Addiction ails Africa

Bloomberg this week reported that “online gambling has millions of young Africans battling addiction.”

The article paints a stark picture of gambling addiction across several African jurisdictions, where a lack of regulatory oversight allows international operators to bend rules and low incomes often see customers turn to gambling in desperation.

It tells the stories of several individuals, including 15-year-old Brave Luhanga, who shouldn’t legally be allowed to place bets at his local PremierBet outlet in Lilongwe, Malawi, but regularly does anyway.

In impoverished communities, the piece explains, shops like PremierBet may be the only place in town to have air conditioning, comfortable surroundings and televisions, and as such have come to act as social hubs for many inhabitants.

Around 90% of Malawi’s population earns less than $4 per day, according to the World Bank, and a lack of job opportunities can also lead many to gamble money they don’t have in the hopes of escaping the cycle of poverty.

The problem is not just limited to Malawi, of course, and the article goes on to describe how in places such as Kenya, “it’s reached the point where people bet like it’s a religion.”

In response, many are working to combat the worst effects of gambling harm taking place across the continent, but with little to no government backing and extremely limited funds, they face an uphill struggle.

One man running a clinic for addiction in Nairobi suggested that gambling companies market irresponsibly in Africa, presenting it as “something to make you rich, like a legitimate business,” rather than simple entertainment.

This, among myriad other factors, has led to an explosion in gambling across Africa over the past 10 years, the full effects of which still remain to be seen.

While many international operators view African markets as their next major growth drivers, many believe they should first consider the human cost of their profits.

Readers are encouraged to read this in-depth and well researched article in full, to better understand the impact gambling companies are having across the African continent.

Taking the plunge

Moving back to the UK now, as ITV News reported this week on a Belfast woman who found cold water swimming to be “the key to her recovery” from gambling addiction.

Sarah Boyd began playing online slots after being tempted by generous introductory bonuses, but quickly found her level of spending increased from just £20 per month to her entire monthly salary.

“When I look back, I can never see the line of difference of where that crossed over and I think that is what’s so dangerous about online slots. Maybe it is just starting as a hobby but it’s very hard to tell the difference of when it changes from a hobby into an addiction,” she said.

Gambling addiction soon began to exacerbate existing mental health challenges for Sarah, including anxiety and depression, and she even attempted twice to take her own life as a result.

“I felt very, very alone and hopeless… and when I came here to do cold water swimming it was so refreshing,” she said.

Now, the cold water is helping to wash away her struggles with mental health, she suggests, and she is determined to spread greater awareness around the dangers of online gambling.

She also hopes to encourage anyone struggling with addiction to take the plunge into cold water and see if it can help them too.

That’s certainly one way of putting the freeze on an out-of-control gambling habit.

DraftKings looking for targets?

A quick foray into M&A now, as the Financial Times reports that DraftKings held early-stage talks with 888 shareholders over a possible takeover last summer.

The FT suggested that the talks were “a sign of the increasing dominance of US operators in the betting industry, and how their financial firepower may yet drive a further wave of consolidation in the sector.”

Apparently, DraftKings CEO Jason Robins had spoken to Kenny Alexander-led consortium FS Gaming last June and July, about making a possible all-stock offer to take over 888 and its subsidiaries.

At the time, FS Gaming was a top-five 888 shareholder, and the FT suggests that DraftKings’ interest in acquiring 888 “underlines the expansion ambitions of US betting operators.”

According to the article, DraftKings walked away from the talks after the Gambling Commission revealed it had placed 888’s licence under review.

In addition to that, 888’s £1.7bn debt pile represented another major hurdle to be overcome in any potential acquisition talks.

Following the publication of its Q3 results last week, DraftKings CEO Robins declined to comment on any discussions of a takeover.

“888 is one we’re aware of, we’ve certainly watched it over the years, I know there’s been quite a twisty, turny story,” he said, adding “I don’t even think 888 is up for sale at this point.”

And, in response to a FT request for comment on the matter, DraftKings said it was “focused on the massive US opportunity in front of us.”

A top-10 888 shareholder told the paper, however, that they would have taken an all-stock DraftKings acquisition offer “very seriously.”

While this particular deal may have fallen through, it does suggest DraftKings could have at least one eye outside the US market.

A series of customer-friendly sports results, particularly in UK football, have had a negative impact on the earnings of several bookmakers in Q3 2023.

While Q3 reporting season has only just begun, several operators have already pointed to reduced revenue due to unfavourable sports outcomes, including 888, Entain, Betsson and bet-at-home.

Below, NEXT.io investigates the impact on, and responses of, those operators which have seen fit to address the matter publicly. 

888 Holdings

On 18 October, 888 Holdings published a Q3 2023 trading update, setting out some of the firm’s headline financial results for the quarter.

In September, the operator had already warned that overall group revenue for Q3 was expected to be down some 10% year-on-year as a result of several factors, including “customer friendly sports results.”

That prediction turned out to be accurate last week, as the operator revealed total group revenue had dropped 9.9% to £405m.

The impact of the unfavourable sports results could also be seen more clearly, as 888 revealed its sportsbook net revenue margin was down across all business areas.

Across retail, the margin dropped from 18.5% to 17.9%, which left the land-based business with a modest 0.4% increase in betting revenue, despite a 3.8% increase in stakes.

In 888’s international business, the Q3 sportsbook margin fell from 11.7% to 11.4%, which, coupled with an 8.1% reduction in stakes, led to the segment’s sportsbook revenue falling 10.3%.

In the UK and Ireland Online segment, however, the result was even more concerning.

Sportsbook revenue margin fell from 9.8% to 9%, which meant that together with a 10% reduction in stakes, betting revenue slipped 17.3% year-on-year, down from £65.8m to £54.4m.

In addition to the squeezed sportsbook margins resulting from customer-friendly sports results, 888 cited an “ongoing significant impact from compliance changes implemented in dotcom markets” and “the ongoing impact of safer gambling changes within the UK” as being responsible for its overall performance.

Entain

In September, Entain released a trading update during which it also commented on the customer-friendly sporting results of Q3.

It said the outcomes were likely to impact sports margins during September, resulting in a reduction in pro-forma NGR.

While group online NGR for full-year 2023 is expected to be up by a low double-digit percent, proforma NGR is now expected to fall by a low single-digit percent.

Expectations were dampened further by the group-wide implementation of tightened safer gambling measures, “and ongoing regulatory headwinds persisting longer than expected, particularly in the UK.”

The business did reiterate its expectations for the full year, however, with EBITDA expected to fall between £1bn and £1.05bn, “supported by robust operational controls.”

Betsson 

Betsson also felt compelled to comment on sporting results in Q3 despite delivering another record quarter for revenue, which rose 19% to €237.6m.

Sportsbook revenue climbed by 2% to €63.3m as the sportsbook margin fell by 12%, down from 8.3% last year to 7.3% for Q3 2023.

“The sportsbook margin was negatively affected by many favourite wins and goal-rich games during the start of the European football leagues,” said Betsson AB CEO Pontus Lindwall.

The fan-friendly results have continued into Q4 2023 according to Betsson, driving further declines in sportsbook margin to well below the average margin of the last eight quarters.

“There have been quite a lot of favourites winning and a lot of goals,” reiterated Lindwall on the firm’s Q3 earnings presentation.

“While this undoubtedly adds to the entertainment factor, it has not been conducive to the sportsbook margin,” he added.

Bet-at-home

One operator clearly affected by softer sports margins in Q3 was German-headquartered bet-at-home.

“Adverse sporting results, in particular a disproportionate number of favourite wins in the most relevant football leagues negatively impact sports betting margins in the period from August to October 2023,” the operator said in a statement.

As a result, the firm’s management board has adjusted its guidance for full-year GGR from a range of €50m-€60m to a new range of €44m-€48m.

Still, the operator added that it expects full-year EBITDA to come in at the upper end of a previously announced range, of between -€3m and €1m.

European exposure

Although the above operators mentioned softer betting margins in Q3, not all operators were affected by adverse results.

PointsBet, for example, made no mention of softer sports margins and in fact improved its margins across both Australia and Canada between Q3 2022 and Q3 2023.

Adverse results in British football are likely to have a much smaller impact on the business than its UK-based counterparts, which have a much higher exposure to European football outcomes.

With that said, Australian competitor Tabcorp did make some reference to softer sporting results in Q3, suggesting that weak sports margins, combined with a “softer” macroeconomic environment, were responsible for a 6.1% overall revenue decline during the quarter.

New CEO Per Widerström has recognised “positive momentum” and a “foundation for profitable growth” after 888 reported a 10% year-on-year revenue decline to £405m for Q3 2023.

Back in September, the company had already warned investors about its mixed performance for Q3 2023, specifically flagging a 10% decrease in revenue. 

In an official trading update posted today (18 October), 888 explained that the current trends and factors impacting year-on-year performance aligned with that earlier warning.

The operator highlighted it is actively working on enhancing the “sustainability and quality” of its business mix, which is currently influencing short-term performance.

Divisional performance

The online segment in the UK and Ireland experienced a 10% decrease in revenue, amounting to £157.2m.

This decline was attributed to shifts in safer gambling practices, a more refined marketing strategy, and lower-than-expected net win margins from betting, especially across UK football results in September. 

Despite the dip, the company reported robust customer engagement, with average monthly active users increasing by 17%.

In contrast, the retail division experienced a more favourable trend, with flat year-on-year revenue growth of 1% to £125.6m.

This growth was primarily driven by investments in self-service betting terminals (SSBTs) and gaming cabinets. However, the positive performance was partly offset by customer-friendly sports results.

888’s International division faced a significant challenge, meanwhile, with a 19% year-on-year decrease in revenue to £122.2m. 

This decline was linked to ongoing compliance changes in dot com markets, particularly in the Middle East.

The impact of these changes has resulted in a slower recovery in revenue and customer activity compared to initial expectations.

On a more positive note, 888 highlighted the success of its synergy and cost-saving efforts.

These initiatives have aided in mitigating the effects of regulatory and compliance changes, demonstrating the company’s commitment to adapting to an evolving industry landscape.

In terms of integration and development, the company seamlessly incorporated Section8’s in-house games into William Hill’s online platform. 

Additionally, 888 has begun integrating William Hill’s proprietary global trading platform into its in-house platform, enabling certain sports to be traded across the entire group via a single trading engine.

CEO comment

CEO Widerström, who assumed office earlier this week, said: “I have already been struck by the strength of the group’s assets and its clear potential, as well as the ambition of our team. 

“I am happy to note that despite the regulatory challenges the group has faced this year, the hard work by the team is already showing signs of results meaning that we head towards the end of the year with positive momentum, and well placed to grow in the coming years. 

“This is a business with a very strong foundation for profitable growth. But there are clearly also several areas for improvement which we will focus on to unlock our full potential and drive value creation,” he added.

The company also underscored its commitment to the safety and well-being of its more than 500 colleagues in Israel in response to recent conflict in the country.

888 activated its business continuity plans, and operations are expected to remain largely unaffected.

Outlook

In the initial three quarters of 2023, 888 recorded revenue of £1.3bn, marking an 8% decrease compared to the same period in 2022.

Looking ahead, 888 maintained its expectations for Q4, anticipating a mid-single-digit decline in revenue. 

Furthermore, the group projects a full-year adjusted EBITDA margin in the range of 18% to 19%.

September proved to be a challenging month for the industry, as nearly all the gambling stocks on our watch list endured substantial declines.

Some companies, unfortunately, fared even worse than others, with 888, GAN and XLMedia emerging as our top underperformers during this tumultuous month.

888

888, a regular in this feature, faced the most significant setback among operators, witnessing a substantial 24% drop in its stock value.

The company recently cautioned investors about their Q3 2023 performance, projecting a 10% year-over-year decrease in revenue to £400m.

This warning closely followed a similar note from Entain, which revealed its intention to expedite a market review and operational streamlining in light of Q3 2023 results that fell below expectations.

Entain’s stock value also experienced a notable decline of 21% in September.

Both companies attributed their challenges to a combination of factors, including the impact of sports results and the effects of newly implemented safer gambling reforms in the UK. 

888 also noted an “ongoing significant impact from compliance changes implemented in dotcom markets”. 

The business made major changes to its policies in these countries after launching an internal probe in January into the checks it performed on Middle Eastern high rollers.

888 executive chair Lord Mendelsohn said: “We are making significant strides to improve the quality and long-term sustainability of our revenues, but performance in Q3 has been below our expectations, and this means we now expect to end the year with EBITDA below our prior expectation.”

With Entain and 888 both posting warnings about Q3 performance, investors are monitoring rival Flutter Entertainment, which has shown no signs yet of making a similar announcement.

GAN

In the supplier category, GAN experienced a challenging month in September, with its stock declining by 24%. 

Starting the month at $1.44, it ended at $1.16 on 29 September, the final trading day of the month.

The resignation of long-serving CEO Dermot Smurfit and the appointment of Seamus McGill as interim CEO on 27 September did provide a brief boost of approximately 20% to the stock. 

However, GAN investors have faced better times in the past, with the stock losing nearly 20% over the last six months and nearly 50% over the past year. 

Notably, the stock reached its highest point on 8 February 2021, at $30.45.

Earlier this year, GAN initiated a comprehensive company-wide strategic review process aimed at accelerating its path to profitability and achieving a more appealing return profile.

When presenting GAN’s Q2 2023 results, Smurfit said the company had received indications of interest from prospective bidders interested in acquiring the business. 

He added that a special board committee comprised of non-executive directors was evaluating the proposals, although no agreement has been reached at this time.

The latest quarter saw GAN report revenue of $33.8m, which represented a decrease of $1.2m compared to the same period of last year.

It’s fair to assume that investors are eagerly awaiting further updates on the strategic review as GAN navigates these changes and challenges.

XLMedia 

The affiliate with the biggest stock loss in September was XLMedia, down 29%. 

Over the past six months, its shares have plummeted by nearly 40%, and it has seen a decline of approximately 60% over the past year.

In September, XLMedia’s stock opened at £11.63 and remained relatively stable for most of the month. 

However, it began to decline following the ban imposed by the UK Advertising Standards Authority (ASA) on an XLMedia Instagram ad featuring Manchester United’s Mason Mount.

What might have raised more concerns among investors was XLMedia’s failure to respond to any of the ASA’s inquiries regarding the banned advertisement. 

The regulator expressed its “concern” over the lack of response and the apparent disregard for the rules.

Then, on 29 September, XLMedia’s shares experienced another decline after the company reported a 34% revenue decline for H1 2023.

XLMedia had previously disclosed its H1 results in July, but opted for a repeat presentation in September. 

This time, the presentation featured only the CEO and CFO discussing the results without a Q&A session.

This resulted in another drop of nearly 6% in the company’s shares.

888 has cautioned investors about its “mixed performance” in Q3 2023, with revenue expected to dip by 10% year-over-year to £400m. 

The company’s shares tumbled 14% during the early hours of trading.

Several factors were identified as the main drivers behind the year-over-year revenue decrease. 

These factors include an ongoing significant impact from compliance changes in dotcom markets, resulting in a slower recovery in customer activity and revenue. 

Additionally, customer-friendly sports results have affected win margins in both UK and international markets in September. 

The continued effects of safer gambling changes within the UK are also contributing to the revenue decline. 

Lastly, a short-term impact stems from a shift in 888’s marketing approach to prioritise higher returns in line with the group’s market focus strategy and new brand-led marketing approach.

Earlier this week, 888’s UK online and retail rival Entain posted a similar earnings warning.

Retail remained robust

Despite these challenges, the retail sector continued to perform strongly, with revenue remaining broadly stable compared to the previous year. 

The company maintained its expectation of mid-single digit revenue growth for the full year, citing robust customer engagement and the positive impact of the ongoing rollout of additional proprietary self-service betting terminals (SSBTs) and expansion of content on the retail gaming platform.

888 also reported a cash balance of approximately £162m, with undrawn committed facilities of £150m, providing a total liquidity buffer in excess of £300m.

Current trading and outlook

The Q4 outlook, however, shows promise, with sequential revenue improvement expected. 

Despite projecting a mid-single-digit year-over-year decline in Q4, 888 is targeting a robust return to growth in 2024.

The company said it has made significant and ongoing improvements to the sustainability and quality of the mix of the business, and while this is weighing on short-term performance, it continues to drive strong double-digit active customer growth.

888 executive chair Lord Mendelsohn commented: “We are making significant strides to improve the quality and long-term sustainability of our revenues, but performance in Q3 has been below our expectations, and this means we now expect to end the year with EBITDA below our prior expectation.”

However, he added: “The hard work the team has undertaken so far this year has set very strong foundations for the future of the business and our synergy delivery is well on track. 

“We are strongly focused on investing to deliver good levels of expected revenue growth in 2024 as we progress towards our clear target of more than £2bn of revenue in 2025 and I look forward to the coming years with confidence.”

Full-year guidance

888 noted that synergy delivery remains on track, and significant cost savings have been achieved, helping to offset the year-to-date revenue performance shortfall compared to initial expectations. 

Additional synergy opportunities have been identified, but any extra savings will be reinvested in growth initiatives. 

The group highlighted its significant growth potential supported by its new operating model and brand-led marketing strategy.

888’s primary focus remains on driving sustainable growth in 2024 and beyond, leading to an expected adjusted EBITDA margin of approximately 18% to 19% for the full-year 2023.

888 had initially provided guidance for an adjusted EBITDA margin of 20% for the year.

Mendelsohn also expressed his confidence in the company’s newly appointed CEO Per Widerström and CFO Sean Wilkins, who are expected to lead the company through its next phases of growth, with Widerström set to assume his role in mid-October.

For H1 2023, 888 reported a loss after tax of £33m, a notable shift from the comparable period in 2022, when it generated a £12m profit after tax.

Group revenue surged by 165.5% year-on-year to £881.6m in H1, primarily driven by the acquisition of William Hill, which completed in July last year.

However, on a pro-forma basis (assuming 888 owned William Hill throughout the comparative period), group revenue declined by 6.5%.

Nevertheless, Peel Hunt analyst Ivor Jones anticipates improved prospects on the horizon, prompting the firm to raise its target price from 150p to 175p.

At the 175p target price, 888 would have a FY24E Price-to-Earnings (PE) ratio of 8.8x and a Free Cash Flow (FCF) yield of 11%.

Jones commented: “It has been a challenging year for 888, but we believe better times are ahead and reiterate our Buy recommendation.”

888 has recruited Sean Wilkins as its new CFO, effective from 1 February 2024.

This change in leadership coincides with the upcoming departure of current 888 CFO Yariv Dafna on 2 October 2023.

Wilkins brings a wealth of experience, spanning 17 years in CFO roles across both private and public companies.

Most recently, he served as the group CFO of Superbet, a betting and gaming business with operations primarily across Romania, Poland, Serbia and Belgium.

Before his tenure at Superbet, Wilkins held CFO positions at several consumer-facing businesses, including Big Bus Tours, Domino’s Pizza Group PLC, Tesco Malaysia, Tesco Telecom, and O2 Asia.

In the intervening period, Dafna will hand over his responsibilities to 888 chief strategy officer Vaughan Lewis, who will take on the role of interim CFO.

Commenting on Wilkin’s appointment, 888 executive chair Lord Mendelsohn stated: “The board is delighted to announce the appointment of Sean as the group’s new CFO following a thorough search process.

“In addition to having an in-depth understanding of the betting and gaming industry, Sean brings a wealth of relevant experience gained in CFO roles at international businesses, where he has demonstrated a strong track record of value creation.”

Lord Mendelsohn added: “Alongside Per Widerström – the group’s new CEO who joins on 16 October – and the rest of the leadership team, the board is highly confident that the group has an outstanding executive team in place with the right skills and capabilities to deliver the group’s clear strategic plans and priorities.”

An extended stay

Mendelsohn further thanked Dafna for his significant contributions to the business over the last three years, including his role in completing the integration of William Hill’s European operations into the business.

He also credited Dafna for maintaining stability in recent months while 888 was in the process of searching for a permanent successor.

Dafna had originally intended to leave the company in March 2023.

However, he extended his tenure at the end of January when Itai Pazner left the CEO position with immediate effect following an internal compliance investigation.

The investigation revealed that the company had not adhered to Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols for VIP customers in the Middle East.

Wilkins said of his appointment: “Having worked in the regulated online betting and gaming industry over recent years, I have followed 888 closely.

“Following its transformational acquisition of William Hill, the group has all the ingredients for long-term success: outstanding brands, technology and people.

“The board has set out very clear plans to create significant shareholder value, and I am really looking forward to being part of the leadership team to deliver these plans and achieve the group’s clear potential,” he added.

Investment consortium FS Gaming has terminated an agreement with DAZN CEO Shay Segev which previously saw it control Segev’s voting rights in 888.

FS Gaming background

FS Gaming was established by former GVC Holdings CEO Kenny Alexander, together with the operator’s former director Stephen Morana and former chairman Lee Feldman.

The group secured a 4.55% shareholding in 888 in June, before putting forward a leadership plan for the business which would see Alexander take charge as CEO, Feldman become chair and Morana as CFO.

As part of the plan, the group secured the voting rights from another former GVC (Entain) executive in DAZN CEO Shay Segev.

Segev’s 2.02% voting rights in 888 were transferred to FS Gaming, giving the consortium total voting rights of 6.57%.

In July, however, 888 revealed that it had terminated talks with the group, after the UK Gambling Commission expressed concerns over an ongoing HMRC investigation into GVC’s international activity under Alexander’s leadership.

Entain has since revealed that it is braced for a settlement payout costing as much as £585m over a four-year period.

Leadership bid falls through

Shortly after abandoning talks with FS Gaming, 888 revealed that former Fortuna Entertainment CEO Per Widerström would take over the business as chief executive.

That put a grinding halt to FS Gaming’s takeover plans, which until now retains its 4.55% shareholding in the operator.

There has not yet been any suggestion that either FS Gaming or Segev, who retains his 2.02% stake in the business, intend to sell off their shares in 888.

Shares in London-listed 888 are trading lower today, after the business announced it had turned to a loss after tax in H1 2023.

Group revenue was up 165.5% year-on-year to £881.6m in H1, due to the operator’s acquisition of William Hill which completed following the end of the H1 2022 reporting period, in July last year.

On a pro-forma basis however, (calculated as if 888 had owned William Hill throughout the comparative period), group revenue was down by 6.5%, which the operator said was the result of compliance changes in dotcom markets, together with a newly refined marketing approach and market focus within the business.

Revenue breakdown

888 has “proactively shifted the business mix and improved sustainability” since last year by focusing on regulated markets, it said, with 95% of revenue deriving from locally regulated or taxed markets in H1 2023.

Still, in its UK and Ireland online operations, 888 reported revenue down 9%, with the lower revenue reflecting the implementation of proactive player safety measures and a refined marketing approach, it said.

Revenue across its UK retail arm grew by 6%, meanwhile, as international online revenue dropped 14% due to the implementation of compliance changes in certain dotcom markets, together with a slower than expected recovery in the Middle East.

Turn to loss

Group adjusted EBITDA more than tripled to £156m compared to the prior-year period before the acquisition, while pro-forma adjusted EBITDA grew by a more modest 9%.

The business declared a loss after tax of £33m for the half-year, however, compared to a £12m profit after tax in H1 2022.

The turn to loss was driven by increased interest costs on 888’s debt together with the amortisation of acquired intangibles and certain one-off costs related to the acquisition, the company said.

Net debt was reduced by £68m to £1.66bn, giving the business a leverage ratio of 5.1x as of June 2023, down from 5.6x in December 2022.

With cash reserves of £188m and an undrawn £150m revolving credit facility, 888 said it had total liquidity of over £300m at the end of the reporting period.

2023 outlook and commentary

Looking to the rest of the year, 888 expects revenue to be lower than pro-forma 2022 by a low- to mid-single digit percentage, it said.

Still, the business also expects “significantly higher” adjusted EBITDA at a margin of 20% for the full-year 2023.

That would mark a significant improvement from 2022’s full-year adjusted EBITDA margin of 16.8%, while the business also aims to have a leverage ratio of under 5x by year-end.

“I am very pleased with the progress we have made in the first half of the year as the group delivered against the plans we committed to at our investor day last year, while also successfully navigating business, market and regulatory volatility,” said 888 executive chair Lord Mendelsohn.

“We made very strong progress with the execution of our integration plan and we now expect to realise the full £150m of synergies in 2024, a year earlier than the original plan. 

“Our strong cash discipline and higher profits also enabled a 0.5x reduction in our leverage. We have successfully delivered against our focused market strategy, changing the mix of our revenue and creating a more profitable and sustainable platform for future growth.”

Entain has set aside a £585m provision in respect of its ongoing deferred prosecution agreement (DPA) negotiations with the Crown Prosecution Service (CPS).

The operator previously announced an investigation by HMRC into its legacy Turkey-facing business, which it is seeking to resolve via DPA negotiations with the CPS.

Entain, then GVC, sold the Turkish business in 2017.

Entain now believes it is likely to be able to agree a resolution of the HMRC investigation, although the full terms of a DPA are subject to judicial approval, which will be sought in Q4 2023.

The firm has therefore allowed for a provision of £585m against any potential settlement, which would be paid over a four-year period.

The settlement relates to alleged offences under Section 7 of the 2010 Bribery Act.

Section 7 relates to the failure of a relevant commercial organisation to have adequate procedures in place designed to prevent persons associated with it from undertaking bribery for the benefit of the commercial organisation.

The provision was calculated on the basis that Entain will receive full credit for its extensive co-operation with the investigation both before and after entering into a DPA.

Entain said that since the start of the investigation, it has undertaken a review of anti-bribery policies and procedures and has taken action to strengthen its compliance programme.

In a statement, the board said it hoped to conclude the matter and draw a line under the legacy issues involving former third-party suppliers and former Entain employees.

Entain chairman Barry Gibson said: “We are pleased to be making good progress towards drawing a line under this historical issue, which relates to a business that was sold by a former management team of the group nearly six years ago.

“We have been working closely with the CPS throughout this process, and they have recognised our extensive cooperation.

“Following a complete overhaul of our business model, strategy and culture in the last few years, the Entain of today bears no resemblance to the GVC of yesterday,” he added.

Kenny Alexander was CEO of the company at the time of the alleged breach.

He had been touted for a return to the UK gambling sector this year as the potential CEO of 888 after investment vehicle FS Gaming built up a significant stake in the business.

However, 888 pulled the plug on the negotiations after the Gambling Commission expressed concern over the outcome of the HMRC investigation.

Incoming 888 CEO Per Widerström is set to stand down from board positions at affiliate marketing group Catena Media and financial services company Nordnet.

The executive is understood to be leaving the positions so that he can dedicate his time more fully to his new role in charge of London-listed 888.

Widerström has been a non-executive director of Catena Media since May 2019, but has stood down from the company’s board with immediate effect.

“Per’s extensive experience and in-depth industry knowledge have greatly benefited the board’s work and the strategic direction of Catena Media,” said Catena chairman Göran Blomberg.

“On behalf of all stakeholders, we express gratitude for his contributions and wish him every success in his new role.”

Catena’s board will now consist of six members up until the company’s 2024 annual general meeting.

Nordnet, meanwhile, said that having accepted the role of CEO at 888, Widerström “will not be able to commit enough time to both assignments.”

Widerström has been a board member of Nordnet since 2017 following investment from Nordic Capital, a private equity firm of which Widerström is also the operating chairman and an industrial adviser.

On behalf of Nordic Capital, Widerström also holds board positions with a variety of companies including German mortgage brokerage group Bilthouse GmbH, payment services provider Qred AB, and loan intermediation company Sambla.

According to his LinkedIn profile, Widerström is currently chairman of the board of both Qred and Sambla, and a non-executive board member of Bilthouse.

“It has been a privilege to serve on Nordnet’s board during the last six years and I am very proud of the journey we have made,” Widerström said in a statement published by Nordnet. 

“While I am sad to leave, I have made the assessment that it will not be possible to commit the appropriate amount of time to both the CEO role at 888 and the board of Nordnet. 

“I would like to thank my fellow board members, management and the whole Nordnet team for a great collaboration and wish them continued success and growth,” he concluded.

In addition to his other roles, Widerström is also chairman at enterprise AI start-up Turbotic, SaaS-enabled health and beauty marketplace Bokadirekt.se, and Malta-headquartered online gambling operator Casumo.

Those companies have not yet announced whether Widerström will stand down from their boards. iGaming NEXT has contacted the companies in question for comment.