A former senior employee of the failed betting platform Football Index has spoken for the first time about the structural flaws which brought down the business and the increasingly desperate attempts to save it in the months leading up to its collapse in early March.
Football Index went offline after a series of crashes in its “football stock market”, where users could buy and trade “shares” in leading players which returned dividends according to their performances on the pitch. The Gambling Commission, which regulated the company, suspended its licence on 11 March, leaving customers with stakes of at least £90m in open bets trapped in the platform.
The Guardian reported last week that FI’s directors were warned by an ex-employee soon after launch that its business model was an “unsustainable” bubble similar to a Ponzi scheme, and now another former employee has described the months leading up to the moment when it finally burst.
A fundamental problem with FI’s business model, the former employee says, was that it was impossible to price shares – or bets – accurately, with a workable profit margin for the platform included, when the firm could expect to pay dividends on each bet for the duration of a player’s career.
“They basically constantly sold bets that would pay out five quid for three quid in the early days of the platform,” the ex-employee said. “It’s as simple as that; they sold loads and loads of bets at prices that were stupid.