Something is better than nothing
Football Index account holders are now able to login and withdraw their cash balances. In an announcement on Tuesday, the now defunct soccer betting site said that the cash out procedures are the same as they have always been. Customers should expect funds to reach their bank accounts in two to ten business days.
This should come as a great relief to many of the site’s customers, though many are still holding the bag. Football Index was a betting site, but not of the traditional kind. It was a betting exchange which allowed customers to buy shares of soccer players in a stock market-like system, either from Football Index itself or from other users on the site’s marketplace. Prices of player shares may go up or down depending on supply and demand. Thus, many users played the site like a stock market, trying to buy low and sell high to earn a profit.
Football Index did it to itself
The key to the whole thing, though, were the dividends that Football Index paid per share, depending on players’ performance in games and even on social media (I know) each week. As such, shares in the best soccer players were especially desirable because they could earn passive income without requiring the user to sell any shares. The maximum daily dividend payment per share was 14p.
But Football Index realized it was losing a ton of money paying all these dividends. On March 5, it announced that the maximum daily dividend payment per share would be slashed in four weeks from 14p all the way to 3p.
The announcement sent player share prices tumbling. With the devastating reduction in dividends, player shares were not nearly as desirable, thus causing users to try to sell off their holdings. But nobody wanted to buy. Many players’ share prices dropped by more than 90%.
Customers lost millions
Cash in users’ accounts was safe, but values of customers’ holdings were destroyed. Many users lost anywhere from four to six figures in account value, investments which had cost them real money. On top of that, The Guardian reported that Football Index continued to issue new shares between the time it decided to reduce dividend prices and the actual announcement.
The business was halted shortly after the March calamity. Football Index went into administration (essentially the UK’s version of bankruptcy) and the UK Gambling Commission stripped it of its gambling license.
In June, the UK High Court ordered Football Index to reimburse its customers £3.2m. The problem is, even though customers can now access their cash balances, those with money tied up in player shares will never see that value realized. Those who lost thousands when share values crashed and then the site went under will never see that money again.
It is estimated that Football Index users are out a combined £90m from the ordeal.
