888 CEO Itai Pazner Steps Down
888 Holdings has announced that CEO Itai Pazner will step down from his role at the company with immediate effect. Pazner’s departure comes as an internal investigation into suspected money laundering on VIP accounts is launched. Non-Executive Chair Lord Mendelsohn will take on the role as interim CEO while the operator searches for a permanent replacement.
888 Holdings has suspended VIP accounts in the Middle East over suspected money laundering. ©Pavel Danilyuk/Pexels
Lord Mendelsohn Interim CEO
Online gambling operator 888 Holdings has revealed that its CEO, Itai Pazner, is to stand down from the company with immediate effect. Pazner’s departure is the most significant directorate change since the firm acquired heritage bookmaker William Hill. The former CEO and Director has led 888 since January 2019, and has spent more than twenty years at the company.
Pazner joined 888 in 2001 as a marketing manager. He soon rose through the ranks of the company, taking on regional management positions. By 2007, he was awarded his first of three Senior Vice President roles. 2017 saw Pazner promoted to COO before leading the company from 2019 onwards.
The operator’s board has commenced its search for Pazner’s replacement. In the interim, Non-Executive Chair Lord Mendelsohn will assume the CEO’s responsibilities. Speaking on behalf of 888, Lord Mendelsohn thanked Pazner for his service in leading the firm through the purchase of William Hill. The interim CEO stated:
“On behalf of the Board I would like to thank Itai for his significant contributions to the business over more than 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.”
While Pazner has stood down as both CEO and Director, the operator noted a number of other directorate changes. On January 13th, it announced that Chief Financial Officer and Executive Director Yariv Dafna was due to leave the company on March 31st. Dafna will now stay on at 888 until the end of the year. Andria Vidler will also take over as Chair of the ESG Committee with immediate effect.
Investigation into Money Laundering
Pazner’s departure comes as 888 launches an internal investigation into suspected money laundering. The operator has suspended its online casino VIP accounts in the Middle East after it uncovered evidence that best practices had not been followed in some areas. An internal compliance review showed shortcomings in its ‘know your client’ and anti-money laundering processes.
While it is looking into the matter, VIP customer accounts in the region have been suspended, effective immediately. Issuing a statement, 888 estimated that the suspensions would impact less than 3% of the group’s revenues, provided they remain in place. It added that the process deficiencies are isolated only to its Middle Eastern market. Lord Mendelsohn explained:
“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.”
The incident has already had an impact on investment. Shares in the group dropped by 24% following the announcement of the investigation and Pazner’s departure. Further to that figure, its shares have fallen by nearly 70% over the last year due to a market-wide drop-off in online gambling.
While the pandemic triggered a boom for online casino and betting businesses, the cost-of-living crisis and heighted regulatory restrictions have seen revenues fall. Investors have exhibited caution throughout 888’s takeover of William Hill’s international assets, which was completed last July.
Concern for Investors
888 bought William Hill’s assets from US casino giant Caesars Entertainment for £2 billion. The American operator was keen to capitalize on the British bookmaker’s sports betting expertise as a growing number of states legalize the practice. However, it soon became clear that Caesars was only interested in retaining William Hill’s US operations.
The sale of William Hill’s international businesses to 888 helped Caesars to recoup a substantial portion of the £2.9 billion it fronted to buy the bookmaker. 888 is now the owner of William Hill’s portfolio of 1,500 UK betting shops, its European operations and online gambling brand Mr Green.
The acquisition has made 888 one of the largest combined online betting and gaming groups in the world. However, it also resulted in the operator taking on significant debt. Investment banks J P Morgan and Morgan Stanley struggled to secure investors to support the £1 billion it underwrote to support the purchase.
The loss of CEO Pazner, as well as CFO Dafna at the end of 2023, puts 888 in a concerning position. The operator has been keen to reassure investors, after outlining plans to cut its £1.8 billion debt. It aims to raise revenues to £2 billion by 2025 and reach its target adjusted EBITDA margin of 23%. Last July, it completed the sale of its B2B and B2C bingo businesses to Saphalata Holdings for $45.25 million, as part of its strategy to streamline the business.
On top of its debts, 888 was last year fined £9.4 million by the UK’s Gambling Commission over social responsibility and money laundering failures. 888 closed 2022 with revenues of £1.85 billion. Despite the positive impact of the FIFA World Cup, the results marked a 3% decline.
