Football Index - Possible alternative way of making money

Possibly as much as you are with stocks and shares.

I suppose you had the same with people investing in 1 single stock eg Sirius minerals probably took in some case the same level of hit as people buying Virgil Van Dyk at the start of this season.

the major difference to me is lets say Hargreaves lansdown goes bust, then people still own the underlying shares, with this if the company goes bust you lose your money

I'm certain the people that run the platform will have a perfectly resonable explanation as to where all the money went

I was never sure whether FI was a ponzi scheme or not. They had a legitimate way to make money from commission. Buy bets were free but they took 2% from sell bets (or 5% for instant sell). As long as they held the money on account from buys, then took commission from the sell bet then it was free money for FI. A traditional bookie simply lays off bets so they profit under any outcome but with the FI model they would have to keep hold of money from buys until the bet transaction was completed (by a sell bet).

If they have been spending the money from buy bets all along and paying sell bets from money taken from new customers then it was a ponzi scheme. It was impossible to tell because they never published company accounts. They were not registered in the UK so weren't obliged to.

As an example, lets say 10 players place a buy bet on the same footballer, starting at 100p, driving the price up to 109p. The same 10 players then instant sell (5% profit to FI). For simplicity they happen to sell in the same order that they bought. So player 1 bought at 100p and sold at 109p and so on. Like this:




Under this scenario players lost a total of -52.25p and FI made this same amount in profit. Some players won and some players lost. If you scale that up over millions of transactions it seems like a legitimate way to make money. That's not ponzi, it's just gambling and FI stated on every single page of the site that it was gambling.

If however, FI spent all the money from buy bets and then had no money to pay the sells then that looks fraudulent and not a sustainable model. I'm surprised that's allowed by the regulator. If it is allowed, then does that mean I can set up a regular bookie, take millions in bets, spend all the money and then when winning customer ask for their payout, go into administration because there's no money left???