Tottenham Report: The trials of King Kenny

July 19, 2023 11:00 PM

Tottenham Report: The trials of King Kenny

  • Scott Longley, CDC Gaming Reports
July 19, 2023 11:00 PM
  • Scott Longley, CDC Gaming Reports

Has 888 brought a fatal blow to the ambitions of Kenny Alexander to get back into the front line of operations?

Rarely has the rug been pulled from under a corporate raid quite so comprehensively and publicly as was the case late last week when 888 effectively squashed any chance of the FS Gaming investor group achieving its aim of having Kenny Alexander as CEO at the UK-listed firm.

FS Gaming emerged in mid-June as a 6.6% stakeholder in 888 and with a plan to have Alexander take over the top job while Stephen Morana, ex-Betfair, was proposed as the new CFO and Lee Feldman, Alexander’s ex-chairman at GVC (now Entain), was to be the new chairman.

Such was the appeal of having such storied names to head up the currently leaderless 888 that the share price enjoyed a 40% rise in the week of the announcement.

Yet, it was always the case that Alexander, in particular, came with baggage. Specifically, questions remain about the extent of his involvement in the ongoing UK HMRC investigation into his old firm Entain.

Two weeks before the FS Gaming stake in 888 became public, Entain provided its latest update on that investigation, telling the market it was in negotiations with the Crown Prosecution Service over a deferred prosecution agreement in relation to its previous activities in Turkey.

Crucially, these activities took place when Alexander was at the top at Entain. The DPA relates to suspected offences in relation to section 7 of the Bribery Act, which involves a company or individual failing to prevent an act of bribery taking place.

Entain said in June that the consequences of the investigation were likely to involve a “substantial financial penalty”.

In light of this background, it perhaps shouldn’t have been surprising that when FS Gaming started promoting the possibility of Alexander taking over at the top of 888, then it would pique the interest of the UK’s gambling regulator.

In fact, as 888’s statement to the London Stock Exchange late last week made plain, the company itself went to the Commission at the time of the FS Gaming approach to notify the regulator at which point, 888 said, the Commission “expressed its concern” about Alexander’s involvement.

The Commission initially requested it be kept abreast of developments. Then, on July 14 came the hammer blow. The Commission said “in light of” the prospect of Alexander taking over the reins meant 888 would now be subject to a licensing review.

Indeed, the full text of the 888 statement was damning. It said the Commission had “expressed its concern regarding the ongoing HMRC investigation into GVC’s activities covering the time the individuals proposed to the board by FS Gaming were in senior leadership positions at GVC, and that it is in close dialogue with HMRC regarding its ongoing investigation”.

888 went back to FS Gaming requesting “clarification” in relation to these “considerations” expressed by the Commission “but the most basic assurances that addressed these concerns were not forthcoming”.

The threat of the licensing review made the 888 board’s decision for them with regard to the FS Gaming proposal.

Citing the fact that the appointments proposed by FS Gaming “have no reasonable prospect” of receiving Commission approval and with any change of corporate control involving the FS Gaming individuals FS Gaming “likely (to) put the Group’s licences to operate in the UK at immediate and significant risk,” it terminated the discussions.

The fat lady sings
And that, by rights, should be that. While FS Gaming put out a public statement to the effect that ‘this ain’t over”, no one is truly expecting there to be any comeback on this one.

It is difficult, after all, to get shareholders to back a proposal where the very existence of the company as a regulated entity in the UK would be endangered.

Meanwhile, 888 is likely very soon to announce a new CEO whose first task will be to reassure shareholders that they can put the business back on the right track.

The appeal of the FS Gaming proposition – and the timeliness of the opportunistic share buying – was all about how 888 has fumbled the ball since it achieved its merger with William Hill.

The FS Gaming team was right in its prognosis of 888 – that it is a strong business under hood that has been lacking in ambition and direction. It is a turnaround opportunity and whoever gets the top job will have the task of guiding it to a brighter future.

But that person will not be Kenny Alexander. Not now.