British Regulators Slammed Over Football ‘Stock Market’ Collapse

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Britain’s banking and gambling watchdogs were heavily criticized in a government-ordered report following the collapse of Football Index, a service that branded itself as a soccer “stock market.”

The Financial Conduct Authority expressed inconsistent views about whether the product from Jersey-based BetIndex Ltd. fell within its regulatory remit, according to the report by Malcolm Sheehan, a senior-ranked U.K. lawyer known as a Queen’s Counsel.

The FCA approach seemed at times to depend on whether it had resources available to investigate, rather than jurisdiction, the report said.

Meanwhile, the report said that client numbers and amounts wagered may have fallen had the Gambling Commission discouraged Football Index from using investing terminology. There were 128 million pounds ($175 million) in open bets on the platform as of March 9, the report published.

“The Gambling Commission could have better responded to the challenges that the novel product raised once launched, with earlier scrutiny, including of the language used by the product, quicker decision-making and action, and better escalation of issues,” the report added.

Football Index allowed users to place bets on the future performance of soccer players through a user interface designed to look like a stock market order book. It called punters “traders” and winnings “dividends.”

“BetIndex Ltd. was licensed and regulated throughout the period by the Gambling Commission,” the FCA said in a statement, “However, the report rightly identifies that the Football Index product gave rise to issues of legal difficulty and complexity for both the FCA and the Gambling Commission.”

The FCA said it’s implementing changes, set out in its July business plan.

“We accept and agree that we should have drawn a line under our efforts sooner, but this does not mean those customers would not have lost money in the event of the BetIndex company collapsing,” the Gambling Commission said in its response to the report.

“The lines between what is gambling and other types of products, such as financial services or computer games, has become increasingly blurred,” it said.

Football Index had an agreement with Nasdaq for the exchange group to provide Football Index with a cloud-based trading system, and was also shirt sponsors for the English soccer clubs Queens Park Rangers and Nottingham Forest.

(Updates detail from report, FCA comment from fifth paragraph.)

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