888 Holdings, the parent company of SI Sportsbook, is without a CEO after the company reported he was “immediately leaving office.”
Itai Pazner‘s departure on Monday came as 888 separately announced an internal compliance investigation concerning some VIP customers from 888’s international .com business. The company suspended VIP activities in certain markets until the investigation is complete.
888’s stock fell 27.5% to 74.85 pence at Monday’s close. Trading volume for Monday was 21 million, up significantly from its average 1.6 million.
SI Sportsbook not involved in investigation
The US business of SI Sportsbook, which is live in Colorado, Michigan and Virginia so far, is not impacted at this time.
The 888 release noted the issues involved a failure to use best practices when it comes to know your customer and anti-money laundering processes in the Middle East.
Following an internal compliance review, it has come to light that certain best practices have not been followed in regard to KYC (Know Your Client) and AML (Anti-Money Laundering) processes for 888 VIP customers in the Middle East region.
While further internal investigations are underway, the Board has taken the decision to suspend VIP customer accounts in the region, effective immediately. The Board currently estimates that the impact is less than 3% of Group revenues, should the suspensions remain in place. Based on the Board’s current understanding, the process deficiencies identified are isolated to this region only.
– 888 Statement
Internationally, domains ending in .com typically serve gray or unregulated markets while regulated markets have domains that end in specific country codes.
Chairman to lead 888 during CEO search
888 will be led by non-executive Chairman Lord Jon Mendelsohn, who took over as executive chairman on Pazner’s depature, until the company completes a search for a permanent CEO.
“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.”
– Executive Chair Mendelsohn
888 reported UK online revenue ‘pressure’
888 posted a trading update Jan. 13 that showed UK online revenue dropped 5% in the fourth quarter and 15% for the full year. Pazner attributed that drop to the impact of enhanced player safety measures:
“As previously discussed, we continue to see pressure on our UK online revenues from regulatory change including the ongoing impact of the enhanced player safety measures, but I am confident we are building a sustainable leading business for the future.”
Also under pressure has been 888’s stock price, which is down nearly 75% since its 52-week high of 292.8 pence when markets opened Feb. 11, 2022.
SI Sportsbook plans in transition
The change in leadership comes at a time when SI Sportsbook is still trying to find its footing in the US sports betting market.
Chief Strategy Officer Vaughn Lewis explained the brand is shifting toward the “unsexy sweet spot” of older men that enjoy online casino at 888’s Capital Markets Day in November. Average revenue per user for men in the 61 and older demographic is six times higher than the 21-to-38 age group.
“Our original plan here was to build a nationwide, sports-led operation in 12 to 15 states. It’s become clear to us that the intense competition in sports betting and the dominance of the top four brands means it will be very difficult to deliver positive returns without evolving our plan.”
-Vaughn Lewis
