GC chief addresses claims regulator “did nothing” in Football Index collapse

News  /  Published 03 Aug 2021  / 
Gambling Commission interim chief executive Andrew Rhodes has attempted to clarify the Commission’s level of involvement in administration proceedings relating to Football Index.

Rhodes, who was appointed to the position back in June following Neil McArthur’s departure, said he had received a number of messages regarding the operator and took to Twitter to address people’s concerns directly.

It had been hoped that a Company Voluntary Arrangement (CVA) would be a feasible way to reimburse customers who lost their money. However, Rhodes said that the Gambling Commission could not help determine if this option remained likely as it was strictly an administration matter rather than one related to the regulator.

Rhodes said: “A CVA may or may not happen – it is not something the GC is involved with and would not be. It’s between the administrators and any potential investor/buyer to set up a CVA. If a CVA does happen, then they will likely make an ‘offer’ for the debts the company has which would be your bets as well as any other debts.

Court documents had previously revealed that the operator’s plans for a CVA involved relaunching the platform, with creditors – including former customers who lost money – receiving equity in the new business.

“This does not mean you would get all your original stake back – it depends on what they offered. Then the CVA would need to apply for a licence to operate from us, which we would be obliged to consider,” he said.

Rhodes also refuted claims that he said he didn’t know how much peoples bets were worth, saying that this was for the administrators to decide: “They need to be valued by the administrators. There are several ways of valuing the debt and whilst many feel this should be the original stake, there are several ways of looking at it.

“Realistically, this will be part of attempting a CVA and if there is no ultimate rescue for the company the debt would need to be valued as part of winding a company up.”

Rhodes declined to comment on the roles of individuals during the investigation, as proceedings are still ongoing. He said he was also unable to provide an answer for when findings from the Football Index inquiry would be published, as it is not being conducted by the Gambling Commission but by DCMS.

Many disgruntled customers demanded that the Commission should be responsible for covering losses made as they were regulating the platform. Rhodes responded saying: “Being regulated does not prevent a company going into administration and unlike some other sectors, there is no insurance or compensation scheme to cover gambling companies that go into administration and then liquidation.

“Funds protection needs to be made clear by the operator but this will vary between companies and aside from funds held separately, often the cash balances, this does not protect against a company going into administration. Administration for operators is not common – there have been four in recent years, though orderly wind-up is a bit more common.”

Rhodes also suggested that there were certain details of actions taken that the Commission could not reveal. After BetIndex collapsed, the regulator revealed that the business had been under review for almost a year but said there was no grounds to suspend its licence at this time. It argued that the move could have worsened the business’ financial struggles, and therefore put more customer funds at risk.

“Many have assumed the GC ‘did nothing’ and you are entitled to your view,” he said. “What I would ask you to have in mind is that we currently cannot say very much at all about these matters because of ongoing investigations and reviews.”

The “football stock market” platform collapsed in March following its operator BetIndex going into administration.

The case was subsequently handed to administrators before being raised to the High Court, where it would be decided how £4.5m of customer money – including only funds held in accounts and not money spent on active bets – would be repaid.

Ultimately, the court determined a cut-off date for account balances, allowing for the repayment of up to £3.5m.
However, a CVA or liquidation of the business is likely to be required in order for customers to see any of the funds spent on bets that were active when Football Index collapsed.

 

Source: iGB News