British regulator places 888 under review
Gambling Commission says it’s assessing 888 subsidiary, which EGR understands to be operating arm Cassava, for possible breach of social responsibility requirements
Great Britain’s Gambling Commission is currently reviewing whether an 888 Holdings subsidiary has breached its social responsibility requirements and licence conditions, it was announced this morning.
888 informed the market the Commission was conducting a review into “the manner in which a subsidiary of the Company (the “Licensee”) has carried on its licensed activities to ensure compliance” with the licence held by the licensee.
EGR Intel understands the “subsidiary” in question is 888’s operating arm 888 UK, which effectively means the entire UK-facing business is under review.
“The review has been initiated to assess certain measures that the Licensee employs to ensure social responsibility to its customers including, amongst other items, effective self-exclusion tools across different operating platforms,” an 888 statement read.
888 said it would be “proactively engaged in a cooperative and collaborative manner” with the Commission throughout the review and would make further comment when appropriate.
The news caused an early morning dip in 888 shares, which were down 19p, or 6%, to 279p at the time of writing.
While the review would appear to be in its early stages, analyst Simon Davies at Canaccord Genuity said 888 was well placed to absorb a fine of the size recently dished out to the likes of Paddy Power Betfair and legacy Gala Coral.
“There is no doubt that we have entered a period of increased political and regulatory scrutiny of the gambling industry in the UK, and this will be unhelpful for short-term investor sentiment,” Davies said in a note.
“Nonetheless, we expect 888 to be rigorous in addressing any failings in regulatory structures/processes. Clearly, there is the risk that it will have to pay a fine, if any breaches are identified.
“And there are a number of precedents. Paddy Power Betfair and Gala Coral paid fines/forfeited cash last year and agreed to take actions to improve AML/social responsibility processes. But 888 is highly profitable, and has a strong balance sheet.
“In a worst case scenario, the regulator could revoke licences, but this would be an unprecedented action against a company which is fully cooperating with its review. And we do not expect that any tightening of 888’s AML/self-exclusion processes would have a material impact on financial performance.”
Earlier this month, the Commission fined BGO £300,000 for advertising failings, the first fine for such a marketing-related failure.