There is an interesting posting on the UK Gambling Commission website that reveals more than it probably ought to.
Published last week, the post reflects on the investigation into the shambolic situation that unfolded prior to, during and after the collapse of Football Index, and the acute failings of the regulator as part of the mess. I’ll take a deep dive into that inquiry shortly.
But what really stood out about the article was a paragraph at the bottom, that I’ll replicate here verbatim: “The Government has announced an increase in funding for the Gambling Commission from October which will allow us to continue to improve oversight of the industry and improve outcomes for consumers.”
What’s interesting about that? Well, given that the immediate future of the Gambling Commission as the industry regulator has come under threat – not least in the wake of the Gambling Act review and having been described as ‘not fit for purpose’ by the National Audit Office – the government has surprised many by showing their support for the organisation.
Ultimately, if the Commission was to be canned following the white paper into the gambling sector, would the government have given them any extra funding? The scale of the money given hasn’t been revealed, but you would imaginable its substantial if mentioned publicly – albeit at the bottom of a press release.
Gambling Commission and FCA to ‘Improve Cooperation’
The independent review into the collapse of Football Index – and, specifically, parent company Bet Index – was led by Malcolm Sheehan, an impartial individual with stacks of experience in these matters.
While not scathing in his condemnation of the Commission, Sheehan clearly insinuates that the regulator should have acted more robustly in its investigation of the now liquidated operator.
Some of the more salient points raised include the accusation that the commission ‘could have better responded’ to the unique conditions of the Football Index product, which while presented as a trading game was far more akin to gambling on player performance.
The Commission should have implemented ‘earlier scrutiny…and quicker decision-making’ in dealing with the firm once the true nature of their product was revealed.
The regulator wasn’t the only one to get a metaphorical kicking, with the Financial Conduct Authority (FCA) also questioned in their response to the situation. Sheehan’s report recommends that the two agencies work more closely together in the future to ensure communication is more efficient and that the ‘consistency of messaging’ on regulatory responsibilities is ensured.
One positive outcome already has been a revised Memorandum of Understanding, which when implemented will ensure that issues can be escalated in rapid fashion, and the FCA has appointed an executive director who will work directly with the Commission on such matters.
Another side note mentioned in the report that is worthy of a second look is the requirement for all bookmakers to be able to show they can cover the payouts of ‘long term’ bets. This is to be considered in the Gambling Act white paper, and it may be the case that all firms will have to set aside a fund designated purely to pay out long-term and ante post wagers.
Commission ‘Accepts’ Blame for Football Index Debacle
It’s human nature to point fingers and assign blame in these situations, and on this occasion – perhaps rightly, given the evidence provided by the inquiry – it’s the Gambling Commission that has taken on the role of scapegoat.
The regulator’s CEO Andrew Rhodes, whose tenure began after the Bet Index debacle, accepts that his organisation could have done more to protect the welfare of the doomed brand’s customers. “No amount of explanation of what happened to Football Index will take away the justifiable hurt and anger its customers are experiencing having lost, in some cases, life-changing amounts of money,” he said.
“We accept and agree that we should have drawn a line under our efforts sooner, but this does not mean those customers would not have lost money in the event of the Bet Index company collapsing.”
Rhodes also reflected on the unique nature of the Football Index product, which was a self-styled stock market for the leading players from around the world, whose value would rise and fall based upon their performances on the pitch. “The lines between what is gambling and other types of products has become increasingly blurred, and no longer neatly fit into existing statutory definitions of gambling.
“The review provides a number of helpful recommendations for how both regulators can work better together, and for how our regulatory approach deals with novel products.”