S Poddar
In a surprising move, the chief executive of Entain, the company behind major bookmakers Ladbrokes and Coral, has stepped down after just five months in charge. The sudden departure of Gavin Isaacs was announced as a mutual decision, taking effect immediately, leading to an almost 11% drop in Entain’s share price.
Isaacs, a 60-year-old Australian lawyer with a quarter-century of experience in the global betting, gaming, and lottery industries, had emerged from semi-retirement to take on the role. Relocating from Las Vegas, he took the reins of the FTSE 100-listed company in September. However, his unexpected exit has left many wondering about his next steps, though sources suggest his departure was unrelated to the company’s strategy or performance.
In the interim, the company will once again be led by Stella David, the current chair, until a permanent CEO is appointed. David previously served as interim chief executive for nine months during the last leadership transition. Meanwhile, Pierre Bouchut, a senior independent director, will take over as interim chair. Entain, valued at over £4 billion, now faces another leadership transition at a critical time.
David expressed appreciation for Isaacs’ contributions, stating, “Entain is making strong progress in delivering our strategic priorities. We would like to thank Gavin for his contribution.” With her interim role, she joins a small group of female chief executives in the FTSE 100, where only 10 companies are currently led by women.
Despite the leadership shake-up, Entain remains optimistic about its financial outlook. The company expects its underlying profits for 2024 to reach the upper end of the £1.04 billion to £1.09 billion forecast range, aligning with market expectations of around £1.1 billion in profits for the coming year.
Isaacs’ appointment was initially seen as a strategic move due to his extensive experience in the US gambling sector. His previous roles included positions at Scientific Games Corporation, DraftKings, Bally Technologies, and Aristocrat Technologies. In 2022, he was inducted into the American Gaming Association’s Hall of Fame. However, running a UK-listed company presented different challenges compared to his previous experience in the US gambling industry.
Analysts at Goodbody described his departure as “disappointing” and a source of “uncertainty around management.” They noted that the search for Isaacs took nine months, and he was widely regarded as a strong choice. However, they also pointed out that David, having previously served as interim CEO, is seen as a “safe pair of hands.”
Entain is also facing scrutiny from regulators. The Financial Reporting Council is currently investigating its 2022 financial results, focusing on the audit conducted by KPMG. Additionally, the company has been dealing with financial setbacks. In 2023, it reported an after-tax loss of £879 million, largely due to a £585 million settlement related to an investigation into alleged bribery involving a former Turkish business. An additional impairment charge of £190 million was also recorded for its Australian operations. The UK authorities had been investigating potential bribery offences linked to a Turkish subsidiary that Entain sold in 2017.
The regulatory pressure intensified two months ago when Australian regulator Austrac announced civil penalty proceedings against Entain. The company was accused of “serious and systemic” non-compliance with Australia’s anti-money-laundering and counter-terrorism financing laws. Austrac claimed that Entain lacked the necessary procedures to detect and prevent criminal activities on its platforms. While the potential fines remain uncertain, the company acknowledged that the costs could be “material,” adding to investor concerns.
In response to the regulatory challenges, Entain stated in December that it had fully cooperated with Austrac’s investigation and had initiated an overhaul of its Australian operations. The company aims to complete this reform process by June.
As Entain navigates this period of transition and regulatory scrutiny, the focus now shifts to stabilizing its leadership and reassuring investors about its long-term strategy. With strong financial projections and a commitment to compliance reforms, the company remains a significant player in the global sports betting and gaming industry despite its current challenges.
