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A High Court decision is due to be made today on how £4.5m from a collapsed ‘football stock market’ currently being held by Jersey’s Royal Court should be distributed to customers.
Football Index – whose parent company, BetIndex, is based in Jersey - fell apart in March after Jersey and the UK’s gambling authorities suspended its licence to trade.
Its sudden demise left customers, who bought fictitious ‘shares’ in players on the platform and received ‘dividends’ when they paid well, facing losses of up to £90m.
There are around 100 customers in Jersey – some of whom have told Express they stand to lose several thousand pounds – and more than 100,000 in the UK.
Shortly after, it applied to Jersey’s Royal Court to begin a process to enter administration. The company said this was with an aim of rescuing it and relaunching in a new form.
Pictured: Some football fans in Jersey are facing losses of thousands of pounds each.
As part of those proceedings, The Deputy Bailiff, who approved the application, was also asked to consider what should be done with funds of £4.5m in a ‘Player Protection Account’ held on behalf of the company by Nedbank in the Isle of Man.
The funds, pursuant to a trust deed dated 18 February 2020, were said to be “held on behalf of customers”, consisting of either “unspent funds” or “unclaimed dividends”.
In his judgment, the Deputy Bailiff noted that the deed’s effects on the cash were a “matter of some dispute”.
Today, the High Court of Justice for England and Wales is set to make a decision on how those funds should be returned to customers.
£3.2m is owed to customers who still have money in their accounts, leaving the operator with a surplus of £1.8m.
The High Court will have to consider the cut-off date from which cash balances should be paid back to customers, who were known as ‘traders’ on the platform. This could be 11 March, when the platform was suspended; 26 March, when it entered administration; or later.
If a date is not determined, Football Index will be liable to pay more than half-a-million per week at the current rate, which would leave it in default by 22 April.
Insolvency practitioners Begbies Traynor initiated the case on Wednesday, and urged the court to hear the case as soon as possible so as to avoid causing additional stress for customers.
Part of Football Index’s meltdown was triggered by a mass exodus of customers who were infuriated by a sudden decision to slash player dividends by 80%, meaning the value of their ‘portfolios’ fell significantly.
Football Index justified the change on the basis of recent “substantial losses”, despite having said in November that it had “never been a stronger financial position."
Critics accused the platform of operating a Ponzi scheme-style structure, which Football Index has denied.
Jersey and the UK’s Gambling Commissions have since been described as “asleep at the wheel” for not acting on concerns about the company sooner.
The UK Government announced an independent review into the meltdown of Football Index last month.
An independent expert will be appointed to run a review of the events between September 2015 and 11 March 2021, with findings made public in the summer. A White Paper setting out any potential proposals for reform of the UK’s gambling laws will be published by the end of the year.
It’s also possible the Jersey Gambling Commission will fall under the scope of the review, with the UK Government also confirming that it would “also look at the work of other relevant regulators, to provide a clear account of how Football Index’s activities were regulated and identify if there are areas for improvement in how complex products are treated.”
The Chief Minister previously said Jersey’s Government was not considering its own review, and maintained that the island “as a whole still remains a well-regulated jurisdiction.”
Two local users, Victor* and Fred*, who stand to lose nearly £20,000 between them, disagree - they told Express they are concerned as to whether Jersey’s gambling laws, regulatory framework and support systems for ‘problem gamblers’ are fit for the digital age.
*Names changed to protect anonymity.
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