888 CEO Leaves Gambling Firm After Money Laundering Failures

Gambling group 888 Holdings Plc suspended VIP customer accounts in the Middle East after discovering that its anti-money-laundering protocols weren’t followed and said its chief executive officer will step down.

(Bloomberg) — Gambling group 888 Holdings Plc suspended VIP customer accounts in the Middle East after discovering that its anti-money-laundering protocols weren’t followed and said its chief executive officer will step down. 

The company started internal investigations after it found that “know your client” best practices and anti-money laundering procedures for its highest-value gamblers weren’t followed, 888 said in a statement on Monday. 888 said it believes the “process deficiencies” are isolated to its Middle East market and that the suspension of VIP activities will reduce revenue by less than 3%.

CEO Itai Pazner will leave the company immediately, 888 said in a separate statement. Pazner, who’s been at 888 for more than 20 years and CEO for four, didn’t respond to requests for comment. The company didn’t expand on the reason for his departure and representatives for 888 didn’t immediately respond to requests for comment. 

Shares dropped 28% at 10:20 a.m. in London, their biggest intraday decline since 2006, and taking them to their lowest level since March 2020.

The development could mean a hit to full-year earnings of between £30 million ($37.2 million) and £40 million if the region’s VIP customers don’t return, Goodbody analyst David Brohan said in a note to clients. It also raises the issue of liabilities related to historical revenue from these customers, he added. VIP customers are a small set of gamblers who typically spend a disproportionate amount and can receive special attention from operators. 

Chairman Jonathan Mendelsohn will assume the role of executive chair on an interim basis while the board searches for a permanent CEO. Chief Financial Officer Yariv Dafna, who’d planned to leave the company in March, will now stay until the end of 2023, the company said.

888’s junk-rated bonds fell the most on record across their various tranches on Monday, between 5 and 6 cents on the euro, according to CBBT pricing compiled by Bloomberg.

Although Monday’s update pertains to 888’s Middle East customers, it comes at a time when government ministers in the company’s domestic UK market are drawing up a long-awaited overhaul of gambling laws. 

888 received a £9.4 million fine from the British gambling regulator last year over social responsibility and money laundering failures — its second after a 2017 penalty.

–With assistance from Giulia Morpurgo.

(Updates with statement on CFO, bond prices from sixth paragraph)

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