Football Index

Blandiblub

With regards to the funding of the dividends, it's not just new customer money - FI would charge commissions on "trades" (ie: you buying a bet off another customer) plus they mint new shares in players at certain price points. For example, they were minting new shares in Jadon Sancho at about £7 a pop. Apply that to many other players and there's a (potentially) a large pool of income. I think the problem has come from an overly ambitious and overly generous increase in dividends last year. On a "gold" day (ie: a match day with over 15 games, like a Saturday), the best player would generate 28p in dividends per share. This appears to have been the thing that made it unsustainable in the medium term and we are where we are.

Also, the thing that has really hit customers was that initial devaluing of essentially all footballers a couple of Fridays ago. There had been absolutely no indication of any major financial worries - quite the opposite in fact (they'd been quoted as stating "never been in a stronger financial position"). They suspended the market on that Friday, which is a normal thing to do when new features or changes are to be implemented, and the majority of customers (judging by the Twitter timeline) were very excited about what was about to come. Speculation about expansion into other territories (Germany) was mooted/rumoured. NO-ONE seemed to be expecting any reduction in dividends and certainly not to the extent of what actually happened. They killed the product with that change and went into administration a week later. 

The other incredibly dodgy thing they did were those aforementioned minting of new shares in players like Sancho. £7 a pop, just a few days before a massive reduction in dividend value which they would've known was coming.

There are people with huge amounts of money in it, which is very probably now lost, but the mantra was always "never gamble anything that you can't afford to lose".

The ongoing discussion, including legal action, will be interesting to follow.

Victims of this collapse are already in a very dark place and no-one was stupid to put in the money they have done. While they shouldn't have gambled more than they could afford to lose, a little bit of the "be kind" mantra is required, even if you would never have done the same yourself.

MaxiRobriguez

Minting new shares.... which had no underlying value.

Commission on trades of shares.... which had no underlying value.

No indication of financial issues and indeed pumping the product right up until the death to extract as much money from punters as possible.

The scheme relied on new punters to pay the older punters. The problem wasn't the site was overly ambitious, the problem was the site was a ponzi scheme that used the nations favourite past time to not attract suspicion 

resk

Blandiblub said:

There had been absolutely no indication of any major financial worries - quite the opposite in fact (they'd been quoted as stating "never been in a stronger financial position"). 

I mean... that's kinda exactly what I would say if I wanted as much money as possible to come in from "customers" while plotting exactly the optimum and most profitable point at which to wind the whole thing up and disappear with all the money.  

Blandiblub

Well, of course. The company/system had been running for over 5 years and with a great deal of success. The wheels have well and truly come off since about last summer, when they changed their fundamentals (order books).

Yes, the recent events have, in hindsight, been a cash grab.

milton1970

It was obviously a gambling pyramid scheme & “the investors” were warned repeatedly from the start by online posters .. these poster were repeatedly shouted down. No sympathy at all .. in gambling for every winner there is always at least one loser !

fwor

Blandiblub said:

a little bit of the "be kind" mantra is required

There are other forums they can go to if they want sympathy. It could be said that we have a "duty" here to help people remember and think twice in future, and if that's a reasonable way to view the situation, then those interests are not served by "being kind".

Malthusian

Blandiblub said:

Well, of course. The company/system had been running for over 5 years and with a great deal of success.

Running a Spitzeder-Ponzi scheme for five years is not "success". If it had been successful it wouldn't have just collapsed.

It would not have been rocket science to design the scheme in such a way that money paid out = money in (minus profit margin). That's the basic skill of "making your book" that gives bookies their name. Just because Football Index had slightly different rules to conventional betting doesn't make it any less incompetent to promise more in payouts than you have available from wagers, resulting in the scheme collapsing.

There's enough computing power in the average fridge to calculate how much the game can afford to pay out in "dividends" based on how much has been wagered. There are bounds on what's physically possible in a game of top-level football; you can't be bankrupted because you offered £X for every goal that Marcus Rashford scores and he scores 12 in a single match. Not if you can do maths, and if you can't, bookmaking is not for you.

There are proper bookmakers which have been going for over a century because they don't offer more in payouts than they take in. Collapsing after five years is not success.

It's not even a success compared to other Ponzis - Madoff's ran for decades, Stanford's for over a decade.

Aretnap

Regulator asleep at the wheel and ignored warnings that the business model was unsustainable in January of last year? I'm sure this can't be true.

https://www.theguardian.com/football/2021/mar/18/football-index-gambling-commission-warned-january-2020

A_Lert

Here's hoping we see suitable comeback from this. Go after the owners' assets, bring criminal charges if needed, now that the evidence is clear it was fraudulent.

And yes, I have sympathy for those who have lost out. Just as I would have sympathy for punters with a regular old bookie if it went bust and they lost all their deposits and winnings.