an accumulated £58 million so far, with projected total losses topping £100 million for Football Index’s users.
The model relied on what was essentially a three year bet; the initial outlay was slowly returned through dividends, or if a player’s value increased, the ‘stock’ could be sold on to other users. This meant, however, that a constant supply of new customers was needed, their buy-ins funding the payment of dividends to those who had already invested.
A fervent outcry has led to appropriate publicity surrounding the issue, with the situation being brought to the attention of MPs and law firms alike. The All-Party Parliamentary Group for Gambling, wrote to Culture Secretary Oliver Dowden outlining the critical shortcomings and necessary reforms stemming from the failure of Football Index. The Chair, Carolyn Harris spoke to the BBC, outlining her and the parliamentary group’s assessment and underlining the severity of the goings-on, stating “This can only be termed a scandal.”
The case underlines the need for wholesale reform of the gambling industry and raises significant questions as to the competence of the Gambling Commission, given they saw fit to licence this platform and failed to implement adequate oversight. Not only does there need to be an urgent inquiry, it is more evidence of the need to create a Gambling Ombudsman to help protect consumers.
What is for sure is that Harris’s sentiments are shared by the Football Index’s customers, who are reportedly £3,000 worse off on average as a result of the recent administration. Users’ portfolios are now frozen and inaccessible, leading many to come out on social media to vent their frustration regarding what they see as a complete systematic failure of the platform.
A lot remains up in the air, and speculation is rife about what is to happen in the near future. QPR and Nottingham Forest have cut ties with the company and will no longer have Football Index as their kit sponsor. The shockwaves of this will be felt around the gambling sector with strong demands for reform led by the aforementioned All-Party Parliamentary Group for Gambling.
Whether this will cause a seismic shift in a traditional powerhouse sector such as gambling is unclear. This does however show that any newcomers to the market must not be allowed operate outside of their means. A rigid market with a handful of long-established big-hitters will most likely remain stable, at least for as long as we are willing to part with our cash in pursuit of a 4000-1 accumulator.
Image: Football Index via Wikimedia Commons