Are you worried Football Index is a Ponzi?

A thread:

The issuance curve give Football Index the opportunity to offer a bet that long term dividends (PB+MB) and expenses incurred would not exceed this sale price.

Back of an envelope example, FI sell 1000 bets that Rayan Cherki wouldn’t exceed £4, 1000 that he wouldn’t exceed £4.01 etc.

People can chop and change their mind and cash out if they want, in profit or at a loss. If they trade, they give FI more money with a commission.

Right now, they can trade him for £1 before he has won any dividends. Let’s say they bought him for £4 and sold him for £1.

Now let’s say, before he retires, he returns £3 in dividends.

-The person buying the original bet lost £3 (£1.02 post commission)
-The person buying the secondary bet wins £2 profit (£1.98 if bought via Bids) through dividends from FI.
-FI win £1 on the sale.
-FI take 2p/4p in commissions on the trades in between issuance and retirement.

FI will make losses on some players and win on others.
FI will make losses for some bets issued on players and profits on other bets on that same player. That is (part of) the gamble.

A buyback promise (Instant Sell) was taken away. Most customers liked this floor, and did not think/know FI could do this. This transferred risk from FI to customer and lead to a reduction in trade price.

In return, FI:
-Double LT dividends
-Introduced a short term dividend (IPDs)
-Promised an “artificial floor” (Market Makers/Liquidity Providers) would come in.
I would wager there were consultations with the Gambling Commission on this, although I couldn’t guarantee it.

The IPDs turned out to be very unprofitable for FI, given for certain players, customers exploited a loophole with low prices. You could sell and re-buy an asset, after the original IPD period, and after the asset scored/CS/assisted, to win dividends for less than the commission

For example, with well timed trading, a 50p player now needed to hit just 25 career goals/assists to return their value in IPD alone. FI have said an enjoyable and valuable replacement is due in the next two/three weeks. Hopefully this is fair for all. Hopefully it does come in.

MM/LP have not arrived. This is not okay given we were told they were lined up for September. No one thinks this is okay. I am sure FI do not think this is okay.

FI are regulated by the GC, not the FCA/PRA. The FCA may not have allowed them to make the changes the did, but the GC did. I believe these changes were made in good faith for the stakeholders as a whole, some got f*cked over, there is no denying that.

FI do retain the ability to change the dividend structure after a trade is made. If they do this without careful consideration, they will lose custom and go under. They will not change the bet just to steal your money. I do not think that the GC would let them do this.

Businesses need new money to keep trading. This is not news. To say FI is a Ponzi because it needs new money (from trades and IPOs) is disingenuous or ignorant of the aspects of the FI business model that has been approved by the GC.

When the “Monopoly money” was first bought from FI, a chunk was set aside to pay dividends. The rest goes to overheads, advertising, shareholders etc. That fund will be set aside for dividends. They will not dip into that fund to pay for overheads etc.

FI offers football fans and gamblers a fun way to spend their time and money, without winning or losing it straight away. It gives them the feeling of being a stock market trader (and apparently a human behavioural psychologist), in their spare time, maybe for profit too.

FI gives customers the feeling they can (and opportunity to) monetise their knowledge of how good a player is, or will be. A bit like a traditional bookmaker.

When the fun stops...

An example:

FI issues bets, believing that a group of players would not exceed £2 in dividends.

They do this expecting the average payout of these players to be 50p.
Some could make £2.50+, some nothing. This is a gamble that FI should win. They’ve got experts in.

The £1.50 margin goes on expenses and profits.

For various reasons, you can now buy these players for 50p off other gamblers.

If you think you know football, some of these players should now seem like “good value bets”. FI have already made their money from selling the original bet. Commissions top this up.

They will only change dividends if:
1) Customers work to make the expected dividend payout more than 50p, by systematically exploiting one of the dividends.
2) They systematically f*cked up the original pricing.

I think I’m done.