Football Index: An open complaint to and about the Gambling Commission

Gambling Commission Complaint

by The Geek

This is the complaint I have sent to the UK Gambling Commission today.  If you have suffered significant financial harm as a result of the actions of Football Index this past year you need to make your own complaint to / about them here.  If you agree with my analysis, reference this article in your complaint and tell your own Football Index story.  I believe at this juncture it is the only way you will see any action from the regulator.  I would also suggest sending a copy of your complaint to your member of parliament, also referencing this article.

In my last article in January, I predicted that one-day people would wake up and their monopoly money balances would be worthless.  On Saturday, that prediction came 80% true. { EDIT less than 3 days after this complaint the UK Gambling Commission suspended Football Index license and the company went into administration. }

Football Index Black Friday:  80%+ Paper Loss Carnage

On Friday 5th March, Football Index suspended their markets and announced massively reduced bet payouts 30 days from that date. On Saturday morning predictably the market began rapidly adjusting to that announcement and there has been absolute carnage since with multiple news sources picking up on the life-changing sums wiped out by people who were allowed to bet way too much on this sure thing.  Why the hell this company hasn’t had its license revoked even temporarily by the time of this article, in my opinion, shows a complete lack of competence by the regulator.

My Football Index Journey

Circa the 8th of January I became aware of a company called Football Index due to massive coordinated & sustained abuse Caan Berry was receiving for criticising their product in December.  After looking into the product mechanics I ascertained that their business model required exponential growth to sustain it.  Eventually, this would come crashing down as it would run out of the new money required to maintain the illusion of value, and that this had already started in 2020.  Caan and I immediately warned our entire customer bases that if they had any significant money in this or any similar product, they needed to get it the f@!k out now. { Caan had also reported his concerns to the gambling commission in December. }

At the time we came in for a torrent of abuse from a rabid, in denial heavily invested user base that I have come to affectionately call the Church of Indexolgy cult.  This had already attracted the attention of Greg Wood from the Observer, who was already investigating some of the massive losses that had begun surfacing by football index customers.  Greg ran this article on the 16th January, and surprise, surprise he came in for the same torrent of abuse from the Church of Indexology as Caan and myself.

No matter how much I and a handful of others tried to explain it to them on Twitter the cult consistently attacked & tried to undermine the messengers rather than open their eyes to the message.  In their minds, if we stopped new money coming in they would lose out.  This was a common thing among the community on Twitter where anyone critical of the model was attacked/bullied/undermined and hounded off the timeline. { I’m told it’s akin to the community behaviour around the one coin scam. }

Since then I have paid significant attention to the company and its community to gain further understanding of the product, company & situation.

Original Article Clarifications

The 2 most common attacks on my original article were “you are making this up because you have a commercial interest in bringing football index down” and “you don’t use the product so you can’t possibly understand it”

To address the commercial agenda angle first, the complete opposite is true for these reasons.

1.            It’s actually in our commercial interests for Football Index to succeed.  We already run our product on 3 separate betting exchanges and it would be a simple adaptation of our software to generate revenue from an entirely new customer base as the football index structure is already 90%+  compatible with our product.

2.            The PR backlash both today & when Football Index does go under is going to be extremely damaging to the entire sports trading industry and that is going to hurt us financially.

To address not understanding the product criticisms, I already have a greater understanding of sports market mechanics than Joe Bloggs as otherwise, I wouldn’t have been able to produce one of the top sports trading interfaces used in the world today.

The 3 biggest technical criticisms from the cult of Indexology of my previous article were “but it pays dividends” and “they make money on trade commission” and “I can refresh my bet after 3 years by selling it & buying it back.”

I will provide some clarity around these criticisms using the “Joe Average” explanation in my previous article.  I said in that article that if you purchase Joe Average@ £1, Football Index need to pay out significantly less than £1 for the business to be sustainable.  I also made a 40% estimate on their payout percentage based on what was available to me in the public domain at that time.  However, since then I’ve found out they disclose to their affiliates that their “Liability Reserve” is 67.5%.  So let’s use this higher number.

If you purchased your Joe Average bet today and then optimally sold him & repurchased just before the 3 year period ended the following would happen to the liability reserve based on the 2019 payout numbers…

  • Year 1: -12% Payout ( 55.5%)
  • Year 2: -12% Payout ( 43.5%)
  • Year 3: -12% Payout (31.5%)
  • Year 3:  Sell & Repurchase – Pay 3 or 4% commission.  Let’s say 3.5%. (35%)
  • Year 4: -12% Payout (23%)
  • Year 5: -12% Payout (11%)
  • Year 6: -12% Payout (-1%)

In other words, the liability reserve is exhausted in 5 years and 11 months.

Not everyone plays the optimum strategy and trades more than once every 3 years, so yes there is scope for traded commissions to cover an average length of a career beyond this.  In the 10 days before the recent black Friday, my analysis suggested based on Football Index own circulation numbers & daily share trades { Which may be overinflated based on analysis of the trade data they publish on }  that a share was being traded once every 273 days.  So this after gaming duty extends the dividend reserve payout to approximately 8 years.

Clarification Conclusions

The mechanics of this model work if every single one of the below conditions are met.

A:  The average career of a player in the leagues that Football Index covers is less than 8 years.
B:  Football Index can sell Joe Average all day / every day @ £1 or above. { Or conversely pay out 1% per month or less over the life of the bet. }
C:  Football index are a responsible gambling operator and have not spent the liability reserve on anything else.

If any of these conditions aren’t met, the model is loss-making and effectively becomes a pyramid scheme as you need new money to pay out on existing liabilities!

Sports Markets are efficient and will always correct to the true value.

Football index, although overlaid by incredibly deceptive terminology, massively complex { ever-changing rules } & payouts and 3000+ selections is a sports market.  Sports markets are incredibly efficient and will always correct to true value based upon supply and demand.  There is terminology in bookmaking circles called the overround.  This, thanks to a genius invention by Andrew Black this can be easily shown in the below Betfair market in our software.

geeks toy interface grid

The Back (or Bids ) side of the market will always be greater than 100% probability, and the Lay(or Offers) side of the market less than  100% probability. { Note:  If either crosses the 100% line an arbitrage opportunity exists which will be immediately be taken by a smart punter or Betfair but that’s not relevant to this explanation.  }  The more efficient and liquid the market, the closer each side of the book is to 100%.

To approximate this to the football index market in simple terms as their model is extremely complicated, if you took the sum of all dividend payouts per share due in the next 3 years { EG £500 } then the sum of the highest bid prices on all players will be under £500 and the sum of the lowest offer prices on all players will be over £500.  There are only 2 things that will make a sports market inefficient, namely excessive supply & excessive demand.

The fatal flaw in the football index mechanics is that they need the market to be extremely inefficient (148%) to be able to sell you bets in Joe Average @ £1, and the only way this can be achieved is with sustained excessive demand, which unfortunately for them with their mechanics requires exponential growth.

Even with this “reset”, the current Football Index model is doomed to fail

As I highlighted above and in my previous article, the business model can only succeed with exponential growth and will start to fail the minute that isn’t achieved as it did last year.  In order to constantly sell you 67.5p of payouts for £1 in their structure, supply must constantly exceed demand exponentially and this eventually swallows up all the money in the world.

Football Index managed to achieve this in the early years because everyone they hooked into this was misled by the deception & perception of easy money and have significantly overexposed themselves to the product.  They in turn got their family, friends { and in turn their friends } into and overly exposed to it.  Eventually, the brakes were put on it by COVID last year at which time the bubble started to slowly deflate.  This “reset” or anything else they have done does not fix this fundamental flaw in the mechanics, and all it achieves is shift significant corporate liabilities from the mismanagement of Football Index to its loyal user base as paper losses.

Simply put, history is going to repeat itself!

This time it’s going to happen significantly faster than it did the first time as in less than a year user sentiment has gone from extremely positive to extremely negative and after this debacle, it’s not coming back.  This will result in everyone at some future date being completely wiped out.

Is Football Index a responsible operator?

In my opinion from my assessment of the company since January 8th, they are far from it and should have their gambling license revoked immediately.  This company also needs to be placed into administration whilst there is still any customer money left to redistribute.  It is also my opinion the directors of this debacle should be prosecuted as what has been allowed to transpire this past year is unbelievable.  Up until less than a month ago, they were misleading the world that they were in the best financial position ever, yet on Saturday they revealed they had been making substantial finical losses for months as I alluded to in my January analysis.

In addition, there is the responsible gambling aspect and serious questions need to be asked about how so many people were allowed {in fact pressured and encouraged from the stories I’ve been told } to deposit 4,5,6,7 figure sums in such a poor value gambling product { possibly a pyramid scheme } and I hope the upcoming gambling act review puts a stop to this ever being allowed to happen again.

And that’s notwithstanding the incredibly deceptive marketing practices that have been used throughout with this product that I allude to in a later paragraph. { Admittedly they have been trying to cover their backside in their T&Cs etc in more recent times. }

My position will not change until Football Index can publicly convince myself and its once loyal customer base that they have a sustainable, transparent business model for the future, and is a responsible operator, all of which has been seriously lacking to date in my honest opinion.

So where is the dividend liability reserve?

Without knowing the full picture it’s hard to say, but the broken mechanics & a massive reduction in payouts does seem to suggest one or more of…

A: They have been selling bets in Joe Average @ less than £1. { Or conversely paying out more than 1% per month. }

B: They have burned through significantly more of it than they should have done on other things, especially on the technology & marketing side as the spend there has been massive for a company of its revenues.

C: Using it to subsidize operations since COVID hit and the bubble started deflating.


If I also had to hazard a guess, the financial director’s departure on Thursday was either because…

A: He seriously screwed up and was pushed.

B: He did not want to be part of what was coming on Friday as he felt the business was no longer a going concern / saw what was coming and jumped.

Why were people sucked into Football Index?

The terminology used around the product has seriously deceived people.  It’s cleverly marketed as a stock exchange when in reality it is anything but.  Instead of using the terms “Bet” and “Payout” they are using “Share” and “Dividend”.  Instead of “Mug Punter / Stupid Gambler” they are using “Traders”

This has completely misled thousands upon thousands of people to believe it is something it’s not and all too frequently the way it’s discussed on social media are with the terms “Invest”, “Investment”, “Re-Invest”,  “Compounding”, “Portfolio”, “Yields”. { Even the then CEO is on YouTube last year boasting of 12% Yields. }

There is also the matter of the methods they use for portfolio valuations, where they use 4 significantly {and 2 cases outrageously} inflated prices to value customers open bets.  Even on the most realistic of the 4 options, the “Mid Price” I’m advised that this is inflated using the buy price if no sell price exists.  There is no valuation for the “best sell price” nor one for the “true cash-out” price which is significantly worse if you have more than 1 share in a player.  In fact, the only valuation should be the cash-out price.

This is extremely dangerous on 2 levels.  Firstly this deception lulls the customer into a false sense of security who is in for somewhat of a shock when they do come to sell and realize that at very best they are -10% on what they were told they were worth, and at worst completely worthless as no one wants to buy them.  Secondly and perhaps even more dangerously these over-inflated profit valuations are being passed around social media etc providing others with the misconception that people are making much better returns than they are.

The failure of the Gambling Commission.

In my last article, I suggested that the gambling commission didn’t understand the business model and once the penny drops, they would order Football Index to cease trading.  Ironically, last year in a podcast Adam Cole the founder & last CEO admitted publicly in a discussion on compliance that you didn’t understand it.  What will it take a complete collapse of Football Index to understand the products you are regulating FFS?

If you as a regulator under the regulations allowed the reported life-changing sums of money to be deposited into these games, you are not fit for purpose yourself and the regulations need serious tightening up in the new legislation!

Allowing a bookmaker to change payouts of a 3-year bet on 30 days notice like this at their complete discretion is bordering on criminality, and certainly doesn’t meet any kind of fairness or consumer rights test. { Especially without a fair value buy back from the operator for any remaining time on your bet based upon the price you paid. }

This isn’t just about football index it’s about the licensing of any similar product of this ilk that allows you to purchase poor value bets dressed up as virtual bullshit that requires exponential growth to sustain the illusion of value.

And Finally!

Gambling companies cannot be trusted, period!  They are leeches that only care about 2 things, money and bad publicity.  If they are left to their own devices they will bleed you dry by any means possible, and that includes Betfair who allowed a customer of mine who spent a mere few hundred pounds a few years ago to lose £50,000 on their Sportsbook in a mere 9 month period last year!

Kind Regards


Related: Football Index Warning Email to UKGC on 11th December 2020

9 thoughts on “Football Index: An open complaint to and about the Gambling Commission

  1. Someone very cleverly copied the spreadbet approach and used catchphrases to lure unsuspecting punters onto the platform, I in fact had a tweet with Caan on the subject and its just basically a derivative trade, you are trading in and underlying asset and not a physical thing. People were told but did not listen, and unfortunately Forrest Gump springs to mind
    “stupid is as stupid does”, don’t see how any action will get taken by Gambling commission when the Financial Ombudsman still can’t stop all the other BITCOIN ponzi betting bots out there with all the so called “famous” faces whom seem to qualify their products.

    The whole industry needs to be overhauled, why should an offshore company be allowed to gouge successful traders on its exchange with 40 pct premium charges, when the trader takes all the risk but the platform own takes a bigger cut as they feel they are missing out, they also pay no tax to the UK govt.

    Maybe HMRC should bring back the betting tax for offshore companies and we have on onshore exchange that operates without gouging its customers.

  2. Hi, looking at your maths it doesn’t look like there is any room to make this a viable product. Is there any way you can see of tweaking the existing system to make it work?

  3. Dude, it doesn’t need a tweak it needs burning down to the ground. The company relies on new deposits to pay existing customers. It’s a huge scam and never was a feasible business.

  4. Excellent analysis. The main failure here was by the Gambling Commission who clearly didn’t understand the so-called business model at all. It is complex but ultimately you could only bet on a player or “buy” and couldn’t sell. Imagine you were the first ever customer on Football Index , you couldn’t possibly short a player, you had to buy. This is the essence of why it was a pyramid scheme. On Betfair someone bets against something and someone bets for it. On this football index every “trader” was effectively betting on players to perform and then earn a dividend. The only way for the dividends to keep being paid was by attracting more and more money into the site in the form of new users. The whole business model was nothing more than a Ponzi scheme when you actually analyse it properly. My guess is when lockdown happened around March 2020 lots of people tried to get their money out. I feel sorry for the people taken in and I could imagine myself falling for something like this in my early 20’s. The Gambling Commission should never have allowed this business to even begin operating and it also sounds like they have been negligent in not shutting it down quick enough either.

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