£4.5m was held in BetIndex’s player protection fund, which was used to cover the £3.5m worth of money judged to be held in player accounts when the business collapsed. However, the value of bets that were active at the time of collapse was a much larger figure, and the status of any possible reimbursement of these funds remains unclear. Rhodes has said that the only course of action available to players looking to recover funds is to go via the administrators, Begbies Traynor.
Rhodes said: “In some industries there are mandatory or voluntary schemes or compensation schemes which give some protection to funds in the event of a company collapsing. The gambling industry is not regulated like that – its regulated as a leisure activity.
“We always say nobody should bet more than they can afford to lose. Not because the company might collapse but because gambling is inherently risky. I realise this is no comfort to some of those who have lost life changing amounts of money with the collapse of BetIndex. The best avenue for the recovery of funds is best pursued through the administrators.”
Rhodes also admitted that the Commission was slow to act in the Football Index case, as per the findings of the Department of Digital Culture, Media and Sport’s (DCMS) independent investigation into the platform’s collapse.
Rhodes acknowledged that the Commission had licensed Football Index to be one type of product – a fixed-odds betting service where players receive dividends but cannot buy or sell bets – only to find that the real product had a stock market model that should have required an exchange betting licence.
Rhodes added: “As the report says, we did not licence Football Index to sell bets between users or between the company and the users. The product that we licenced was one where customers could place a bet on a feature of a given football player and be paid dividends based on the performance of that football player. We did not licence a product for the sale of bets known as shares between users.
“We took too long in reaching our final decision and that’s something that we agree with. Our focus was on protecting consumer and trying to bring Football Index into compliance but we should’ve drawn a line under those efforts at an earlier point.”
The Commission initially defended its decision to wait to suspend BetIndex’s licence because of concerns that a suspension may hasten its collapse and the loss of customer funds. Rhodes again reiterated this point.
He said: “Once it became clear that Football Index was not operating according to its original licence, the Gambling Commission had some very difficult choices. The product was very large and the suspension of the licence would have had huge repercussions for the company.
“The reality is whenever we suspended the license the company would have most likely collapsed and most of the customers would have lost the money they had in open bets.”