What happened to Football Index? Collapse & concerns of betting ‘stock market’ explained

Football Index has been on the minds of many fans of the sport in recent weeks, with fears that a lot of money could be lost following its collapse.

Betting has been suspended on the popular platform, while Championship clubs Queens Park Rangers and Nottingham Forest will no longer carry the sponsor logo on their shirts.

The situation is ongoing and attempts are being made to resolve the issues that caused the sudden suspension.

What happened with Football Index?

Football Index entered administration in 2021 and had its gambling licences suspended following a number of issues arising out of policy changes and share-price crashes. 

The platform itself has been suspended, meaning that traders’ funds cannot be withdrawn and there are concerns among the community that those funds could potentially be lost should the business collapse entirely.

Concerns had been raised in 2020 about the perceived risk of players’ money being ‘trapped’, with the removal of an ‘instant sell’ – ability to sell shares back to Football Index at any time – being a particular bone of contention.

Other issues included the continued “minting” of new shares in high profile players by Football Index while users were unable to sell their own shares and the final straw for many users was the reduction of dividends.

What did Football Index say about it?

BetIndex Limited, the parent company of Football Index, issued a statement on the matter on March 11.

The statement outlined that they had “consulted with external legal and financial advisors” as well as the gambling authorities in arriving at the decision to suspend their betting platform.

Company Announcement.

More info:https://t.co/GLEz83kYpt pic.twitter.com/i2cjcdZmPd

— Football Index (@FootballIndex) March 11, 2021

As well as acknowledging that the decision to change the dividend process was a source of disquiet, BetIndex explained that they were “pursuing a restructuring arrangement” via administration.

“The restructure could involve equity in BetIndex Limited being distributed to customers, board representation for customers, and a new management team put in place, along with other initiatives,” the statement said.

The statement says that existing cash balances of Football Index traders “will remain held in a segregated account” while the process of administration is ongoing. 

You can read the full statement in relation to Football Index here.

What is Football Index?

Football Index is an online betting platform which styles itself as a ‘stock market’ where ‘shares’ in players are traded. It is regulated by the UK Gambling Commission

Launched in 2015 by BetIndex, Football Index was promoted as “the football betting rebellion”, with the company positioning itself as a “challenger” to traditional bookmakers.

On the ‘about’ page of its official website Football Index is described as the sum of “Fantasy Football + Stock Markets + Betting”. 

But what does that actually mean?

How does Football Index work?

The basic market tenet of ‘supply and demand’ is in effect. When traders buy shares in a player, their share price goes up and when they sell shares in a player, their share price goes down.

A player’s share value also increases or decreases in tandem with their performances on the pitch.

By buying shares in players like Paul Pogba or Lionel Messi, traders are making a ‘long bet’ on the future performance of those players.

Real-money profit could be made in two ways. The first is the classic ‘buy low, sell high’ method and the second is through ‘dividends’ that are associated with player performance.

Dividends are paid out to traders based on how players perform on the pitch – using matchday statistics such as goals, assists, clean sheets etc. (hence the ‘Fantasy Football element) – and in the media.

The ‘media dividend’ is based on how many positive mentions a player receives from a pool of trusted media sources.