The Guardian has revealed that a document was sent to the Gambling Commission in January 2020, labelling betting firm Football Index as “an exceptionally dangerous pyramid scheme”.
The document analysed Football Index’s business model, highlighting a number of fundamental flaws in how the company operated, including misleading customers into believing they are investing rather than gambling, with little or no consideration that all of their money was at risk.
Other major warnings within the report include an estimate that “should user growth stop or decline, the company would quickly find itself unable to pay these liabilities to users,” and that Football Index is “vulnerable to and destined for a bank run in which the first ‘X’ percent of users manage to get some money out before the system collapses and the remainder lose everything.”
Football Index last week went into administration, having launched in 2015 under a licence from the Commission. The company initially announced an 80% reduction in dividends, with the site going offline a few days later.
The Commission suspended the licence on 11 March, saying: “The suspension follows an ongoing section 116 review into the operator, as we had concerns activities may have been carried on in purported reliance on the licence, but not in accordance with a condition of the licence, and that Football Index may not be suitable to carry on with licensed activities.”