A High Court Judge has ruled that administrators can begin the process of paying out funds belonging to customers of Football Index after their accounts were frozen following the collapse of the platform earlier this year.
UK firm Begbies Traynor Group are handling the administration and will now start refunding the £3.2 million belonging to 280,000 customers of BetIndex Ltd., the Jersey-based company that ran the popular football betting platform before its collapse.
Football Index was launched in 2015 and marketed as a ‘stock market of football’ where football fans could buy shares in professional football players. The fans would then earn dividends based on a player’s performance or sell their shares in the player for a profit. The player’s share value was not only affected by their performance but also by transfers to bigger clubs.
However, shares in a player could only last for a maximum of three years at which point the customer’s share or bet expired. The idea behind this was to encourage more trading and activity on the platform. The platform became so popular that it was even endorsed by several professional football teams.
But then in March of this year it was announced that payouts on players would be reduced which caused player share prices to crash. As a result, the company then announced that it would go into administration after its license was suspended. At this point the UK Gambling Commission opened an investigation into the company’s collapse and all customer’s money was frozen.
Following the High Court ruling this week, customers will be paid out according to the status of their account on March 26th as the judge decided not to wait for customers’ shares or bets to expire at the end of their three year period. This means that any dividends that have accrued since that date will not be paid out.
Administrators have revealed that the company has £4.5 million in the bank, £3.2 million of which belongs to customers. The court has decided that once all money has been repaid to customers and any further deductions taken from the company accounts, any remaining funds can flow back into the company.
Administrators have also revealed that they have signed an agreement with creditors that will allow the company to continue trading under a different business model and prevent it from going into liquidation.
Meanwhile, The Department for Digital, Culture, Media and Sport has appointed Malcolm Sheehan QC of Henderson Chambers to lead a regulatory review into how the Gambling Commission handled the situation.
Malcolm Sheehan QC will review the steps taken by the Gambling Commission and other regulatory bodies regarding BetIndex. As set out in the terms of reference published today, it will examine the regulatory environment around the novel football betting product which collapsed earlier this year leaving thousands of customers out of pocket.
The UK Gambling Commission has said that it welcomes the move and has launched its own internal investigation that will be separate from the government review.