Football Index, the betting platform that is now suspended, was always regarded as a risky unsustainable enterprise by the broader gambling industry. It is reported in the Guardian today that Football Index was highlighted to the Gambling Commission as "an exceptionally dangerous pyramid scheme under the guise of a 'football stock market'" as long ago as January 2020 and that "immediate and urgent action was needed to 'alert and protect their (Football Index) users'".
Football Index was licensed by the Gambling Commission and launched in 2015 with an intense campaign to attract investors to its self-described "football stock market" using the language of the financial markets, inviting investors to buy "shares" in leading footballers, where "dividends" could be earned over a three-year term of their bet based on the footballers' performance. Investors could also buy and sell "shares" between themselves, at the rate of a 2% fee per transaction charged by Football Index.
The Gambling Commission was approached with a comprehensive analysis of the Football Index business model pointing out the flaws and risks the platform posed, from the deliberate imitation of the financial investment market creating the impression that the user was investing rather than gambling to the unsustainability of the ever-rising dividend payments Football Index was required to pay out which increased with each sale of a given share. The conclusion was that unless the platform was able to exponentially increase its sales of "shares" to new users it was unsustainable.
The analysis predicted that once the tipping point was reached only so many users would be able to retrieve their money leaving the rest to lose everything enough. The lawyers in Giambrone's banking and financial litigation team consider that the false impression that Football Index promoted caused many users to remove large sums of money from actual investment platforms into Football Index due to the false promise of continuous high returns. Many users have lost their life savings or worse as they have borrowed against the prospect of high returns on their investment in Football Index as they had not considered that their entire investment was at risk and could be wiped out.
Genuine investment vehicles are regulated by the Financial Conduct Authority which provides a far greater degree of protection that the Gambling Commission. The detailed analysis was presented to the Gambling Commission by hand and copies were also circulated to the senior executives 14 months prior to the collapse of Football Index. The lawyers in Giambrone's banking and financial litigation team are assisting some of Football Index former investors in an attempt to retrieve their lost funds and are considering this new information with a view to assessing whether any new liability has arisen. The Gambling Commission contends that despite the fact that the in-depth analysis warning was sent 14 months prior to the collapse of Football Index they did not have sufficient evidence to withdraw the licence until March 2021 stating "11 March 2021 was the first point where we had sufficient evidence to demonstrate that suspension was necessary".
Former users may very well consider that they were not sufficiently protected by the regulating authority and the lawyers in Giambrone's banking and financial litigation team who are investigating the grounds for legal action against the platform are also scrutinising the role of the Gambling Commission in light of the latest revelations.
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