888 Holdings has reported a pre-tax loss of $17 million for the first half of 2017 after recording more than $50 million in “exceptional” costs.
Those costs upset a fiscal six months that would have set a positive record for the company, officials said, as recorded by key metric growth and KPI gains across its product verticals.
The company said it recorded corporate revenues of $270 million for the six months, up 3 percent from 2016. It pointed to strong performance in its B2C casino division within regulated markets. The company declared a period Adjusted EBITDA of $47.6 million, an 8 percent increase over 2016.
However, exceptional charges of $50.8 million came in the period including a prioritized $45 million to cover “potential past VAT matters” in the German market.
Along with the potential tax payment, 888 was also ordered to pay a record £7.8 million fine in the UK relating to social responsibility failures to problem gamblers. The company was essentially fined for allowing gamblers who had placed themselves on voluntary exclusion lists to continue placing bets.
Investigations by UK regulators found that about 7,000 players on self-exclusion lists had been able to access 888 services and deposit and wager a combined total of £3.5 million over 13 months. The players were able to access their accounts through a technical problem in 888’s bingo platform, which failed to identify the players as being on the lists.
888 must pay back the £3.5 million to players who had opted to self-exclude as well as donate £4.25 million to an unidentified “socially responsible cause”, determined by the UK Gambling Commission, as a fine.
“Safeguarding consumers is not optional,” said Sarah Harrison, chief executive at the Gambling Commission in a press release. This penalty package of just under £8million reflects the seriousness of 888’s failings to protect vulnerable customers. The 888 sanction package will ensure those affected don’t lose out, that the operator pays the price for its failings via a sum that will go to tackling gambling-related harm, and that independent assurance will be given to see that lessons are learnt.”
The company said it set aside £4.2 million during the fiscal half to pay the fine. The company also said it has reviewed the problems with its self-exclusion software and implemented stricter controls.
Still, the company pointed to the positive for the year so far.
“888 has delivered further revenue growth and operational progress in the first half of 2017 resulting in a 9 percent increase in revenue at constant currency,” said Itai Frieberger, CEO of 888. “This pleasing outcome was driven by continued growth in 888’s core Casino vertical, strong momentum in the fast-growing 888Sport and a good performance in Poker. The Group’s strong strategic momentum continued as 888 developed its positions in regulated geographies, achieved greater diversification across products and markets and further enhanced operational efficiencies.”
