From Football Index to Ponzi Scheme: How to Recognise a Ponzi Scheme

In early 2020, the online football trading platform Football Index collapsed, with investors losing millions of pounds in the process. What was not widely reported at the time, however, is that this was a complex case of a company going bankrupt. 

Instead, it was a textbook example of a Ponzi scheme. This blog post will closely examine what constitutes a Ponzi scheme and how to identify one. We will also investigate the case of Football Index app to understand better how these schemes can collapse.

Football Index was set up to act like a stock market trading app. Users could buy and sell “shares” in leading players, with their performance on the pitch determining the return dividends. Players who did well would score bonus points that could be used to purchase more shares or cash them out for real-world money.

Football Index – Doomed From The Start

At the beginning of 2015, when Football Index launched, the concept was hailed as revolutionary and marketed to football fans as a ‘safe’ way to make money on the sport they loved by using their knowledge. In an article for The Guardian, the business model was explained and declared fundamentally floored and here’s why…

In the beginning, Football Index called itself an investment company, not a gambling app. The premise was that all investments were long-term and promoted as an alternative to traditional betting since the stake was “invested” over months or years and could not be lost in a few hours.

However, early investors often cashed out quickly when the share price rose, leaving Football Index with a longer-term problem. To offset this, Football Index began offering loans to traders. Loans meant traders could borrow money from a sister company and use it to invest in more shares. As more people borrowed money, the number of shares increased but so did the amount owed to the company.

This deliberate imitation of an investment product had implications for users and Football Index alike – customers were obliged to deposit significant sums and stake most or all of the money on shares since cash balances earned no dividends – leaving them without protection if things went wrong. The risk was compounded by Football Index’s decision to stop allowing investors to withdraw their funds as early as 2018, creating a situation with little liquidity in the market.

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Football Index’s Floored Business Model

The fundamental problem with FI’s business model was that it was impossible to price shares accurately – or bets – with a workable profit margin for the platform included when the firm could expect to pay dividends on each bet for the duration of a player’s gambling apps career. It quickly became apparent that Football Index couldn’t sustain its dividend payments in the long run, and users were left out of pocket.

Non-payments are a key warning sign for gambling online: if something looks too good to be true, it probably is! Any company offering ludicrously high returns should be cautiously treated and investigated further.

Football Index came crashing down as people began withdrawing their funds faster than they were coming in, and the company could not meet its obligations. This is another common warning sign of a Ponzi scheme: when withdrawals exceed deposits, the system collapses.

Was Football Index a Ponzi Scheme?

It is tough to prove whether Football Index was a Ponzi scheme, and the company denied the accusations. However, several characteristics point toward it being a Ponzi scheme

– unsustainable returns

– withdrawals exceeding deposits

– lack of transparency

– unrealistic promises

At last, here is some good news at last for those scammed by Football Index. According to Gambling News, a court in Jersey has ruled that liquidators for Football Index will allow some customers to get their money back. However, it’s unclear how much or exactly when they can expect access to the platform to withdraw their cash. The chances are bettors will only get back a fraction of what they’re owed, but something is always better than nothing.

How a Basic Ponzi Scheme Works and Why it’s Illegal

A Ponzi scheme is an illegal form of investment fraud. It relies on taking money from new investors to pay out “returns” to existing investors, with no real underlying asset or business model. The returns become increasingly difficult to pay out as more people invest until the whole thing collapses, and all the investors are left with nothing.

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Ponzi schemes can be known as Pyramid schemes because of their structure. Almost always, early investors on the pyramid get paid from the money coming in from new investors lower down. Famous Ponzi schemes include Bernie Madoff’s multi-billion dollar scam and Allen Stanford’s 8-billion dollar swindle.

How to Invest or Gamble Online Safely

Investing and gambling are different things. When you invest money theirs a good chance that your initial stake will be safe (depending on the level of risk you take), but gambling is a high-risk activity that may result in you losing all your money.

The best way to bet safely online is to use official gambling sites and apps. These are regulated by gambling commissions, meaning you can be sure the site is legitimate and trustworthy. You should also check that the gambling provider has proper customer service channels in place so if something goes wrong, you can get help. Most reputable gambling sites offer 24/7 support with live chat agents or contact telephone numbers.

Finally, ensure you understand how much money you need to stake and what types of bets are available before playing. It might seem obvious, but only gamble what you can afford to lose.

It’s important to remember that gambling apps and sites can be fun but also dangerous, so be sure to use them responsibly. When it comes to gambling online, safety comes first!

By following these simple tips, you should be able to enjoy gambling safely – and if you think something is too good, it probably is! If a deal looks too good to miss out on, take the time to do your research before committing any money – it could save you from falling victim to a Ponzi scheme like Football Index. 


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