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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.

Drake ups the stakes

The New York Post took a deep dive this week into the sports betting history of Canadian rap sensation Drake.

While punters in the UK stress over affordability checks, at least our betting habits aren’t being put under the microscope by one of the biggest tabloid newspapers in the US.

The Hotline Bling singer is currently on a hot streak, having won a $1m wager on Israel Adesanya to win his latest UFC bout. Drake pocketed roughly $222k in profit that night.

“Drake is a celebrity whale,” professional sports bettor Bill Krackomberger told The Post. “He’s one of the most in-demand gamblers by casino marketing departments. I saw him at Aria and he was betting $200,000 a spin at roulette.”

With 39.5 million Twitter followers and a genuine passion for punting, it is easy to see why operators including Stake.com have paid mega bucks to sign Drake as a brand ambassador.

 Gambling review falls down pecking order

Unless you’ve been living under a rock this week, you will know by now that UK Prime Minister Boris Johnson has resigned.

The Conservative Party leader had to be dragged kicking and screaming from Number 10 to announce his resignation and will now cling on to power until the autumn.

The timing of BoJo’s resignation has come at a particularly bad – or good – time for the UK gambling industry, depending which side of the fence you sit on.

The government had been expected to publish and rubberstamp its long-delayed review of the 2005 Gambling Act, but that timeline is now in tatters following the resignation of gambling minister Chris Philp, who on Thursday quit in protest at Johnson’s leadership.

“I strongly urge you to deliver the review in full and undiluted,” wrote Philp in the farewell letter to his former boss.

Industry paper the Racing Post points out that the sector could now be made to wait until autumn for any kind of clarity, with parliament due to start summer recess on 22 July.

The paper reports that a proposal contained within the review white paper places the threshold for enhanced affordability checks at a net loss of £2,000 over a 90-day period.

Operators appear to have escaped a worst case scenario in that case, although the prolonged uncertainty will do little to improve the share price fortunes of those listed in London.

Getting shirty

Sky News looked at the delayed review and decided to run with another angle.

Premier League clubs had been expected to vote on a voluntary ban on gambling shirt sponsorship this week but that will now be postponed until 26 July at the earliest.

The initiative was thought up by the Premier League to avoid government intervention on the issue, which has been a running theme throughout the review process.

One club executive told Sky they were grateful of the breathing space as there is a wish for further discussion about the plans before they are put to a vote. Premier League rules mean that approval from at least 14 clubs is required for a vote to be approved.

Almost half of Premier League clubs, including Newcastle United and West Ham, were sponsored by betting operators last season.

Companies including Stake.com, Dafabet and Betway can breathe a sigh of relief – for now at least.

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The Premier League has asked clubs to back a three-year plan to phase out gambling front-of-shirt sponsorships to prevent a government-imposed ban.

According to Sky News, the voluntary ban would come into effect at the start of the new season in August but would not affect existing deals, provided they run no longer than the 2024-25 campaign.

The 20 top-flight clubs have been given one week to decide on the plan. If at least 14 clubs vote in favour, the phase out would be adopted immediately.

The proposal sent to clubs yesterday (4 July) is widely seen as a preemptive move to avoid stricter rules. For example, shirt sleeve sponsorships by gambling companies may still be permitted under the voluntary action.

As part of the review of 2005 Gambling Act, the UK government is currently discussing whether football sponsorships should be prohibited, or at least regulated, under tighter restrictions.

Nine of the 20 Premier League teams were involved with betting companies last season.

Everton hit headlines in June after agreeing a front-of-shirt deal with Stake.com.

The club however faced a backlash after supporters disapproved of the partnership, but they are not the only Premier League club to have signed a gambling sponsorship ahead of the new campaign.

While the Premier League declined to comment to Sky News, it is understood the government will still make a final decision on the matter.

Meanwhile, the BBC has reported that a voluntary ban is being discussed between the Premier League and the government and could offer “a middle ground” for clubs which hope to avert any legislation on the much-debated topic.

Gambling front-of-shirt sponsorships are already banned in European markets including Italy and Spain.