Bloomberg
(Bloomberg) -- A U.K. gambling website that calls itself a “real money virtual stock market” offering bets on soccer players said it’s in talks to fix a liquidity crunch and paused a technology project with Nasdaq Inc.Football Index also said it would slash payouts, or “dividends,” to clients in a move that caused an angry backlash on social media. The decision was made following consultation with legal and financial advisers, “in order to ensure the long-term sustainability of the platform,” Chief Executive Officer Mike Bohan said in a statement.“When it comes to liquidity, I want to assure you all that we have a dedicated liquidity consultant who is engaging with various third parties in the market,” Bohan added.A company spokesperson declined to comment on the cause of the firm’s current liquidity situation when contacted by Bloomberg, citing “commercial sensitivity.” Football Index cannot provide a “precise timeline” on the talks, however “conversations are ongoing,” the spokesperson said by email.The company’s website describes itself as a “gambling platform which operates like a stock market,” with users placing bets on the performance of footballers, which it calls “buying shares.”A matchday chart ranks the players, with the top performers entitling their owners to a dividend. Football Index said it paid out 11 million pounds ($15 million) during the 2019-20 season. Clients may cash out on their bets early, which the platform calls “selling shares.”The drastic cut in dividend payments prompted the value of most players on the index to collapse, with the Guardian newspaper reporting there was no sale price available for some players. The company said it has disabled comments on its Twitter feed because of personal threats to its workers.By tapping into the public’s mania for soccer -- it’s the world’s most popular sport and broadcasting rights run into billions of dollars -- and combining that with the world’s democratization of investing, Football Index said it had 100,000 members two years ago. It’s the main jersey sponsor for two teams in England’s second tier, Queens Park Rangers and Nottingham Forest.But in September 2019 as Football Index’s client base swelled, the U.K. advertising watchdog told the company to stop presenting its services as an investment opportunity rather than a gambling product.In July that year, Nasdaq announced an agreement to provide Football Index with a cloud-optimized trading engine. Football Index said in Friday’s statement that, while the partnership had reached the testing phase, the company has “made the decision to hit pause on Nasdaq integration till later in the year.”“We stand ready to continue to develop this exciting project,” the Football Index spokesperson said in the email, while adding that it has decided to “reprioritise internal resources on projects that will more immediately deliver value for our customers.” They cited current “unique circumstances” faced by its customers and the “broader economic situation created by Covid-19.”A spokeswoman for Nasdaq declined to comment.(Adds background in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Yahoo Finance