(Alliance News) - 888 Holdings PLC said the UK gambling watchdog is reviewing its licence, after a vehicle backed by former executives of GVC Holdings PLC proposed additions to the bookmaker's board.
888 shares traded 22% lower at 82.61 pence each in London on Friday afternoon.
888 said FS Gaming, which last month built a 6.6% stake in the gambling firm, suggested adding to its board. FS is backed by Kenny Alexander, Lee Feldman and Shay Segev. Alexander was formerly chief executive of GVC Holdings, the Ladbrokes and Coral owner now known as Entain PLC. Alexander was replaced by Segev, who then stepped down as chief executive in January 2021 to head up sports streaming platform DAZN.
FS proposed adding Feldman, Alexander and Morana as chair, chief executive and chief financial officer.
However, Entain back in May said it entered into deferred prosecution agreement negotiations with the UK Crown Prosecution Service in relation to a HMRC probe.
888 explained: "Entain noted that the ongoing investigation includes a review of its former Turkish facing business and that the company acknowledged that historical misconduct involving former third party suppliers and former employees may have occurred. In considering the proposal, the board examined all potential risks related to this, including reviewing information from historic discussions between William Hill and GVC.
888 said it has been in contact with the Gambling Commission in relation to FS Gaming's recent investment, as well as its proposal to add to the firm's board.
"The Gambling Commission has expressed its concern regarding the ongoing HMRC investigation into GVC's activities covering the time the individuals proposed to the board by FS Gaming were in senior leadership positions at GVC, and that it is in close dialogue with HMRC regarding its ongoing investigation. The Gambling Commission requested regular updates from 888 in relation to any new developments in the circumstances around FS Gaming and its proposal so that it can fully execute its responsibilities as the GB regulator," 888 added.
888 said it went to FS Gaming for clarification but said this was not forthcoming. It also said that the Gambling Commission on Friday informed the firm that it needs to begin a review of its operating licences. This is in light of FS Gaming's investment and proposed board additions.
888 added: "The group will co-operate fully with the Gambling Commission in its licence review. The Gambling Commission has confirmed that a licence review allows for a range of outcomes, including immediate suspension, revocation of operating licences, or the imposition of licence conditions or financial penalties if the commission finds that licence conditions have been breached, or that the operator, or relevant persons connected to the operator, are unsuitable.
"As a result of the initiation of the licence review by the GBGC, and in conjunction with publicly available information, and the board's due diligence, the board concluded that the appointments proposed by FS Gaming have no reasonable prospect of being approved by the Gambling Commission at this time and any actions by FS Gaming to effect a change of corporate control would likely put the group's licences to operate in the UK at immediate and significant risk. Therefore, the board has unanimously concluded to terminate discussions."
888 said it is finalising the search for a new chief executive, despite the events with FS Gaming briefly interrupting its search.
The company in January said its chief executive left the company suddenly. The departure of Itai Pazner came just two weeks after the company announced Yariv Dafna would step down as chief financial officer. However, 888 in January said its CFO would stick around a little longer until the end of 2023.
Also in January, 888 announced it has suspended VIP activities in the Middle East region ahead of the "outcome of an internal compliance investigation".
Following an initial review, 888 said some of its units in the Middle East region have fallen short in know your client and anti-money laundering compliance measures. 888 said it currently believes the issues are "isolated to this region only".
In March, it was announced that three gambling businesses owned by 888's William Hill will pay a total of GBP19.2 million for "widespread and alarming" social responsibility and anti-money laundering failures.
It was the largest settlement in UK Gambling Commission's history. WHG (International) Ltd, which runs williamhill.com, will pay GBP12.5 million; Mr Green Ltd, which runs mrgreen.com, will pay GBP3.7 million; and William Hill Organisation Ltd, which operates 1,344 gambling premises across Britain, will pay GBP3 million.
By Eric Cunha, Alliance News news editor
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Entain (ENT)