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September 27, 2021
In April 2021, the Government announced it would undertake an independent review examining the circumstances surrounding the collapse of the gambling company Football Index. Football Index, operated by BetIndex Ltd, allowed customers to buy “shares” in footballers and receive returns based on their performance. The Gambling Commission suspended the firm’s operating licence in March 2021, and it entered administration shortly after.
The Government has now published its report, which examines the actions taken by the Gambling Commission from September 2015 to March 2021. Key findings include:
- in the first instance, BetIndex did not properly notify the Gambling Commission of the nature of the product in its licence application, nor did it inform the regulator of changes to the product after launch as it was required to;
- 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; and
- while Football Index was never regulated by the Financial Conduct Authority (FCA), areas for improvement for the FCA have been identified, including in speed of response to requests from the Commission and consistency of messaging on regulatory responsibilities.
The report identifies lessons to be learnt and provides recommendations for both the Gambling Commission and the FCA, which they have already started responding to:
- they have developed a strengthened Memorandum of Understanding, which includes new escalation routes to make sure regulatory impasses are identified and overcome quickly;
- the Gambling Commission has updated its framework for how it assesses risk so that product novelty is properly considered, as well as committing to consulting on tighter rules for the terminology used to describe gambling products; this includes making clear distinctions for consumers where products are gambling, rather than “investments”; and
- the FCA has additionally nominated an Executive Director to oversee the relationship with the Commission and continues to pursue its programme of change as set out in its July Business Plan.
In addition, the report asks whether more should be done to assure that gambling companies which offer long term bets are able to cover the payouts. This question will be considered as part of the Government’s Gambling White Paper, which it intends to publish in due course. To read the Government’s press release in full, click here. To access the report in full, click here.