The gambling platform Football Index drastically slashed the share price on their site causing an unprecedented crash leaving many users looking at big losses, some furious users losing their life savings.
Football Index, the so-called “real money virtual stock market” enables investors to buy and sell “shares” in high profile footballers receiving dividends based on the footballer's performance over the three year period of a contract. Founded in 2015 the platform is regulated by the Gambling Commission. Football Index decided to re-schedule the share prices and radically reduce pay-outs leaving investors unable to even be able to recoup their initial investment. The platform had proved to be extremely popular and Football Index apparently paid out £11 million last year to its investors. A maximum of 33p could be won per day by a user, this was slashed to an unrealistic 06p causing many investors to conclude that the whole operation was less than straightforward and that the sudden loss of their money was suspicious.
The lawyers in Giambrone's banking and finance litigation team feel that the unannounced temporary suspension of trading followed by adjustment to the terms and conditions of trading with no prior indication given, potentially amounts to a breach of the terms and conditions of trading. Football Index has issued several statements to its users stating that it is unlikely that they will get their money back.
Such devastating news impacts on many users who have put substantial sums into the scheme and feel that their money is trapped.Investors have lobbied for an investigation and some 12,000 have signed a petition for the Gambling Commission to scrutinise Football Index. A spokesperson for the Gambling Commission said “in order to regulate effectively we do not talk about individual cases” but fell short of confirming that there would be an investigation.
Some investors noted that the platform was making small adjustments to minimise dividends and more red flags were seen by others due to the cancellation of football games due to coronavirus. There has been speculation that the platform operated like a Ponzi scheme and no foundations and depended on the continual renewal of investors to pay the existing investors. Prior to the crash Football Index was sending encouraging indications that Football Index was doing well. In the first lockdown it was announced that dividends were to be increased, there was a promotion where certain dividends were increased to five times the usual value to encourage more trade and the suggestion that Football Index was branching out into other countries.
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