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The founder of a ‘football stock market’ which collapsed last year leaving traders with losses totalling around £100m has been blacklisted by Jersey’s gambling watchdog.
In a notice quietly published on its website last week, the Jersey Gambling Commission confirmed that that Football Index’s Adam Cole (72) was now prohibited from being involved with any gambling company licensed by the Commission.
It comes after the watchdog’s Board of Commissioners suspended the licence of Football Index’s parent company BetIndex, which was registered in Jersey with an office in Wharf Street, pending an investigation into its activities in March 2021.
Their probe found that BetIndex was “no longer fit and proper to hold a licence in Jersey”, leading it to be revoked in October 2021.
An investigation into founder Adam Cole followed, with the Commission concluding that he should not be allowed to operate any gambling business in Jersey from 6 April 2022.
His ban is of "unlimited duration", though Mr Cole does have the right to apply to the Commission to have it withdrawn or varied.
Founded in 2012, Football Index operated like a stock market, allowing users - known as ‘traders’ - to buy imaginary stock in different players and receive a payout if they play well in real-life matches.
The company primarily made its money through the ‘minting’ of those shares, and taking a commission on buying and selling on the platform.
Pictured: The collapse left thousands of football fans - including some in Jersey - facing losses of thousands of pounds each.
But traders were left shocked in early March 2021 when it was suddenly announced that dividends would be slashed by 80%, leading player values to crash.
Football Index justified the change on the basis of recent “substantial losses”, despite having said in November 2020 that it had “never been a stronger financial position."
Shortly after, its licence to operate was suspended.
Following the meltdown, Jersey’s Royal Court took hold of the funds until it could be decided how they should be distributed.
That was decided in June 2021 in a ruling by London’s High Court.
It concluded that £3.5m of the protected pot should be distributed to those with funds held in player accounts – a small fraction of the estimated losses incurred by the 280,000 customers of the collapsed ‘stock market’.
Some users accrued portfolios worth thousands – and sometimes tens or hundreds of thousands – of pounds, including in Jersey, where there were around 100 customers.
At the time of its collapse, many customers likened the company’s structure to a “Ponzi scheme”, which Football Index denied.
Two local users, Victor* and Fred*, who stood to lose nearly £20,000 between them, told Express at the time that they were concerned as to whether Jersey’s gambling laws and support systems for ‘problem gamblers’ are fit for the digital age.
They also questioned whether the UK Gambling Authority and Jersey Gambling Commission, which regulated the company, had their eyes off the ball in advance of its collapse.
Listen: Fred* called for action from local politicians and Jersey’s Gambling Commission to ensure such a crisis cannot occur again in a previous Bailiwick Podcast.
Court documents have shown how Football Index contacted insolvency specialists three weeks before its collapse – while customers were still being encouraged to deposit money.
In September 2021, an independent UK Government review led by Malcolm Sheehan QC was published, detailing multiple failings by the UK Gambling Commission to keep tabs on Football Index and protect consumers.
It said that, while the Commission was made aware of concerns about the ‘stock market’ product in 2019, it did not do enough to act before its collapse in 2021.
Following the review, the UK Gambling Commission updated how it assesses risk in relation to “novel products” – in other words, gambling products that do not follow a traditional format, like Football Index. The actions of Jersey authorities fell outside of the scope of the review.
Asked if he would consider a local inquiry by Deputy Steve Ahier back in April 2021, Chief Minister Senator John Le Fondré said he would only do so “if the facts warranted it” and maintained that the island was a “well-regulated jurisdiction.” No review has been opened since.
*Names changed to protect anonymity.
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