UKGC Investigates 888 Holdings Following Strategic Power Shift

Despite the promising business proposal from FS Gaming, an investment vehicle supported by former Entain CEO Kenny Alexander, 888 Holdings has decided to discontinue talks due to the pending investigation into the latter’s UK licence.

The Planned Takeover and its Stumbling Blocks

FS Gaming, guided by Alexander, had put forth an ambitious plan with him as the proposed Chief Executive, Lee Feldman, the former Entain chair, as the chairman at 888, and Stephen Morana as the CFO. This move would have propelled FS Gaming’s stake in 888 beyond 10%, requiring a change in corporate control subject to the Commission’s approval. If not approved, the regulator might be forced to revoke the business’s operating license.

However, the Commission expressed apprehensions tied to an ongoing HMRC investigation into GVC’s (now known as Entain) previous Turkish business. FS Gaming, failing to assuage these concerns, triggered a review by the regulator under Section 116 (2)(c)(ii) of the Gambling Act 2005.

Ripples of the Review

Following the Commission’s review, the HMRC investigation, and the 888 board’s due diligence, it was concluded that the appointments by FS Gaming had no likelihood of approval. The immediate and substantial risk to 888’s UK licenses led to the termination of discussions.

Lord Mendelsohn, the 888 executive chairman, assured complete cooperation with the Gambling Commission. He stated, “While this engagement temporarily interrupted the very thorough search process to appoint a new CEO, the board is finalising its appointment and expects to make an announcement in the very near future.” He emphasized the board’s unwavering commitment to execute the group’s strategy for enhanced shareholder value.

Investigation Clouding the Horizon

The investigation into Entain’s Turkish business by the Crown Prosecution Service since May has added to the complexity of the situation. Entain conceded that historic misconduct involving former third-party suppliers and former employees might have occurred.

As a result, 888’s board had to carefully consider potential risks, even those stemming from prior discussions between William Hill and GVC. When these businesses collaborated to acquire Sportingbet in 2012, GVC took charge of the remaining business, including Turkey.

The Gambling Commission’s warning about the threat of license loss over a change in corporate control, suitability of appointees to influential positions, and consideration of roles held during the HMRC investigation period highlighted the gravity of the situation.

The Search for New Leadership

Despite these challenges, 888 has embarked on a quest for a new CEO since January, after Itai Pazner‘s exit. The hunt for leadership coincides with the suspension of VIP activities for Middle Eastern customers due to lapses in AML and KYC best practices.