This was one of two debates on gambling products this week. A debate on a mandatory levy for research, education and treatment took place yesterday (7 June).
Evidence provided showed that individuals lost £90m worth of deposits when the operator went into administration after mounting losses. Plaid Cymru MP Ben Lake said players lost these funds as “regulators with the duty to protect them failed”.
In addition, Lake called for a system to refund lost money via fines collected by gambling and financial regulators.
“Why not use the sizable funds levied by the Financial Conduct Authority and the Gambling Commission from fines and regulatory settlements to pay back Football Index users?” asked Lake.
“For instance, the Gambling Commission issued £58m worth of fines between June 2014 and December 2019[…] the FCA fined GAM International over £9m just last month.”
However, Nigel Huddleston – Parliamentary Under Secretary of State at the Department for Digital, Culture, Media and Sport – said that this was not a workable solution as gambling Commission fines go to specific social responsibility causes.
Conservative MP Aaron Bell suggested that the Commission may have misled the public by licensing the operator.
“My five constituents — all young men — believed, because they saw the kitemark, that the Gambling Commission understood, and almost endorsed, the product,” said Bell. “Obviously it did not.”
“If we licence these sorts of products, then we ought to be standing behind them. We are not standing behind them now, as they are struggling to get any sort of compensation at all, although there is obviously an administration process going on.”
This sentiment was echoed by MP Jessica Morden, who called the lack of regulation “an utter failure”.
“It modelled itself as an investment package, and in an utter failure of regulation by the Financial Conduct Authority and the Gambling Commission, customers felt wrongly assured that their long-term investments in the index were secure,” said Morden. “The Gambling Commission was aware that these investments were more risky than customers thought.”
Meanwhile, SNP MP Ronnie Cowan pointed out that BetIndex – the parent company that operated the brand – did not declare “the nature of its product” in its application for a licence, as was found in a report examining the collapse. He said the Commission could have responded to this more promptly.
“The Gambling Commission could have responded better, with earlier scrutiny of the product offered by BetIndex, quicker decision making and action, and better escalation of the issues, but it did not do so,” said Cowan, who went on to reprimand the Commission for putting investor’s money in danger.
“The Gambling Commission ignored warnings that its business model was flawed and that customers’ money could be at risk.”
Administration proceedings for BetIndex are still ongoing. The High Court had already distributed £3.5 worth of player account balances, but the fate of funds held in bets that were active when the business collapsed will depend on the administration process, which is handled by Begbies Traynor.
Last week Adam Cole, founder of Football Index, was blacklisted by the Jersey Gaming Commission.
Original article: https://igamingbusiness.com/football-index-debate/
