UK Gambling Commission update on Football Index
Bettors left adrift at the mercy of the law to seek return on their “investment”
Following its decision to suspend the operating licence of BetIndex Limited (t/a Football Index), the United Kingdom Gambling Commission has issued an update on matters that led to such a decision in view of published media criticism about the nature of the BetIndex business.
The UKGC’s press notice reads: “Due to the number of consumers interested in our investigation into BetIndex we have taken the decision to publish some further information about the background to our regulatory action. We have focused this update on the areas where we have received questions about our approach.
“BetIndex Limited was granted a licence for Remote General Betting Standard Real Event on 9 September 2015. The operator is also licenced by the Jersey regulator.”
The UK gaming regulators go on to explain about the nature of BetIndex products, which “allows customers (called traders) to place bets (shares) on the future performance of footballers. A bet lasts for 3 years during which time they accrue dividends. After 3 years the bet expires meaning that customers lose their stake and any right to further dividends. The product evolved to enable customers to buy and sell bets with prices fluctuating according to demand. We have identified that the product contains elements that are betting in nature, and therefore regulated by us as gambling, as well as elements are not considered gambling and therefore not subject to our regulatory remit.”
What is difficult to understand for some analysts is that so called bets, or shares, had a maximum duration of 3 years, after which bets were lost. However, while such bets were in play, bettors, called traders, could negotiate such betting options based on the market value of the betting propositions involved.
While at first glance, one could read that the use of financial terms and the nature of buying and selling transactions (shares) could imply that the betting public might have understood themselves to be dealing with a financial product, there is nothing to say in financial terms that an investment proposition, or shares, lose out at a given time (3 years), unless the company goes belly up. In other words, shares keep a value unless the company goes bankrupt, whereas BetIndex’s product, which was based on the “market value” of football players could not go down to zero in a 3-year space of time.
THE UKGS adds: “Following concerns about the operator we began a formal Review into the licensee under section 116 of the Gambling Act on 20 May 2020. The focus of our review was to address issues in relation to the betting aspect of the product. At that stage there were no grounds to suspend their operating licence.
“During the course of the review, we utilised expertise from across the Gambling Commission and a specialist external QC to examine the business model, the finances of the company and the complex legal questions over the appropriate regulatory framework.”
As bettors on the BetIndex products are left adrift and at the mercy of the law to seek return on their “investment”, and regardless of the provisions made by BetIndex to safeguard the economy of the bets placed on their products, the question is whether there was sufficient support to treat the BetIndex products as betting offerings or investment opportunities. One would like to think that the “external QC” contracted by the UKGC had a sound knowledge of the betting business, because, from practical experience, there is a chasm between knowledge of regulations and the law and the betting industry and business.
