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2024-04-22
A Costly Gamble in Austria For 888
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British gambling company 888 is facing a £100 million legal bill as its ambitious gamble in Austria backfires. The company, which owns popular online brands such as 888 Poker and Mr Green, has been caught in a web of regulatory pressure and compliance failings.
It began when Austria’s three highest courts ruled that British gambling firms, including 888, were operating illegally in the country. As Casinos Austria, the state-backed gambling company, held a monopoly since 2016. The court’s decision demanded that these firms return any player losses, leading to a wave of gamblers seeking to recoup their money.
Realizing the gravity of the situation, 888 has set aside £116 million to cover ongoing legal and regulatory matters, primarily in Austria and Germany. This provision reflects the company’s acknowledgment that it is facing a prolonged battle that could have severe financial repercussions. The hefty legal bill poses a significant challenge for 888, as it comes at a time when the company is already grappling with compliance failings and management uncertainty.
Over the past 18 months, 888 has been plagued by compliance failings, which culminated in the suspension of VIP customer accounts in the Middle East due to concerns of potential money laundering violations. This prompted the resignation of then-chief executive Itai Pazner, leaving the company in a state of limbo. Shareholders have grown increasingly anxious, resulting in a decline in the company’s share price by almost 50% over the past five years.
888’s legal troubles are not limited to Austria. The company is also facing pressure on the home front, as the UK government pushes ahead with regulatory changes in the gambling industry. These changes include limiting stakes in online betting, as outlined in the government’s gambling white paper published last year. The combination of regulatory challenges in both Austria and the UK adds to the complexity of 888’s predicament.
In an effort to turn the company’s fortunes around, 888 appointed Per Widerstrom as its new chief executive. Widerstrom, an online betting veteran, aims to focus on key markets and reduce the company’s debt. As part of the turnaround strategy, 888 will undergo a rebranding, changing its name to Evoke. The new name is intended to reflect the company’s mission to provide world-class betting and gaming experiences to its players.
Despite the rebranding and change in leadership, 888 still faces legal proceedings in Austria and Germany. Analysts have pointed out that a name change alone will not be sufficient to overcome the legal challenges the company is confronting. While 888 maintains that it operates within the bounds of EU law, the ongoing legal battles continue to cast a shadow of uncertainty over its future.
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