The Gambling Commission (GC) in the UK is facing serious questions related to the recent collapse of sports betting platform Football Index which went into administration last week.
UK Gambling Regulator under Fire
Dark clouds are gathering above the UK gambling regulator following the complete meltdown of the famous betting platform which allowed players to profit from buying and selling shares in real football players.
The commission moved on to suspend the license of the company operating the Football Index platform, BetIndex Limited, March 12, amid concerns “activities may have been carried on in purported reliance on the licence, but not in accordance with a condition of the licence”, raising doubts about the suitability of the operator to carry on with licensed activities.
The storm for Football Index began on March 5 when the operator announced its decision to slash player dividend payments on the platform, a decision that led player price tags to sink catching many customers off-guard. Some of the disgruntled customers went on social media to vent their frustration as they were unable to unwind their shares.
Later on, Football Index suspended operations and announced it went into administration due to liquidity issues, leaving customers’ money trapped on the platform. Football Index also had its sponsorship deal with Championship clubs Nottingham Forest and QPR immediately dropped as a result of the company’s falling into administration.
The recent development raised serious issues with regards to gambling oversight and forced Gambling Commission CEO Neil Mc Arthur to announce his resignation with immediate effect.
Existing Regulation Unfit for Purpose
The commission’s boss stepping down was not enough for the regulator to alleviate pressure from parliamentary forces to explain the failure to protect users at the platform in a period of ongoing review of the Gambling Act 2005.
Richard Holden, MP from the Conservative Party and member of the All-Party Parliamentary Group for Gambling Harm (APPG), required the GC to address some crucial questions regarding oversight, stating that existing regulation is unfit for purpose. He went on to label the Football Index meltdown as the “most serious disaster” for gamblers in Britain to date.
Labor Party MP Carolyn Harris also accused the Gambling Commission of doing nothing to protect punters against the “dreadful practice” adopted by the platform operator to exploit and trick customers, while some MPs believe Football Index should not have been approved for license after misleading customers to position itself more like an investment platform than a gambling one.
Despite that the operator advertised its platform as an investment, it was never approved by the Financial Conduct Authority (FCA), leaving customers’ funds to be treated as bets and not protected under the Financial Services Compensation Scheme (FSCS).
As explained earlier by a spokesperson of the GC, gambling services are used by customers at their own risk with no guarantee that customer money would be kept in a separate account from the operator’s. The spokesperson further noted that licensing included suitability and financial circumstances checks but neither daily oversight nor real-time monitoring of the operator’s financial health.
Following the sudden resignation of Neil McArthur, the new undersecretary overseeing UK gambling laws at the DCMS John Whittingdale was reported to have met with senior officials at the GC to hold frank discussions regarding the Football Index fallout.