In an unexpected turn of events, the agreement between FS Gaming Investments and Shay Segev (pictured above left), which involved the transfer of voting rights for shares in 888 Holdings, has been canceled. This development has been closely watched with great interest by the industry.

Relinquishing voting rights

As a result of this cancellation, FS Gaming Investments now maintains control over only 4.5 percent of its shares in 888 Holdings. The investment firm had originally acquired a 6.5 percent stake in the company in June 2023, but with the cancellation of the deal, it relinquishes voting rights over the remaining 2.5 percent.

FS Gaming Investments is the investment vehicle associated with Kenneth Alexander (pictured above right), and Lee Feldman, both of whom held leadership positions at GVC Holdings before its rebranding as Entain Plc in 2020. During their tenure, GVC Holdings executed a transformative acquisition of Ladbrokes Coral, establishing a new FTSE100 gambling entity.

Shay Segev terminated discussions

Shay Segev, previously a part of the GVC/Entain c-level team as Chief Operating Officer from 2016 to 2020, had transferred his voting rights to FS shortly after 888 Holdings terminated discussions with the fund. These discussions had centered on a potential change in leadership and strategic direction, which would have seen Alexander and Feldman appointed as CEO and Chairman of 888 Holdings.

The situation carries significant implications for both Entain and 888 Holdings. Currently, the HM Revenue and Customs (HMRC) is conducting an investigation into a former Turkish division of GVC, known as Headlong, which was terminated in 2017 to facilitate GVC’s acquisition of Ladbrokes Coral. While the closure of this division predates the rebranding, Entain anticipates a substantial financial penalty from HMRC due to discrepancies associated with the Turkish-facing brand.

This HMRC investigation, coupled with the connection between FS Gaming Investments and GVC’s legacy operations, led to the UK Gambling Commission (UKGC) reviewing 888 Holdings’ operating license. Consequently, 888 Holdings decided to discontinue discussions with FS regarding the future of its senior management. The recent filing on the London Stock Exchange (LSE), indicating a reduction in FS Gaming Investments’ share in 888 Holdings, could be seen as a continuation of the distancing between the two entities.

On a separate note, Entain recently revealed that it had set aside a ￡585 million legal provision in anticipation of potential enforcement action following its H1 trading results. Despite this provision, Entain reported robust performance for the first six months of the year, with revenue surging by 14 percent to reach ￡2.4 billion, compared to ￡2.1 billion in H1 2022.

Entain faces challenges in H2 2023

Following the earnings call, Chairman Barry Gibson and CEO Jette Nygaard-Andersen emphasized the company’s transformation since rebranding from GVC. They highlighted its commitment to responsible operations and outstanding corporate governance.

Entain is entering a critical phase in H2, with investors keenly awaiting the gambling group’s plans for a potential multi-billion-dollar merger with MGM Resorts, the US venture partner of BetMGM. Notably, in 2021, Entain rejected an US $11 billion merger offer from MGM Resorts, citing undervaluation of its long-term prospects in the rapidly evolving US betting market.

Despite regulatory challenges, Entain remains optimistic about its US ventures, with the BetMGM partnership on track to achieve FY23 NGR guidance between US $1.8 billion and US $2 billion.

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