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888 has rejected a proposal to appoint ex-GVC chief Kenny Alexander and other executives to key leadership roles and now faces the possible loss of its UK licence stemming from an ongoing investigation into GVC’s former dealings in Turkey.
In an explosive statement issued on Friday (July 14), 888 said that it was rejecting a proposal by Lee Feldman, Kenny Alexander and Stephen Morana to respectively become chair, CEO and CFO of the operator.
It also revealed that its licence is now under review by the UK Gambling Commission as a direct consequence of the trio, under the name FS Gaming Investments, buying a 6 percent stake in the company.
Entain, formerly known as GVC, is under investigation by the UK tax agency HM Revenue & Customs (HMRC) over its alleged former operations in Turkey.
In May, Entain said it expects to face a “substantial financial penalty” as a result of the investigation.
The Turkey-facing business took place while the three FS Gaming executives were in control at GVC, 888 said.
After acquiring its 6 percent stake in June, FS Gaming days later released a proposal to replace the leadership of 888 with Alexander, Feldman and Morana.
The announcement caught the attention of the Gambling Commission, which “expressed its concern” with the proposal, in light of the regulator’s ongoing dialogue with HMRC over the Entain investigation, 888 said.
“[888] requested clarification from FS Gaming in relation to considerations expressed by the [Gambling Commission], but the most basic assurances that addressed these concerns were not forthcoming,” the company said.
On July 14, the Gambling Commission began a review of 888’s licence as a direct consequence of the FS Gaming investment and its proposal to take executive control of the company.
“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,” 888 said.
The 888 board said it was terminating discussions with FS Gaming primarily because it believed the commission would use its powers to block the appointment of Alexander and the other executives in light of the ongoing investigation.
888 also warned that if FS Gaming increases its stake to 10 percent or more, it could further jeopardise the ability of the company to operate in the UK.
“Any shareholder acquiring a stake of more than 10 percent in the business triggers a change of corporate control. The GBGC is required to approve such a change of control or reject it, and if it rejects the application, the only course of action is to revoke the licence to operate. Furthermore, once a change takes place it cannot be reversed,” said 888.
888 said the commission had indicated it would consider the ongoing HMRC investigation when considering the approval of the FS Gaming group and would not need to wait for the ongoing criminal investigation to conclude.
A spokesperson for the UK Gambling Commission told VIXIO: “We do not talk about individual operators. In general, if any operator requests information on existing regulations then we will provide that as part of our drive to make gambling fair, safe and crime-free.”
888’s executive chair, Lord Mendelsohn, said: "We will be fully cooperating with the [licence review], arising from potential issues with respect to FS Gaming's investment and Proposal, and look forward to bringing the review to a conclusion expeditiously."
888 is currently without a CEO after the departure of Itai Pazner in January, but Mendelsohn said the board was close to announcing a successor.
“While this engagement temporarily interrupted the very thorough search process to appoint a new CEO, the board is finalising its appointment and expects to make an announcement in the very near future,” he said.
