Football Index’s (FI) collapse caused chaos for the Gambling Commission, whose competence was called into question following a report on the incident from the Department for Digital, Culture, Media and Sport (DCMS).
Commission CEO Andrew Rhodes has since taken to the watchdog’s blog to answer the public’s questions regarding the whole affair.
In a series of lengthy responses, Rhodes discusses several subjects, from the regulator’s technological literacy to its integrity.
First off, the executive fields a question about whether or not Football Index operated as a ‘Ponzi Scheme’, with a detailed answer breaking down what constitutes such a scheme, as well as clearly outlining why Football Index wasn’t one.
In his response Rhodes categorically denies such a claim, saying: “The Commission did not license a Ponzi scheme, and the independent report’s findings concluded that Football Index was not operating as a Ponzi scheme.”
He then goes onto to answer a question about remedial compensation, and explains why the Gambling Commission cannot offer redress, which, according to the CEO, primarily owes to its lack of statutory powers.
“Some sectors have statutory compensation schemes and others have voluntary ones. Many sectors do not have this, however, and as such in the Commission’s case, there is no fund from which any redress could be provided in the event of a gambling operator collapsing,” he said.
Then, perhaps most importantly, Rhodes discusses the accusation that the Commission simply did not understand Football Index’s product.
In his answer, he contends that gambling regulations do not encompass the entirety of the service that FI was offering, and remarked: “The ability to sell bets/shares between users was something the company put in place immediately, but it did so without any permission. This is a feature that sits outside gambling regulation and is something that the Commission would be likely to refuse and had done so before.”
This is an issue that has now come up again regarding the regulator’s statement on, and subsequent investigation into, NFT fantasy football site Sorare.com, which utilises blockchain technology for its digital trading card game.
However, Rhodes refuted the notion that the Commission did not understand Football Index, stating: “The independent report didn’t conclude that the Commission did not understand the product it had licensed, but did conclude that what BetIndex operated was only partly what had been licensed by the Commission.”
In his final summary, Rhodes, despite not being Chief Executive at the time, accepted full responsibility for the actions of the Gambling Commission, and reiterated the regulator’s commitment to its role as the UK’s top gambling watchdog.