UK's Regulatory Lapses by William Hill May Establish a Fresh Record for 888
Negotiating the acquisition of William Hill's non-US assets from Caesars Entertainment could lead to a rough ride for new owners 888. Given the company's vast global presence in the gambling industry, it's facing one of the biggest fines ever, potentially reaching £20 million (US$23.75 million), as per the Daily Mail reports. This fine may even surpass the £17 million (US$20.19 million) fine Entain experienced last year.
The penalty is due to breaches in "social responsibility and anti-money laundering obligations." A single source indicated that the fine against William Hill could be "north of £20 million."
888 seems to have put money aside to cover the fine, but such a large penalty would inflict heavy damage on the company. There's a risk that 888 may drop off the FTS250 index this month, a stock market index containing 250 UK-based mid-market cap companies listed on the London Stock Exchange.
Since September 2021, its share price has nose-dived by 85%.
888 acquired William Hill last summer for £2 billion (US$2.37 billion) from Caesars. Its portfolio includes online casinos and over 1,000 retail sports betting outlets.
Trouble Brewing
888 isn't new to energetic circumstances. An investigation kicked off in January into VIP customers from the Middle East, suspected of money laundering activities.
888 found out that numerous betting high rollers could deposit and withdraw vast sums of money with minimal oversight. The ensuing scandal resulted in CEO Itai Pazner's immediate resignation after over 20 years with the company. Lord Mendelsohn, 888’s chairman, is now taking up the CEO position on an interim basis until a permanent replacement is found.
The current CFO, Yariv Dafna, is also planning to step down.
888 is set to release a new financial report at the end of March.
Stormy Weather Ahead
Austria's supreme court has also recently found the company guilty of operating illegally in the country. It claims that 888 and Flutter have been offering their services in Austria, while only Casinos Austria is licensed in the country.
The court ruled that users could file claims against 888 and Flutter to receive compensation for their losses. The Financial Times announced a few days ago that more than 2,500 users have already received over €75 million (US$79.31 million) in compensation from various operators since January.
888 and Flutter are said to owe around an additional €34 million (US$35.95 million) which they're allegedly holding onto while fighting Austria.
Since 2017, 888 has had to pay regulatory fines in the UK twice. These fines amounted to £17.2 million (US$20.5 million) in just two instances. It doesn't look like the company will be closing its purse strings any time soon.
