A spokesperson for the operator, which offers a “football stock market” where futures in football players can be bought and sold, told iGB it wasn’t behind or in need of restructuring payments owed to affiliates or suppliers. The business’ sponsorship deals with Championship football clubs QPR and Nottingham Forest will also continue.
However, the spokesperson did not directly answer a question as to whether the brand was at risk of closing in the near future.
The BetIndex-owned operator temporarily cut maximum dividends – bonuses issued following achievements such as a goal – were cut by 78.6% to £0.03.
“In consultation with our legal and financial advisors we have had to make the very difficult decision that in order to ensure the long-term sustainability of the platform we simply must reduce dividends,” Football Index said.
“This decision is not one that we have taken lightly. The board deliberated at length, and we have taken a number of other steps before reaching this decision: we have restructured, reduced costs, including taking directors’ salary cuts and have tried our very best to keep the dividends at the level that they have been.
“Unfortunately, however, the current yields are just not sustainable.”
In a follow-up statement, it explained that the business had been losing significant amounts of money lately. Initial recovery plans, that would have involved a less drastic dividend reduction, proved insufficient.
“Over recent months, Football Index has sustained substantial losses,” it explained. “The board agreed a recovery plan aimed at stemming these losses while retaining the dividend payments at current levels.
“It was hoped that this would stimulate a market recovery which would allow for the higher dividend to continue to be paid prior to the normal annual review, and for an exciting and affordable dividend to be announced at that time.”
It said that while its team worked hard to deliver based on that plan, it became clear that the higher dividends would still have proved unsustainable.
During this time, it offered markets on new players, through so-called initial public offerings. This, it said, was part of its effort to restimulate betting activity.
“The issuance of new shares and IPOs were key deliverables of that recovery plan, amongst other initiatives to rejuvenate the market,” it added.
The move led to a significant decrease in liquidity on the platform. However, a spokesperson told iGB that the move was the best available option for its long-term outlook even despite this impact.
“Every decision that we make with regards to changes to the platform is made with the express goal of providing a sustainable level of growth in terms of customers and the value of bets made in that period, and this was no exception,” the spokesperson said.
They added that Football Index was taking urgent action to keep an acceptable level of liquidity on the platform.
“We are working hard to restore consumer confidence in the platform as a matter of urgency.”
The spokesperson also told iGB that despite the need to restructure dividends to protect its long-term sustainability, that it was not behind or in need of restructuring any payments to affiliates or suppliers.
Football Index account funds are held in a standalone trading account separate from BetIndex’s general accounts. Trust arrangements are in place to offer protection of these funds but the operator said there is “no guarantee that all funds will be repaid in the event of insolvency”.
However, the operator’s terms and conditions say that the value of player shares purchased are “not stored in any account or otherwise protected as they are sums at risk”.
In December 2020, the operator’s co-founder Adam Cole announced he would leave the business at the end of the year as part of a “reset”.
BetIndex holds licences from the Great Britain Gambling Commission and the Jersey Gambling Commission.
A spokesperson for the GB Gambling Commission said the regulator could neither confirm or deny whether there was an investigation into Football Index. The spokesperson also noted that the only possible terms of an investigation would cover its provision of remote betting as per its licence.