888 Holdings tanks as Gambling Commission launches review

Shares in online gambling group 888 Holdings tanked on Monday after it revealed that it is being investigated by the UK Gambling Commission.

The company said the commission is currently conducting a review of the licensed activities of one of its subsidiaries to ensure compliance with its UKGC operating licence.

"The review has been initiated to assess certain measures that the Licensee employs to ensure social responsibility to its customers including, amongst other items, effective self-exclusion tools across different operating platforms."

888 said it will be "proactively engaged" in a cooperative and collaborative manner with the UKGC throughout the review, adding that it is "dedicated to providing players with a responsible as well as enjoyable gaming experience".

Although there was no timescale given or indication of the full scope of the investigation, Canaccord Genuity said it expects the review to last several months.

"There is no doubt that we have entered a period of increased political and regulatory scrutiny of the Gambling industry in the UK, and this will be unhelpful for short-term investor sentiment. Nonetheless, we expect 888 to be rigorous in addressing any failings in regulatory structures/processes.

"Clearly, there is the risk that it will have to pay a fine, if any breaches are identified. And there are a number of precedents. Paddy Power Betfair and Gala Coral paid fines/forfeited cash last year and agreed to take actions to improve AML/social responsibility processes. But 888 is highly profitable, and has a strong balance sheet."

Canaccord said that a worst case scenario could involve licences being revoked, but that this would be an unprecedented action against a company which is fully cooperating with its review.

At 0915 BST, 888 shares were down 6.6% to 278.46p.