High Court to rule on payment of Football Index customer funds today
The money in the account is earmarked to pay for funds held in customer accounts when the platform collapsed, which totalled £3.2m when BetIndex entered administration on 11 March.
However, there was debate about the status of bets that were active at the time the platform was suspended, and the dividends – a form of winnings based on player achievements such as goals – that resulted from these bets. While the account could be used to reimburse all account funds, if dividends needed to be paid, it would be in a deficit by 22 April.
As a result, the hearing will determine a cut-off date for active bets, with dividends to be paid up until the date of these bets. The hearing was initially set to be before the Insolvency List, but was raised to the High Court instead.
Dates being considered for a cut-off are 11 March, which is when the business went into administration, 26 March and a point after 26 March. The administrators, Begbies Traynor, will argue for both 11 March and 26 March, having previously recommended 26 March.
H&J Director Services 1 Limited will act as a representative for those who wish to see a later date selected, such as those with large sums staked on the site but low balances, who may receive significant dividends.
Documents show that a number of customers wished to push for a later date, and were especially opposed to the 11 March proposal. One customer noted that they “invested a significant amount of money a few days before [11 March]”, with a different customer noting that they spent £2,000 on that date itself.
Another said that choosing an early date would be “a total waste of everyone’s time” as it was unusual for customers to keep much money in their accounts, while a further customer had £1.3m wagered on the platform, and has accrued £18,719 in dividend payments.
Although the hearing will primarily concern the funds held in the player protection account, court documents also provided more information about the state of BetIndex’s finances.
Alongside the £4.5m fund for player accounts, which is currently held by the Viscount of the Royal Court of Jersey, the business held £7.2m in another bank account as of 24 March.
Although the business’ outstanding liabilities did not outstrip its assets at the time of entering administration, it was incurring heavy losses, primarily due to high dividend payments. In December 2020, the business made a net loss of £5.8m, with dividends totalling £2.1m. In January 2021, BetIndex paid a further £2.4m in dividends and made a £3.3m net loss.
In addition, these funds vastly outstripped the amount staked on the platform. The administrators estimated that the value of active bets comes to around £90m, with customers having staked £124.3m.
Documents for today’s hearing also detail the operator’s plans to relaunch the platform for the 2021/22 football season under new ownership and a pool betting licence – with customers who are owed money receiving a 50% stake as part of a Company Voluntary Arrangement (CVA). The operator confirmed that there would be a CVA to help return further customer funds earlier this week.
Other court documents show that BetIndex set out plans for administration in a board meeting on 5 March, meaning these plans were in place while players were still able to deposit and spend money.
BetIndex went into administration less than a week after announcing a controversial change to its dividend structure that reduced customer payouts, with the Gambling Commission then suspending its operating licence on the same day.
The regulator later revealed that BetIndex had been under investigation for almost a year, but said it did not suspend the operator’s licence partly due to concerns that this may have accelerated its financial decline.
The government Department of Digital, Culture, Media and Sport (DCMS) later announced an inquiry into the platform’s collapse, which will also examine the role of the Gambling Commission.