Football Index, the online gambling platform, has entered administration and been suspended after a market crash at the weekend sparked fury and disgust from investors.
The under-fire company announced on Thursday evening that, after discussions with ‘external’ legal and financial advisors, the decision was made to help find an ‘agreeable way forward’.
Administrators Begbies Traynor have now been called in – with Football Index claiming there is a hope that the site will be able to continue in a ‘restructured format’.
Virtual gambling platform Football Index – a shirt sponsor for QPR and Nottingham Forest – has been suspended after the catastrophic market crash
In an explosive statement, the platform admitted the move may see equity being issued to investors, board representation introduced for its users and, more importantly, a new management team put in place.
‘Until such time as the administrators are in office, the platform will remain suspended and no trading or payment transactions, such as deposits and withdrawals, will be possible,’ Football Index added.
‘Once in office, the administrators will be in contact with customers, creditors, and other stakeholders. This interim step of suspending the platform is merely to ensure that everyone’s rights are preserved in relation to funds held by BetIndex Limited.’
Advertised as a stock market for footballers, and licensed by the Gambling Commission, Football Index confirmed that no trading or transactions, including deposits or withdrawals, will be available for the foreseeable future.
The company went on to insist that the decision to suspend the market was ‘deeply regrettable’ – and an outcome they attempted to avoid by slashing dividends by around 80 per cent on Friday.
A further statement is expected from the administrators within the next 10 days after their appointment is officially rubber-stamped.
The sudden change in the company’s terms and conditions resulted in the share prices for many players on the site plummeting over the weekend.
A number of footballers are now worth just pennies, and investors told Sportsmail that they feel ‘trapped’ after the value of their extensive portfolios dramatically dropped – with many having expressed concerns after losing ‘life-altering’ amounts of money, often ranging in the thousands.
The buy and sell prices for the world’s top players plummeted drastically over the weekend
Football Index explained that their primary objective when cutting dividends was to ‘protect the long-term sustainability of the platform’.
Investors are able to buy and sell ‘shares’ in footballers around the world on the site, and they will receive dividends in return depending on the performances of the players.
They will typically take up a three-year contract – although the maximum dividend users may win on a single day has now dropped from 33p to just 6p.
There is ire directed at Football Index’s assurances to customers about their strong financial position – which contrasted to the company’s ‘significant’ losses this year.
They were told that the the platform had, in its five-year history, ‘never been in a stronger financial position than today.’
Founder Adam Cole admitted to shareholders in an email, which was sent last week and seen by Sportsmail, that work was underway to ‘stimulate liquidity and restart the market’.
Football Index has also come under fire after the company continued to ‘mint’ and issue new shares in the days leading up to the announcement that dividends would be reduced.
They have been accused of not delivering on several promises by investors – with a touted expansion into Germany and work alongside NASDAQ widely viewed as an indication of the company’s bright future.
Notts Forest are in dialogue with Football Index – their main shirt sponsors – following the crash
A Q&A session with CEO Mike Bohan, which was advertised a fortnight ago but failed to take place, also stirred frustrations in the community.
Football Index has even been accused of being a ‘Ponzi scheme’, a form of fraud that lures in investors and hands profits to earlier investors with funds from recent ones.
An email from its customer service team surfaced on social media and raised serious concerns that the company relies on new deposits to pay its existing investors.
‘At the time of communication, Football Index had substantial cash reserves,’ it said. ‘However, in the coming months Football Index sustained consistent and substantial losses due to very low deposit levels which depleted their reserves.’
They have categorically denied that new deposits are linked to payouts, however.
Meanwhile, Sportsmail revealed on Thursday that Nottingham Forest are in dialogue with Football Index, their main shirt sponsors, after becoming aware of the backlash facing the platform.
QPR, whose jerseys are also emblazoned with the company’s logo, declined to comment.
Football Index and Begbies Traynor have been approached for comment.