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FS Gaming and 888 Gaming avoid Gambling Commission actions

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Following the review of 888 Holdings’ licence triggered by Kenny Alexander’s attempted takeover, The Gambling Commission has decided not to take any regulatory action.

In July last year, the Commission published its review. The review was announced in July last year after FS Gaming, an investment vehicle backed and financed by Kenny Alexander (former CEO of Entain), acquired a stake at 888.

Following the purchase of a stake in 888, a group of ex-Entain managers were to assume control. The Commission launched an investigation after this.

888 faces loss of GB license over FS Gaming appointments

Alexander was to have been named CEO in the proposed plan. Lee Feldman, former Entain chairman would be the new CEO at 888. Stephen Morana will become chief financial officer. This move could push FS Gaming’s share in 888 to above 10%. A change in control would then be required by the Commission.

The regulator’s only choice if it rejected this change would be to cancel 888’s license.

888 ended discussions with FS Gaming because the “appointments had no reasonable prospects of approval”. 888’s UK licenses were at risk and it terminated discussions on the issue.

In a press release issued today by the group 888 (22nd March), the group stated that the Commission would not take any action.

The Commission concluded its review of the license without imposition of any conditions or financial penalties on the group, after it was satisfied that all risks to licensing objectives in accordance with the Gambling Act which led to this review had been adequately managed and mitigated.

In a response to the Commission, it confirmed that the Commission would not take any action on the issue.

In a press release, the Commission informed iGB that it had received confirmation from 888 holdings that the management proposal put forth by the new investors was no longer pursued.

The Commission has therefore decided to stop the license review for 888 Holdings. No further action is required.

Why did the Commission care?

This case is primarily about HMRC’s investigation of GVC (which rebranded to Entain by 2020) and its Turkish former business.

888 claimed that FS Gaming had failed to give “basic reassurances” in response to these concerns. The regulator launched its investigation under Section 116(2)(c) (ii) Gambling Act, 2005.

The HMRC case was settled by the Crown Prosecution Service since the review began. Entain has agreed to pay an amount of money plus the disgorgement profits in totaling PS585.0m ($737.6m/EUR681.4m). Entain will make a PS20.0m charitable donation and pay PS10.0m towards CPS costs and HMRC.

The 888 team did not comment on whether or not this would have an effect on the Commission’s decision to do nothing following its review.

What happened to GVC’s Turkish former business?

Entain has resolved the Turkey case, and will now include the costs associated with it in the 2023 financial results. This means that the company is expected to lose PS936.5m for the entire year.

What was the actual case of Turkey?

Section 7 of the Bribery act 2010 was one possible offence. Entain note that historical misconduct may have involved former suppliers or employees.

The board of 888 examined any potential risk arising from this investigation. This included information gathered during historic conversations between William Hill, GVC and 888. In 2012, the businesses combined to buy Sportingbet.

William Hill purchased Sportingbet’s Australian operations and acquired a call-option on Sportingbet’s Spanish operations. GVC acquired the rest of Sportingbet’s business including Turkey.

In 2017, the Turkish subsidiary Headlong Limited, was sold to Ropso Malta. The EUR150m earned-out amount later became non-existent in order to expedite the transaction and avoid delays from regulatory authorities. In July 2019, the formerly named GVC denied that it had continued to profit from Headlong even two years after its sale.

HMRC began its investigation one year after the earn-out was waived, highlighting “potential offence”. The investigation was enlarged by this, which had been launched initially around the time that the earn-outs were waived back in November 2019. Alexander had abruptly quit as GVC’s CEO just days earlier.

What’s next for 888?

It will be a great relief for 888 as they work to stabilize the ship after a tough year. The new CEO Per Widerstrom will deliver a turnaround strategy in the near future.

The operator announced in January that revenue for 2023 would be down 8% to 1,711bn PS. The trading update revealed this, and the full results are due to be released next week.

As part of the changes in its organizational structure, 888 will also be making some redundancies. 888 confirmed this with iGB and said that the changes would help them achieve their long-term goals. The departments that will be affected by the changes have not been disclosed.

No future for 888 in the US?

In a more recent move, 888 launched this month a review of its B2C US operations. It said that this could result in the sale of the entire division or a partial one.

888 is also considering a controlled withdrawal of US B2C activities and possible strategic transactions. The review will not affect 888’s existing B2B agreements in the US, according to 888.

There is currently no date set for the end of this review. Next week, the operator will likely update investors on its full-year performance.

In accordance with its strategic review, 888 will end its partnership with Authentic Brands Group. The partnership can be ended by paying up to 50m in two installments. ABG’s deal with 888 allowed it to operate sportsbooks and casinos online under Sports Illustrated.

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