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888 CFO Yariv Dafna insists the operator is well positioned to deal with a potential clampdown on online casino stakes as part of the UK Gambling Act review.

The stakes have never been lower

Speaking during an 888 event for retail investors on 17 April, Dafna said a £2 stake limit for the under 25 cohort is likely to be introduced, although it was currently unclear whether restrictions would come into force for individuals over the age of 25.

888 has taken pre-emptive steps to soften the impact of forthcoming restrictions for UK operators, including stake limits for online slots of between £5 and £10 per spin, and enhanced affordability checks when a customer deposits £500 or more.

“We believe we are positioned well to absorb significant parts of what’s to come,” said Dafna.

The UK government’s review of the 2005 Gambling Act is expected to bring about wide-ranging legislative changes for UK-licensed gambling operators.

The review was initially launched via consultation in 2020 and has been delayed on multiple occasions due to government upheaval and more pressing national priorities.

It was widely expected to be published today (17 April), although there is still no sign of the white paper at the time of writing.

When asked about knock-on effects of the review’s recommendations, Dafna said 888 was in a better position to swallow the rule changes than several of its competitors.

888 CFO Yariv Dafna: “A £5 [limit] to our understanding is the lowest level that you can find today in the market.”

“A £5 [limit] to our understanding is the lowest level that you can find today in the market,” he told investors. “There are still operators in the market with £10, £20 and £50, and some of them even above £100.

“We are expected to have lower impact compared to others which are still running on a higher number,” he added.

Dafna believes the concrete restrictions as set out in the review (when it does eventually get published) will have a greater impact on the firm’s 2024 financials than in 2023.

However, enhanced safer gambling measures have already come at a cost for the company.

For example, UK online revenue fell by 9% year-on-year between Q1 2022 and Q1 2023 to £167m. This drop-off was attributed to reduced revenue from higher-spending players as the digital division continues to decline due to the ongoing impact of safer gambling changes.

Dafna refused to provide a concrete figure for Gambling Act review impact for two reasons. He said: “You never can expect exactly the behaviour of the customer after such a reduction and we also don’t know where it [the review] will land.”

No easy ride for new CEO

Elsewhere, 888 executive chair Lord Jonathan Mendelsohn provided an update on the company’s search for a new CEO following the dramatic departure of Itai Pazner in January.

He told investors that appointing a new permanent CEO was the board’s main priority and that an announcement would be forthcoming in the coming months.

“We have been pleased with the depth and calibre of the candidates that we are engaging with and are making good progress with our search and our interviews,” said Mendelsohn.

888’s new leader will be judged on several key strategic targets, including delivering cost synergies of £150m following the firm’s acquisition of William Hill and Mr Green.

Key financial targets have also been set with a deadline of 2025, including revenue of more than £2bn, an adjusted EBITDA margin above 23% and crucially, a debt leverage ratio of less than 3.5x.

“I might think more ambitiously about tasking the new chief executive officer with even bigger goals than that,” said Mendelsohn.

“But I think it’s important to say our focus has to be on ensuring that we deliver effectively, we continue to grow EBITDA, and we continue to run an efficient business,” he added.