Football Index: A Complete Breakdown of the Breakdown
In recent weeks, there has been a lot of talk about Football Index. The company name has been plastered across social media and is even making the mainstream news – but why? Well, it’s not pretty. We’re going to deep dive into the whats and whys of the Football Index crash and try to shed some light on one of the year’s biggest scandals.
What is Football Index?
In their own words, Football Index started “the football betting rebellion”. Their website claimed that “every time you put a bet on with a bookies, you’re being played”. Instead, they urged the reader to “become a football trader, and take back control” (read: lose all your money in our alleged pyramid scheme).
Football Index presented their platform as an alternative, football-based stock market. Allowing people to buy and sell shares of players gave the impression of long term sustainability. This wasn’t pure speculation, their users were traders employing careful consideration to profit from their vast football knowledge.
With promises like ‘10X profit within 2 years’ coming from the CEO, it’s no wonder that thousands of people fell into the trap of believing that the platform offered the chance to get rich quick, or to plan long term investment through player shares and performance dividends.
Based on the trajectory and last two years; 10X bigger I’d say #footballindex .— Adam Cole (@AdamColeFI) June 2, 2020
Most importantly, Football Index is a straight-up gambling platform, they just did a good job of convincing people otherwise. Publishing videos on Youtube with titles such as “Top 5 Long Term Trading Tips” gave the impression that it was a regulated market, and by extension a viable place to invest your money.
Why did the crash happen?
In its first few years of operating, Football Index looked like the real deal. It easily raised seed money, customers loved the platform and it ranked second in Sunday Times’ Sage Tech Track 100. However, recent months saw a bit of a downward spiral. A partnership with NASDAQ and the prospect of an IPO was repeatedly mentioned, but these never came to fruition.
Football Index became known for hosting Q&A sessions to announce and discuss improvements to the platform. On the way up, users came to associate these sessions with good news and many would invest even more money into their account in the build up. But, this was to offer another dark twist in the saga: when they announced a mystery Q&A in March, users invested, believing good news was around the corner. The company was actually due to announce the fatal slashing of dividends, but did nothing to warn the user base.
Football Index cut dividend payout prices by over 80%. This meant that users could only earn 6p per player share instead of 33p per player share. This directly correlated to a crash in share prices; popular players like Bruno Fernandes dropped in price from £5.70 to £0.68. This drop in value saw some users lost 5 or 6 figure sums.
A question of foul play?
Matt Zarb-Cousin, a member of the Campaign for Fairer Gambling put it this way, “Football Index is an unsustainable business model. They created a stock market out of assets they themselves created. The football players on the market had no underlying value. To pay out dividends, it required more customers to deposit money. When that dried up, the problems started”.
The Guardian reported that the alarm had been sounded over a year ago. The company has been placed into administration and had its gambling licenses revoked. The story will develop as whistleblowers come forward and more details emerge.
What does this mean for the customers?
Football Index had 500,000 users – 30,000 of them who used the app regularly. The platform lost a staggering 90 million pounds which puts the average loss per player at £3,000. However, some people fared much worse, such as one grandfather who lost his £23,000 retirement fund because of the crash.
To compound the problems for the users, any money that they do still have on the platform has been locked in, with no deposits or withdrawals being authorised whilst the company goes through the administration process.
What happens to Football Index now?
Apart from being dropped by Nottingham Forest and QPR as kit sponsors, Football Index are also facing a lawsuit. Specialist solicitors Leigh Day have taken up the case of the thousands of ‘traders’ affected by the crash. They are asking users of the platform to register with them and have issued the following statement on their website:
‘If you are a Football Index ‘trader’ and are interested in enforcing your legal rights in this complex area, register your interest today. You might be entitled to bring a legal claim for recovery of the losses you have suffered.’
The number of people that have registered for the lawsuit is unknown, but the Football Index Group Action Twitter page has a following of over 8000 – and counting.
Why do we care, and how are we different?
We don’t do speculation and we don’t do gambling. On Stakester, you can only ever back yourself to win a skill-based game. You’re in charge here: we will never offer you odds or ask you to risk money on an outcome you can’t control. And, if you lose, we don’t win – there’s no ‘house’ sitting back in the control room and counting all of your money.
We offer you the chance to improve your gaming experience by playing for money and prizes. There’s nothing more to it than that.