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888 avoids Gambling Commission action over FS Gaming talks

| By Robert Fletcher
The Gambling Commission will take no regulatory action against 888 Holdings following the licence review sparked by an attempted management takeover by Kenny Alexander.
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The Commission announced the review in July of last year. This followed FS Gaming, the investment vehicle backed by former Entain CEO Kenny Alexander, acquiring a stake in 888.

After purchasing a 6.57% stake, plans were set for a trio of former Entain executives to take charge at 888. This led to the Commission initiating the investigation

888 faced GB licence loss over FS Gaming appointments

Alexander would have become CEO under the proposal. Former Entain chair Lee Feldman would take the same role at 888 and Stephen Morana chief financial officer. Such a move would likely take FS Gaming’s stake in 888 above 10%, triggering a change in corporate control that would require the green light from the Commission.

If the regulator rejected that change, its only option would have been to revoke 888’s licence.

888 terminated discussions with FS Gaming as the appointments had “no reasonable prospect of being approved”. Therefore, its UK licences would be at immediate and significant risk, prompting it to terminate discussions over the matter.

However, in a statement released today (22 March) by 888, the group said the Commission will take no action.

“The Commission has concluded the licence review without imposing any licence conditions, financial penalties or other remedies on the group after being satisfied that the risk to the licensing objectives under the Gambling Act that led to the review have been appropriately managed and adequately mitigated,” 888 said.

Issuing its own response, the Commission confirmed it would not be taking action over the matter.

“We understand from 888 Holdings the management proposals put forward by the new shareholders are no longer being pursued and have not been for some time,” the Commission told iGB in a statement.

“As a result of this, alongside wider assurances provided as to those involved in the management of the operator, it has not been necessary for the Commission to make any determination in this case or to make any assessment of the suitability of the proposed individuals and we have therefore discontinued the review of 888 Holdings’ licence to operate with no further action required.”

Why was the Commission concerned?

The case primarily relates to concerns over HMRC’s investigation into GVC, which rebranded as Entain in 2020, and its former Turkish business.

At the time, 888 said FS Gaming failed to provide “basic reassurances that addressed these concerns”. This resulted in the regulator launching its review under Section 116 (2)(c)(ii) of the Gambling Act 2005.

Since the review launched, the HMRC case has been settled with the Crown Prosecution Service (CPS). Entain agreed to pay a financial penalty plus disgorgement of profits totalling £585.0m (€681.4m/$737.6m). It will also make a charitable donation of £20.0m and contribute £10.0m to CPS and HMRC costs.

888 did not share whether this has an impact on the decision by the Commission to take no action following the review.

What was the issue with GVC’s former Turkish business?

The Turkey case has now settled, with Entain accounting for the associated costs in its 2023 results, leading to a £936.5m loss for the year.

But what did Turkey case actually involve?

Possible offences flagged included section 7 of the Bribery Act 2010. Entain noted historical misconduct involving former third-party suppliers and former employees may have occurred. 

888’s board examined all potential risks relating to this investigation, including information from historic discussions between William Hill and GVC. The businesses paired up to acquire Sportingbet in 2012

William Hill acquired its Australian business and secured a call option on Sportingbet’s Spanish operations. GVC took charge of the remaining business, including Turkey. 

The Turkish subsidiary Headlong Limited was sold off to Ropso Malta in 2017, with the €150m earn-out later waived in order to speed up the deal and avoid regulatory delays. The formerly-named GVC denied it continued to benefit from Headlong two years later, in July 2019.

However, one year later, HMRC launched its investigation highlighting “potential corporate offending”. This widened an inquiry first launched around the time the earn-out was waived in November 2019. This came days after Alexander abruptly stepped down as GVC CEO.

What next for 888?

The news will come as a relief to 888, as it works to steady the ship following a difficult year. New CEO Per Widerström is expected to deliver turnaround strategy imminently.

In January the operator reported an 8% decline in revenue to £1.71bn for 2023. This was revealed in a trading update, with its full results due next week.

Alongside this, 888 said that it will be making redundancies as part of changes to its organisational structure. Confirming this to iGB, 888 said the changes will help it achieve long-term plans. 888 did not state which departments will be affected.

No future in the US for 888?

More recently, 888 this month launched a strategic review for its US B2C operations. This, it said, could lead to the partial or full sale of the division.

888 will also consider a controlled exit of US B2C operations and other possible strategic transactions. The review, 888 said, will not impact its existing B2B arrangements in the US.

At present, there is no end date for the review. The operator is likely to update shareholders in full-year results next week.

In line with the strategic review, 888 is ending its partnership with Authentic Brands Group (ABG), paying up to $50m to end the partnership in two tranches. The ABG deal allowed 888 to run sportsbooks and online casinos under the Sports Illustrated brand. 

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