888 shares tumbled after the gambling group announced the exit of its boss and the suspension of VIP accounts amid the launch of an internal compliance investigation
Itai Pazner, who became 888’s chief executive four years ago, quit with immediate effect, with non-executive chair, Lord Mendelsohn, taking over until a permanent replacement is found.
The company, which bought William Hill last year, also said it had suspended its VIP accounts in the Middle East over best practices not being followed over money laundering.
The combo of bad news sent tumbling 26 per cent to 76.10p in morning trading on Monday.
Under pressure: 888’s boss has stepped down amid problems in the Middle East
888 said an initial internal review showed that ‘certain best practices have not been followed’ in relation to anti-money laundering and ‘know-your-client’ processes for its VIP customers in the Middle East.
It has therefore suspended VIP accounts in the region with immediate effect.
The company estimated that this content affects less than 3 per cent of group revenues, were the suspensions to remain in place.
888 shares have lost around 70 per cent of its value over the last year amid a slowdown in online gambling from lockdown highs, investor caution over its £1.95billion takeover of William Hill as well as increased regulatory scrutiny of the industry.
Pazner’s departure adds to that of its chief financial officer, Yariv Dafna, announced earlier this month after just two-and-a-half years in the role.
The brief stock market statement about his departure may indicate Pazner is taking the blame for the firm’s issues in the Middle East, according to AJ Bell’s investment director, Russ Mould.
‘Investors may have been more reassured by him staying in place to sort out the problems in the Middle East — an unenviable task which will now fall to the newly «executive» chair Jon Mendelsohn,’ Mould added.
‘A background in politics may serve him well in the interim period before a new boss is found, given the tricky waters he now has to navigate.’
Mendelsohn said: ‘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.’
Last year, 888 was struck with a £9.4million fine by the UK’s Gambling Commission for social responsibility and money laundering failings.
Gambling firms are facing increased scrutiny in Europe and the UK for the harms they do to the wider society.
Since October, online gambling advertisements in Britain must not be of ‘strong’ appeal to under-18s, meaning they cannot contain imagery, themes and characters widely recognised by children.
However, betting firms, including 888, have been taking advantage of the legalisation of sports gambling across many US states.
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