The gambling operator has reached a settlement agreement over VIP failings in the Middle East.
UK.- The London-listed operator 888 has announced that it has reached a settlement agreement in Gibraltar under which it will pay £2.9m as a result of compliance failings in the Middle East. The failings led to the resignation of former 888 CEO Itai Panzer earlier this year.
The Gibraltar Gambling Commissioner had identified historic failings in know-your-customer (KYC) requirements on VIP accounts. It also noted overly high thresholds for enhanced due diligence (EDD) intervention and a lack of clarity and consistency in the checks. Other failings included an overreliance on open-source checks to prove sources of funds.
The Gibraltar Gambling Commissioner said: “Gibraltar licensees are expected to factor the learnings from this case into their own risk assessments, systems and controls. 888 continues to be considered a fit and proper entity to hold licences in Gibraltar. 888 has enhanced its policies and procedures in remediating the identified historical deficiencies.
“The Gambling Commissioner and Licensing Authority consider this matter closed and will be making no further comment on this matter.”
888 H1 results
Meanwhile, 888 Holdings is maintaining its full-year guidance following the publication of results for the first half. Revenue rose 165 per cent to £881m due to the incorporation of William Hill in July last year. However, on a pro-forma basis, revenue was down 7 per cent year-on-year.
The drop was due to an 11 per cent decline in online gambling revenue in the UK (£335m). This was put down to compliance and regulatory adjustments. 888’s international unit saw pro-forma revenue fall by 14 per cent to £226m, again due to compliance changes as well as a decline in the Middle East. The incorporation of William Hill’s retail business proved to be the strongest generator of growth with revenue of £27m.
Overall adjusted EBITDA was £155m, more than tripling H1 2022 figures. The company highlighted that it achieved £66m of cash synergies in H1 and aims for £150m by 2024. Costs rose from £118.3m to £294m due to the William Hill acquisition, but on a pro forma basis, costs were down by 3 per cent to £291m. The company reported an interim loss of £33m, which compares to profit after tax of £12m in H1 2022.
888 said that its “proactive actions are driving a significant mix shift in the player base to lower spending groups, providing a more sustainable and profitable base to drive future growth in the UK, as well as putting the group in a strong position ahead of any changes from the White Paper, with various consultations ongoing”.
Executive chair Lord Mendelsohn said: “I am very pleased with the progress we have made in the first half of the year as the group delivered against the plans we committed to at our investor day last year, while also successfully navigating business, market and regulatory volatility.”
He added: “We made very strong progress with the execution of our integration plan and we now expect to realise the full £150m of synergies in 2024, a year earlier than the original plan. Our strong cash discipline and higher profits also enabled a 0.5x reduction in our leverage.
“We have successfully delivered against our focused market strategy, changing the mix of our revenue and creating a more profitable and sustainable platform for future growth.”
New 888 CEO
888 has recently named Per Widerström as group CEO, effective from October 16. The company has been without a permanent CEO since Pazner’s departure. Widerström has worked in several senior roles, including as CEO of Central and Eastern Europe-focused Fortuna Entertainment Group from 2014 to 2022.
Mendelsohn said: “I was thrilled to be able to announce the appointment of Per Widerström as our next CEO. Over the coming weeks, I will be working closely with Per to ensure a smooth handover and I am highly confident in his ability to lead the team to realise the full potential of this business.
“The strategic progress made during the year to date has created a fundamentally stronger business with higher profit margins and we remain on track to deliver against expectations for the full year.”