Verdict Reached in Football Index Case
In March, the sports betting platform Football Index, based in Jersey, filed for bankruptcy. The All-Party Parliamentary Group (APPG) has called this a scandal and has begun an investigation. A preliminary verdict has been reached: the administrators of BetIndex, which operated the collapsed soccer exchange, must refund €5.1 million to the players. Here are the specifics.
Who qualifies for reimbursement?
The sudden bankruptcy of Football Index made headlines in the UK. The soccer exchange owned by porn entrepreneur Adam Cole (70) had reported significant losses beforehand, which were supposed to be addressed by cutting the dividend payouts by up to 82%. Right after the insolvency, the company's license was revoked.
In response, the APPG stepped in, declared this a scam, leveled harsh accusations at the UKGC (UK Gambling Commission), and called for an investigation. An initial conclusion has now been reached: BetIndex needs to repay £4.5 million to the players, some of whom suffered massive losses.
The administrators of BetIndex have been said to have already begun steps to return the money, but the distribution is still up in the air. The compensation must be balanced against the losses of individual players.
An application regarding how to distribute the funds is already on the Football Index Player Protection Trust Account. Identifying the customers eligible for repayments has been given to the insolvency administrator Begbies Traynor. The goal is to maximize the benefits for the respective clients.
The Football Index platform resembled stock market trading, letting players buy shares and wager on the future performance of soccer players and the platform itself. At the time of insolvency, players had invested over £90 million in the company. Adam Cole encouraged players (among others) to max out their credit cards to get maximum returns, which resulted in frequent conflict with the British Advertising Standards Authority (ASA).
£1.3 million surplus
Early decisions have been made in the insolvency process: according to recent reports, BetIndex's account currently holds £4.5 million, with just £3.2 million in liabilities to customers, giving a £1.3 million surplus. This is to be repaid to customers whose accounts still hold funds or who still have active bets.
BetIndex has stated that player investments are safeguarded from potential creditors according to their terms and conditions. However, funds placed through bets on the platform have no such protection. These funds are considered to be lost and have been classified as such. Only bets that are still active are excluded.
As part of the insolvency proceedings, BetIndex is hopeful that it can maintain its operating status in a restructured form. However, the current dividend model has been deemed unsustainable by both the APPG and the UKGC. The future remains uncertain for now.
Political repercussions of the bankruptcy
The news of the Football Index platform's collapse, established in 2015, sparked outrage from the APPG - a cross-party group of UK MPs that deals with gambling risks and harms. In a letter to Culture Secretary Oliver Dowden, Chair Carolyn Harris referred to this as a scandal underlining the need to reform the Gambling Act.
The APPG placed the players' losses at the center of the debate, with each one losing an average of £3,000. This was due to the Gambling Commission's negligence, as it failed to properly monitor the Football Index.
The bankruptcy raises many questions for the Gambling Commission, which licensed the platform and didn't regulate it appropriately. An ombudsman for gambling has been tasked with mediating between these parties.
In the meantime, a group of players have contacted the law firm Leigh Day to have all potential compensation claims reviewed on behalf of thousands of clients. Challenges are also being made against the UKGC. Nichola Marshall, a partner at Leigh Day, said that the Gambling Commission's methods will face scrutiny in light of this incident. It must be determined what the UKGC actually understood about the Football Index business model and what role it played in the bankruptcy.
Matt Zarb-Cousin, of the Clean Up Gambling campaign, which also supports dissatisfied Football Index customers and Leigh Day, commented that the business was operated in an unacceptable manner. The Football Index was in a situation where new customers were necessary to cover dividend payments for existing customers. This was not expected from a licensed operator in a regulated market.
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Source: www.onlinecasinosdeutschland.com
