888 has suspended VIP accounts in the Middle east and CEO has stepped down

888 has suspended VIP accounts in the Middle east and CEO has stepped down

888_suspends_vip_accounts_in_middle_eastMega-power online betting company 888 has suspended VIP operations in the Middle East and its top executive has stepped down in news that has eroded the value of company stock. An internal compliance investigation has been announced in regard to perceived failures in internal anti-money laundering and know-your-customer (KYC) processes.

According to the company, certain best practices related to anti-money laundering and KYC regulations “have not been followed”.

According to UK’s The Guardian, share prices have folded by as much as a quarter of their value in the firm’s biggest loss in share price in nearly two decades. Over the last year, the share price has dropped over 70%, according to the news organization.

In relation to account holders in the Middle East, the company said: “While further internal investigations are underway, the board has taken the decision to suspend VIP customer accounts in the region, effective immediately. Based on the board’s current understanding, the process deficiencies identified are isolated to this region only.”

About 3% of the company’s revenues (+/- £50m) would be affected by the suspensions.

CEO Steps Down

Separately, as the company did not state a reason for the following, 888 said on Monday that 4-year CEO, Itai Pazner would exit his role as chief executive and company director and would be replaced with immediate effect on an interim basis by non-executive chairman Lord Mendelsohn.

Pazner, 50 has worked for the company for more than 20 years and oversaw the acquisition of William Hill’s international (non-US) assets from the U.S.-based Caesars Entertainment in 2021.

Earlier in January, the company announced that Chief Financial Officer Yariv Dafna would be stepping down after 888’s full-year results are published in March. However, in a move seen to calm investors, Dafna has reportedly been asked to stay on until the end of the calendar year.

Lord Mendelsohn commented: “The board and I take the group’s compliance responsibilities incredibly seriously. When we were alerted to issues with some of 888’s VIP customers, the board took decisive actions. We will be uncompromising in our approach to compliance as we build a strong and sustainable business.”

The company has struggled with compliance issues in recent years. In 2017 the Gambling Commission in Great Britain fined the company £7.8m for somehow letting thousands of punters who had self-excluded access their betting accounts.

In 2022, 888 caught a fine of £9.4m from the British gambling regulator for various instances of players overspending and experiencing excessive losses during the pandemic.

“Not Likely” to See License Suspended

The government of Gibraltar, where 888 is licensed stated: “The Gibraltar Gambling Commissioner, who is the gambling sector supervisor for anti-money laundering in Gibraltar, has been notified by 888 of the matters that are now subject to the public disclosure and is monitoring development.

“The gambling commissioner will be reviewing and discussing the outcome of the internal investigation in due course. Relevant customer accounts have been suspended whilst that internal investigation is carried out and 888 have given full commitment to regulatory transparency in respect of this matter.

“It is too early to say what the regulatory outcome will be, but on the known facts, and because of the level of commitment to resolution, license suspension or revocation, is highly unlikely.”

888 was founded by brothers Avi and Aaron Shaked and brothers Shay and Ron Ben-Yitzhak in 1997. The company was listed on the London Stock Exchange in 2006. 888 has its headquarters in Gibraltar. Following the acquisition of William Hill the company now employs about 12,000 people worldwide.

Source: Shares in 888 fall as it removes CEO and suspends Middle East VIP accounts, The Guardian, January 30, 2023

Author: Henry Brown