Online gambling group 888 has decided to terminate discussions with FS Gaming following concerns raised by the UK Gambling Commission. A move that would have seen a number of appointments made to the gambling group’s board led the UKGC to warn 888 of a potential license suspension or revocation.
FS Gaming recently acquired a 6.5% stake in 888, prompting a proposal for the appointment of key individuals to the gambling group’s board. The namings included Lee Feldman as Chair, Kenny Alexander as CEO, and Stephen Morana as CFO. Alexander’s placement as CEO would have occupied the seat since former boss Itai Pazner left in January.
However, with each executive previously holding senior leadership positions at the now-rebranded Entain, 888 has been in communication with the UKGC in relation to the shareholding and proposal. The company has now decided to end talks to make Alexander its new boss, which it is hoped will make the odds of a license revocation or suspension extremely slim.
“The board had no option but to terminate discussions as it simply could not put licenses in our largest market at significant risk,” said Lord Mendelsohn, Executive Chair of 888. Shares in 888 have now plunged as the gambling watchdog launched another review into the firm.
Lord Mendelsohn, Executive Chair of 888
The latest developments follow an announcement in May that the former GVC (now Entain) was facing an ongoing investigation by HM Revenue & Customs into its former Turkish business, which prompted further scrutiny.
This led 888 to acknowledge the regulatory concerns and initiate discussions with the UKGC, which expressed its concerns about the shareholding and proposal, particularly during the time the key individuals proposed to the board held senior leadership positions at GVC.
Following discussions with FS Gaming, 888 sought clarification on the potential connections to the HM Revenue & Customs investigation. However, the basic assurances provided were deemed insufficient by the company. As a result, the UKGC decided to initiate a review of 888’s operating licenses.
“The group requested clarification from FS Gaming in relation to considerations expressed by the GBGC, but the most basic assurances that addressed these concerns were not forthcoming,” said 888 in a statement.
“We will be fully cooperating with the GBGC’s Section 116 (2)(c)(ii) review, arising from potential issues with respect to FS Gaming’s investment and Proposal,” Lord Mendelsohn added.
The review will evaluate potential breaches and the suitability of the operator and relevant connected persons. Possible outcomes of the license review include immediate suspension or revocation of licenses, imposition of additional conditions, or financial penalties. In response to the ongoing review and the potential risks it poses, 888’s board unanimously decided to terminate discussions with FS Gaming.
The company stated that prospective appointments “have no reasonable prospect of being approved” and that any actions by FS Gaming to effect a change of corporate control would put the group’s licenses to operate in the UK at immediate and significant risk. According to industry analysts, it is hoped that with the termination of the proposed appointments, the chances of a license suspension or revocation are slim.
888 emphasized its commitment to fully cooperate with the UKGC during the license review process, while also eyeing to appoint a new boss. “While this engagement temporarily interrupted the very thorough search process to appoint a new CEO, the board is finalizing its appointment and expects to make an announcement in the very near future,” Lord Mendelsohn added.
The news of the termination of discussions with FS Gaming and the ongoing license review by the UKGC had a significant impact on 888’s share price. The company’s shares plunged by 25.2% as investors reacted to the potential risks and uncertainties surrounding its licenses in the UK market.
Analysts have noted that losing its UK license would have dire consequences for 888, as the UK and Ireland contributed around 60% of the group’s EBITDA in the previous financial year. However, it is hoped that with the termination of the proposed appointments, the chances of a license suspension or revocation are slim.
Original article: https://www.yogonet.com/international/news/2023/07/17/67930-888-terminates-discussions-with-fs-gaming-amid-uk-gambling-commission-license-review
