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The owner of William Hill could potentially lose its operating license in the UK as regulators are reviewing its license due to concerns over a new shareholder’s involvement in a bribery investigation by the UK tax authority.
888 Holdings PLC announced that the Gambling Commission informed them on Friday about the review of their license, which is associated with almost a 7% stake held by FS Gaming Investment Consortium backed by former executives at GVC, now rebranded as Entain.
The consortium comprises Kenny Alexander and Lee Feldman, former key figures at GVC, who proposed themselves as new management for 888. This move follows 888’s struggles with compliance breaches and a significant debt burden.
When the stake was disclosed last month, 888’s shares surged due to the anticipation of the new management team taking control. However, 888’s board, which has been searching for a new CEO since January, decided to discontinue discussions with FS Gaming. They cited the “immediate and significant risk” of losing their license if the proposed management team was installed.
Following the warning from 888, the company’s shares plummeted 26% in late afternoon trading. In 2020, approximately two-thirds of 888’s £1.8bn in revenues were generated in the UK.
888 sought clarification from FS Gaming regarding concerns raised by the Gambling Commission, but they did not receive satisfactory assurances. The commission initially reached out to 888’s board to clarify if FS Gaming’s stake exceeded 10% after activist fund HG Vora endorsed the consortium’s management positions.
In May, Entain entered into a deferred prosecution agreement with the Crown Prosecution Service, linked to a bribery act investigation by the UK tax authority concerning GVC’s former Turkish subsidiary Sportingbet. Alexander was GVC’s CEO during the subsidiary’s sale in 2017 to one of his horseracing associates. Alexander left GVC in 2020 when the HMRC probe was announced, but the company stated that the departure was unrelated to the investigation.
888’s chair, Lord Jonathan Mendelsohn, who is currently acting as interim CEO, mentioned that they are fully cooperating with the license review. The review could potentially lead to an immediate suspension, permanent revocation, or the imposition of conditions or financial penalties on 888’s license.
The Gambling Commission declined to comment on the matter.
FS Gaming is also supported by former Entain CEO Shay Segev, who succeeded Alexander, and Stephen Morana, a former independent board director at Entain who was proposed as a possible finance director at 888 by the consortium.
FS Gaming expressed their surprise at 888’s statement and claimed to be small public shareholders without access to non-public information. They stated that they were engaged in discussions to maximize the value of the assets and will continue their efforts.
Mendelsohn added that 888 is in the process of finalizing the appointment of a new CEO and expects to make an announcement soon. This process was temporarily interrupted by discussions with FS Gaming.
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