CEO Itai Pazner to leave 888 with immediate effect amid Middle East compliance failures
The non-executive chair of the group, Lord Mendelsohn, will be stepping in as the executive chair on an interim basis while the board searches for a permanent CEO.
Lord Mendelsohn thanked Pazner for his contributions to the company over the past 20 years, including the last four as CEO.
“Itai has played a very important role in building a business with powerful proprietary technology, and has overseen successful early stages to the William Hill integration process. We wish him well in his future endeavours,” he said in a brief statement.
Under Pazner’s leadership, 888 acquired William Hill’s European operations for a sum of approximately £1.9bn.
However, the company incurred a substantial debt of £1.76bn to finance the acquisition.
Pazner joined 888 Holdings in 2001 as marketing manager and held various senior positions before being appointed COO in 2017 and CEO in 2019.
On LinkedIn, Pazner described working for 888 for more than two decades as a “great honour”.
In a social media post, he said: “The main achievement that stands out for me is my role in creating the 888casino into a leading online casino brand globally.
“Working with a great team of colleagues, we built 888 into a top-tier player in sportsbook and 888poker to be one of the leading poker networks globally,” he added.
In a separate statement, 888 revealed that it has suspended VIP activities in some of its .com markets due to an internal compliance investigation.
The review has revealed that best practices regarding Know Your Client (KYC) and Anti-Money Laundering (AML) processes have not been followed for VIP customers in the Middle East region.
To rectify the situation, the board has decided to suspend the VIP customer accounts in the region, which is estimated to impact less than 3% of the operator’s revenues.
Lord Mendelsohn commented: “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,” he added.
iGaming NEXT has reached out to 888 for comment.
The trouble with .com
Advisory firm Regulus Partners linked Panzer’s departure to the “dangerous” nature of “grey-market operating practices”.
The firm also pointed out that 888 made redundancies at its Israel office a few days ago.
“The Middle East contains a full house of ample VIPs, complex gambling law, extreme AML risk, and ‘creative’ payment processing, to the extent where the act of doing business is potentially as a big a problem as the amount from a legal risk standpoint,” said Regulus Partners analyst Paul Leyland.
“As regulatory scrutiny increases, it is likely to become increasingly difficult to hide systemic AML failings in plain sight, in our view; indeed we are surprised that it has taken this long for a blow-up of this nature to happen,” the firm added.
Regulus predicts that Pazner won’t be the last senior executive to face consequences for questionable .com practices of publicly listed and domestically regulated operators.
The question remains, Leyland concluded, whether a senior scalp will be enough to appease inquisitive regulators.
CFO stays on
Meanwhile, 888 said CFO Yariv Dafna has now agreed to stay on until end of 2023.
Earlier in January, it was announced that Dafna would leave 888 after publication of the firm’s full-year 2022 financial results in March.
According to a recently issued trading update, overall revenue for Q4 2022 slipped by 2.6% year-on-year to £458m.
Moreover, 888 ended the year with £1.8bn in equivalent debt, it said, with some 70% of its interest costs fixed for at least three years.
Headquartered in Gibraltar, and listed in London, 888 operates from 15 offices around the world and employs over 12,000 people globally.
London-based brokerage Peel Hunt admitted its Buy rating for the stock was less credible following today’s news. It lowered its target price to 150p per share, down from 210p.
“The share price decline implies investor concern that we are not being told what is really going on,” said Peel Hunt analyst Ivor Jones.
“The board has a lot to do to reassure that there are no more problems to be revealed,” he added.