Football fans lost £58million after the gambling watchdog failed to stop a major betting firm collapsing despite warnings that it was a ‘Ponzi scheme’.

Football Index fell into administration last week in what is believed to be the biggest failure of a gambling business in British history.

It comes after the Gambling Commission, which regulates betting companies, was warned in January last year that Football Index was ‘an exceptionally dangerous pyramid scheme’ with ‘unparalleled levels of irresponsible gambling behaviour’. It was last night facing accusations that it was ‘asleep at the wheel’.

The platform, the self-styled ‘stock market of football’, allowed gamblers to buy ‘shares’ in footballers and receive dividends based on their performance. They could then trade them with other punters for profit, paying a small commission to the platform.

Customers piled money in on the promise of ‘guaranteed yields’. The Advertising Standards Authority admonished Football Index in 2019 for ‘creating the impression the product was a lucrative investment opportunity’. The administration has left thousands of victims with massive losses, with some claiming they had more than £100,000 in open bets.

The website has been suspended, trapping users’ deposits, and Championship football teams Nottingham Forest and Queens Park Rangers have ditched Football Index as their shirt sponsor. More than 7,000 victims have joined a potential class action against the firm. Football Index has denied it was a pyramid scheme.

The Daily Mail has called for action against unscrupulous betting firms through its Stop the Gambling Predators campaign.

The company’s founder Adam Cole, 70, is a former public schoolboy who launched the world’s first ever pornography VHS company in 1979. The commission said yesterday that it had been investigating Football Index since May last year. But it only suspended its betting licence last week. It said it did not intervene sooner because ‘there were no grounds to suspend their operating licence’.

Furious customers said they would not have continued depositing money if they had known about the secret investigation. Funds sitting in a bank account with Football Index’s parent company Bet Index have been ring-fenced, the commission said, and customers hope they will get some redress through the administration process.

Matt Zarb-Cousin, of Clean Up Gambling, said the Gambling Commission had ‘been asleep at the wheel.’ He added there are ‘now very serious questions to answer about why this product was licensed in the first place’ and ‘why the regulator took so long to investigate concerns’ about the betting firm.

Football Index said: ‘We believe the best outcome for our community will be to continue the platform in a restructured form.

‘Our business model does not, and never has, relied on new users coming into the market.’