Football Index has appointed administrators and had its gambling license.
Millions of pounds of customer money is tied up in the self-styled football stock market which allows ‘traders’ to buy shares in football players.
Traders are currently unable to deposit or withdraw money as the platform undergoes a restructure.
Should the company fail some individual customers could be set to lose £200,000.
What has Football Index said?
On the platform’s official website the company announced that it had taken the decision to “suspend the platform”.
The company acknowledged “we understand this has been a difficult and challenging week for you all,” before revealing “the decision has been made to suspend the platform.”
Plans to restructure the platform are underway after a dividend structure proposed on Friday was not “well received” with the company promising to “find a more agreeable way forward.”
A restructure could see “equity in BetIndex Limited being distributed to customers, board representation for customers, and a new management team put in place, along with other initiatives” according to the statement.
They acknowledged that the no deposits and withdraws were possible and that this would remain the case whil administrators were in place.
Customers and creditors are set to be contacted by administrators according to the platform.
The statement concluded: “This decision is deeply regrettable, and is the outcome we were seeking to avoid by restructuring dividends. However, we believe it is the most responsible route forward for our community given the situation as it has developed.
“The administrators will release a statement upon their formal appointment by the Court, which is anticipated to be in the next 10 days and will be able to share further timelines at that point.”
How does Football Index work and why is it failing?
Set up as a rival to betting platforms, Football Index claims that it offered football fans the opportunity to place a bet on something “that isn’t defined by a win-lose”.
The platform allowed players to buy shares in a player banking on the future performance of players, with dividends paid out to owners of shares in top performers.
The website was also pitched as an alternative to the regular stock market offering to “provide a way of Trading in something that you know and love.”
On March 5 the company infuriated investors when it announced a policy to reduce “dividend payouts” on players. Customers took to social media to complain about the change saying they had lost thousands of pounds following a subsequent crash caused by the change.
On March 6 announced that it had incurred "substantial losses”.
What will happen to my money?
If a business goes into administration it doesn’t necessarily mean that it is going out of business.
It is the administrators job to maximise the value of the company while selling it off – if keeping Football Index running as a going concern is in the administrators interest it could resume trading allowing investors access to their money.
If the company fails, investors with money tied up in the platform will be required to apply to the administrator. Money left behind after creditors and employees have been paid will be paid out to claimants.
Money Saving Expert notes “you may be lucky to get anything. If you do, it's often just a few pence per pound owed.”
In their statement on Thursday the company explained: “The restructure could involve equity in BetIndex Limited being distributed to customers, board representation for customers, and a new management team put in place, along with other initiatives.”