888 Plunges As Regulators Examine Kenny Alexander Investment

On Friday, stock prices for 888 Holdings Plc (OTC: EIHDF) saw a major decrease as the gaming corporation alerted investors of a possible UK license suspension. This arose due to an examination by regulators of the investments that Kenny Alexander’s vehicle had put into the organization.

Last month, FS Gaming Investments, led by former GVC Chief Executive Officer Kenny Alexander, took a 6.57% stake in 888. Holding out promise for 888 investors that Alexander’s involvement would invoke change, the Great Britain Gambling Commission (GBGC) has since begun to investigate potential improprieties in the way GVC, under Alexander’s command, divested its Turkish assets. This controversy has cast doubt over 888’s UK permit, as well as putting it in a position to potentially face financial penalties. Nevertheless, despite the scrutiny, Alexander is still highly respected in the sports betting circle, widely known as one of the industry’s godfathers. His current company, Entain Plc (OTC: GMVHY), now represents one of the world’s largest sportsbook operators. In other news, the parent company 888 recently paused talks with FS Gaming following the GBGC’s inspection. To illustrate such, The Times released an image of a William Hill shop in the UK.

Prior to its investment in 888, FS was made aware of possible complications due to Entain being under investigation by HMRC for allegations of bribery associated with their previous operations in Turkey. In order to assuage any anxieties from regulators, 888 is taking active steps to address the inquiry.

888 Looking to Allay Regulators’ Concerns

Around a week after disclosing its investment in 888, FS Gaming presented a plan to 888’s board for Alexander to become the chief executive officer, Stephen Morana to be the finance director, and Jonathan Mendelsohn to be replaced with former GVC Chairman Lee Feldman. While 888 acknowledged the talks, those discussions were abandoned in an effort to cooperate with the GBGC, thus avoiding potential fines and safeguarding its UK license. GBGC further expressed its worry about the HMRC inquiry directed at GVC, as the individuals proposed by FS had previously served in senior leadership positions at GVC. The GBGC has stated that it is in close contact with HMRC concerning the active investigation.

In order to fulfill its duties as the UK’s gambling regulator, the GBGC wants 888 to provide regular updates on any new information related to FS Gaming and its Proposal. 888 has strong incentives for collaborating with GBGC, as Investec analyst Roberta Ciaccia informed the Evening Standard that 60% of the operator’s pro-forma 2022 EBITDA stems from the UK and Ireland. To move forward, 888 needs to continue working with the GBGC on this matter.

Next Steps for 888

After talks between 888 and FS concluded, Alexander’s group announced that they will no longer be seeking board seats at the gaming company. This move is likely to calm regulators and investors. Now, the William Hill parent can refocus on the task of finding a new CEO and increasing its market share. In a statement from Mendelsohn, it was noted that the process of appointing a new CEO is almost complete and an announcement is anticipated soon. He also confirmed that the business is still on track to meet projected Adjusted EBITDA figures for 2023.