Founded in 2015, Football Index was a betting platform that tries to replicate a stock market. But, instead of stocks and shares, customers could buy and sell football players. The key difference being that traders didn’t actually own part of a player.
Dubbing itself “the football stock market”, Football Index referred to players as shares and called bonus pay outs – given when a player played well or made media appearances – dividends.
If a player scored goals or played well, their transfer value would increase. Equally, if they joined a bigger club, their “share price” would go up.
Users made a profit by identifying future stars and buying shares in them early. Later, they would often be able to sell them for a profit after their value rose.
Football Index wanted to offer an alternative to traditional bookmakers as well as the stock market, which it felt was inaccessible. It had ambitions of genuinely becoming a football stock market and was even in talks with Nasdaq, an American stock exchange.
However, things didn’t quite go to plan…
What actually happened with Football Index?
The betting platform went into administration in March. Customers lost almost £90 million as the company collapsed.
In the weeks before, customers saw the money they had stored in the Football Index reduce significantly as players’ “share prices” decreased. Now, many fear all their money is lost.
It has since ceased trading and a statement on Football Index’s website reads: “Please be advised that the UK and Jersey Gambling Commissions have suspended our operating licenses.”
This is despite Football Index repeatedly reassuring consumers that they have “never been in a stronger financial position” as recently as November.
However, on 5 March the platform slashed the “dividends” by 82 percent, triggering a massive slump in the value of players on its market.
Just days before the so-called football stock market announced the “dividend” cut, it also “minted” new shares of players, which encouraged many customers to buy more stakes at values that would soon collapse.
The “minting” of shares and a 2% commission on buying and selling on its platform were the company’s two main sources of revenue.
The Gambling Commission suspended the company’s betting licence and has announced an investigation into its operations. The collapse is being described by many as the biggest failure of a gambling business in British history.
Additionally, the CEO of the gambling commission, Neil McArthur, resigned on 15 March. This was likely linked to the index’s collapse.
Why has Football Index been in the news?
The sheer amount of money involved and the betting platform’s significant social media following meant Football Index attracted media attention.
Stories of those caught up in the football stock market facing sleepless nights and cold sweats, as many lost thousands of pounds, swept across media outlets.
Generally young, its customers have learnt harsh lessons in the dangers of gambling. But equally, concerns have been raised about how well these risks were communicated to customers, particularly as it presented itself as a football stock market rather than as a traditional betting platform.
Over 40 MPs and peers have written to Prime Minister Boris Johnson urging him to conduct an “urgent and independent public enquiry”.
The collapse is particularly topical as financial influencers are growing in popularity, but are often spreading dangerous advice.
The Financial Conduct Authority – a UK regulator – has warned of the risky trading tips being shared on TikTok and other popular social media sites.
What are safer alternatives for your money?
Gambling your money is never safe. If you’re looking to make gains, I believe investing is a better option.
Contrary to what Football Index tried to claim, the stock market doesn’t have to be intimidating and inaccessible.
As a beginner, the stock market may seem confusing, but it doesn’t have to be. There are plenty of share dealing accounts that are great for beginners and guide you through the process.
Of course, though, your money is not guaranteed when investing. The value of your investments can go up and down.
A Stocks and Shares ISA can also be a good option for investing.
Stocks and Shares ISAs allow investors to pay in up to £20,000 each year – completely tax free.
Please note that tax treatment depends on the specific circumstances of the individual and may be subject to change in the future.
There’s a range of different Stocks and Shares ISAs on offer, so you’ll likely be able to find one to suit your specific circumstances.
It’s also worth ensuring you have an emergency fund set up in case something like Football Index negatively affects you.
Keeping 3 to 6 months’ worth of expenses in an easy access cash savings account can help protect you in the event of an emergency. It can also stop you panicking if your investments do fall, even temporarily!
While interest rates are low at the moment, there are still some good options for savings accounts.
