888 CEO Exits After Internal Probe Discovers AML-KYC Failures

It’s unclear if the scandal that forced out Itai Pazner will impact any proposal by 888 to continue providing casino gaming and online poker in Delaware.
January 30, 2023

We will be uncompromising in our approach to compliance as we build a strong and sustainable business. 888 Holdings announced its CEO had departed in the wake of an internal compliance investigation that found the UK-based gaming giant had not followed best practices in the Middle East region.

In a series of regulatory announcements posted Monday, 888 said that its board had suspended VIP customer accounts immediately in the Middle East after a probe found the company had not followed Anti-Money Laundering (AML) and Know Your Client (KYC) protocols for the region.

The board said it believes the AML and KYC failures were isolated to the Middle East region and that less than 3% of company revenue would be affected by the suspension — which it hinted would be temporary and lifted once additional internal investigations into the matter are concluded.

888 did not say that it had found any evidence that money laundering had occurred, only that it had taken insufficient steps in the region to ensure it won’t happen.

The company also announced Monday that CEO Itai Pazner had resigned and that the company’s non-executive chairperson, Lord Mendelsohn, would temporarily lead 888 as interim CEO while the board seeks a permanent replacement.

“The board and I take the Group’s compliance responsibilities incredibly seriously,” Mendelsohn said of the VIP suspensions in the Middle East.

“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.”

On Pazner’s departure, Mendelsohn said the former CEO “played a very important role in building a business with powerful proprietary technology and has overseen successful early stages of the William Hill integration process. We wish him well in his future endeavors.”

Shares of 888 were down by about 25% in trading on Monday, according to reports.

It’s unclear if the fallout from the AML-KYC failures in the Middle East will affect its current — or future — operations.

Earlier this month, the Delaware Lottery announced it had put its exclusive iGaming contract up for bids. 888 has held the contract without incident for about 10 years, providing online casino games and poker (but not sports betting) through custom skins provided to three racinos in the state.

888 US President Howard Mittman hinted that the company plans to apply for the new contract.

An official with the Delaware Lottery did not return a message seeking comment Monday on whether the news from 888 puts any application by the company in peril.

The Lottery’s request for proposal (RFP) for the iGaming contract shows it wants an operator with experience in all three verticals — online poker, online casino, and online sports betting.

If the Lottery were to award its iGaming contract to another company, poker players in Delaware would likely lose access to the 888/WSOP US Network, connected to player pools in Nevada and New Jersey.

Conversely, online poker players in Delaware could wind up playing on BetMGM or PokerStars. Both operators have access to player pools in the states mentioned above and Michigan — all four are members of the Multi-State Internet Gaming Agreement (MSIGA).

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