UK Gambling Commission Investigates 888 Holdings Amidst Stake Acquisition and CEO Proposal

The UK Gambling Commission (UKGC) has launched an investigation into 888 Holdings' GB license after FS Gaming, an investment vehicle backed by former Entain CEO Kenny Alexander, acquired a stake in the company.

The investigation comes as a result of FS Gaming acquiring a 6.57% stake in 888 last month, followed by a proposal for a group of former Entain executives to assume leadership positions within the company.

The UKGC's investigation focuses on concerns related to an ongoing HMRC investigation into GVC's former Turkish business. The Commission raised issues regarding the potential change in corporate control triggered by FS Gaming's stake acquisition and the proposal for former Entain CEO Kenny Alexander to become the chief executive of 888. The proposed appointments would likely increase FS Gaming's stake in 888 above 10%, requiring approval from the UKGC.

However, the UKGC expressed concerns over FS Gaming's failure to provide adequate reassurances regarding the ongoing HMRC investigation, prompting the regulator to launch a review under Section 116(2)(c)(ii) of the Gambling Act 2005. As a result, 888's directors concluded that the proposed appointments had "no reasonable prospect of being approved." The company's UK licenses are now at immediate and significant risk, leading to the termination of discussions with FS Gaming.

888 executive chairman Lord Mendelsohn stated that the company will cooperate fully with the UKGC's investigation. The board of directors had no choice but to terminate discussions with FS Gaming as it could not put its licenses in the UK, its largest market, at risk. Despite the interruption caused by the engagement with FS Gaming, the board is finalizing the appointment of a new CEO and expects to make an announcement soon.

The investigation into 888 is closely linked to the ongoing HMRC investigation into GVC's former Turkish business, which began in 2019. The HMRC is looking into potential offences under the Bribery Act 2010, and concerns have been raised about historical misconduct involving former third-party suppliers and employees. The HMRC investigation widened following the sale of GVC's Turkish subsidiary, and it has been reported that the investigation focuses on potential corporate offending.

The UKGC emphasized the need for licensees to ensure that individuals appointed to positions of influence or control are suitable for those roles. Ongoing criminal investigations are a crucial factor in determining suitability, and the UKGC may take action on personal licenses or operating approval before legal proceedings are concluded.

Following the news of the investigation, shares in 888 have experienced a significant drop, falling by 19.08% to 86.02 pence per share in London at the time of writing.

By fLEXI tEAM