888 Avoids UK License Forfeiture Over FS Gaming Scheme

Article by : Erik Gibbs Mar 26, 2024

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Last July, the UK Gambling Commission (UKGC) kicked off its review following FS Gaming’s acquisition of a stake in 888, backed by former Entain CEO Kenny Alexander.

With plans in motion for three former Entain executives to lead 888 after securing a 6.57% stake, the Commission initiated an investigation, foreseeing Alexander as the potential CEO, Lee Feldman as the chair and Stephen Morana as the chief financial officer.

This scenario hinted at FS Gaming’s stake in 888 surpassing 10%, necessitating Commission approval for a change in corporate control.

Yet, faced with the Commission’s potential rejection, 888 opted to cease discussions with FS Gaming. This decision safeguarded its UK licenses, averting immediate jeopardy. In a statement, 888 revealed the Commission’s decision to take no punitive action.

888 affirmed that the UKGC’s review concluded without imposing any conditions, penalties, or remedies on the group. The gaming regulator echoed this sentiment, indicating that the proposed management changes were no longer pursued, leading to the discontinuation of the review.

The core of the matter revolves around an inquiry from Her Majesty’s Revenue and Customs (HMRC) into GVC, which underwent a rebranding to become Entain in 2020. The inquiry particularly focused on its former Turkish operations.

888 voiced concerns that FS Gaming, at the time, failed to offer fundamental assurances to address these apprehensions. Consequently, the regulatory body initiated its examination under Section 116 (2)(c)(ii) of the Gambling Act 2005.

Since the commencement of the review, the HMRC case has been resolved with the Crown Prosecution Service (CPS).

Entain has agreed to a financial penalty along with disgorgement of profits amounting to £585 million (US$737.6 million). Additionally, it will allocate £20 million (US$21.66 million) to charitable causes and contribute £10 million (US$12.64 million) toward CPS and HMRC expenses.

888 has not disclosed whether these developments influenced the Commission’s decision to refrain from taking any action following the review.

The resolution of the Turkey case led to Entain recording a substantial £936.5 million (US$1.01 billion) loss in its 2023 financial report. Alleged violations, including potential breaches of the Bribery Act 2010, were acknowledged, with Entain addressing the possibility of past misconduct involving third-party suppliers and employees.

888’s board conducted a thorough risk assessment concerning the investigation, referencing prior collaborations between William Hill and GVC in acquiring Sportingbet back in 2012.

Despite GVC’s divestment of its Turkish subsidiary, Headlong Limited, in 2017 and HMRC’s investigation in July 2019, concerns about corporate misconduct persisted. These inquiries coincided with significant events in GVC’s leadership, including Kenny Alexander’s abrupt resignation as CEO.

In the face of ongoing challenges, 888 sees a glimmer of hope with new CEO Per Widerström’s impending turnaround strategy. Despite an 8% revenue decline in their latest update, indicating a rocky financial year, the company is undergoing organizational restructuring and layoffs to realign with long-term goals.

Furthermore, a strategic review of its US B2C operations, including possible divestment and phased market exit, adds to the uncertainty. Updates on this review are pending, while they’ve also severed ties with Authentic Brands Group, closing their venture under the Sports Illustrated brand.