In a significant turn of events for the gambling industry, the Gambling Commission has decided not to take regulatory action against 888 Holdings after concluding a meticulous review process. This development came after FS Gaming, an investment entity supported by the ex-CEO of Entain, Kenny Alexander, acquired a consequential stake in the company.
The precise impetus for the review, which the Commission initiated in July of the previous year, traces back to the moment FS Gaming took on a 6.57% share in 888. This acquisition set the stage for a proposed overhaul of leadership at 888, intrinsically involving a cadre of former chiefs at Entain. Had these plans materialized, Kenny Alexander would have stepped into the CEO role, Lee Feldman, the ex-chair of Entain, would have assumed the same position at 888, and Stephen Morana would have been appointed as the chief financial officer. Such appointments, indicative of FS Gaming amplifying its stake beyond 10%, signaled a seismic shift in corporate control, a juncture mandating the official blessing of the Commission.
The scrutiny of 888 could have resulted in dire consequences. Had the Commission viewed the changes unfavorably, their only recourse would have been to rescind the firm’s operating license. However, according to a statement released by 888 on the 22nd of March, the company was informed that the Commission has chosen a non-interventionist approach. At the time of reporting, the Commission has yet to officially articulate their rationale behind this decision.
In their communiqué, 888 detailed the outcome: “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.”
A central element of concern triggering the review was the investigation into GVC, which underwent a rebrand to become Entain in 2020, scrutinizing its past Turkish operations. Initially, 888 cited an inability by FS Gaming to deliver “basic reassurances” on these issues, prompting the review under Section 116 (2)(c)(ii) of the Gambling Act 2005. Moreover, 888’s board members were convinced that the prospective appointments posited by FS Gaming stood no chance of endorsement, thereby endangering their UK licences. As a result, 888 ceased negotiations on this front.
In the waning stages of the preceding year, the HMRC probe reached a settlement, with Entain agreeing to a substantial financial penalty and profits disgorgement totaling £585.0 million, a £20.0 million charity donation, and £10.0 million to cover CPS and HMRC costs. The implications of this resolution on the Commission’s decision to forego action against 888 have not been disclosed.
Entain wrapped up the Turkish case within its 2023 outcomes, reporting a significant loss of £936.5 million for the fiscal year. The inquiry highlighted possible contraventions of section 7 of the Bribery Act 2010, including historical misdemeanors connected with third-party suppliers and ex-members of staff. An extensive risk analysis was conducted by 888’s board, delving into historical interactions such as the joint acquisition effort of Sportingbet by William Hill and GVC in 2012. Following the subsidiary Headlong Limited’s sale to Ropso Malta in 2017, and subsequent events, HMRC’s attention was drawn to “potential corporate offending.”
The Commission, at the onset of the inquiry, underscored that 888 might face the termination of its license. It stressed that any influential roles must be filled by individuals who are deemed suitable, with ongoing criminal investigations being a predominant factor in evaluating such suitability.
As 888 weathers these regulatory storms, it recently disclosed an 8% drop in 2023 revenue, reaching £1.71 billion, and indicated pending organizational restructuring involving layoffs, addressing this with iGB. The company is also conducting a strategic review of its U.S. operations, which may culminate in a sale or a managed exit. Details on these developments are anticipated alongside the official full-year results disclosure.
In a synchronized move, 888 and Authentic Brands Group (ABG) have concluded their partnership, ending the deal that enabled 888 to operate sportsbooks and online casinos under the Sports Illustrated brand in other states.
The endgame of the strategic review remains unknown; however, shareholders and industry observers are on standby for insights during the imminent update with the annual financial figures.
