888 boss Itai Pazner: Why we’re taking a big punt on Britain’s bookies

The businesman tells Sabah Meddings why he can offer William Hill’s shops a bright future

Itai Pazner sees digital platform 888’s move into bricks and mortar as creating an “omni-experience” for the brand

Itai Pazner is so eager to get his hands on William Hill’s European business, he’s been going undercover on a guerrilla tour of its bookies in recent weeks. “They don’t know me, I’m still anonymous,” grins Pazner, chief executive of online gambling company 888.

From early next year, if shareholders approve the transaction, Pazner’s online empire is expanding to include 1,400 of William Hill’s high street shops, a workforce of more than 10,500 and ownership of one of the oldest gambling brands in Britain.

Casino games, poker and bingo operator 888 agreed to pay £2.2 billion for the British bookmaker’s European business earlier this year. Pazner’s years of remaining under the radar are nearly over.

For 888, which was established in Israel in 1997 and listed on the London Stock Exchange in 2005, the acquisition will make it the UK’s third-largest gambling operator after Paddy Power Betfair owner Flutter Entertainment and Entain, which owns Ladbrokes Coral. The deal is also a bet against looming regulation in Britain designed to protect problem gamblers. Placing bets using credit cards has already been banned, alongside a clampdown on controversial betting machines known as fixed-odds betting terminals.

Thankfully for William Hill’s shop staff, Pazner’s experience in-store was a positive one — they taught him how to fill out a betting slip. “Colleagues are very friendly — they helped and explained,” he says of the experience.

Pazner’s swoop on William Hill comes as the gambling sector rides a wave of dealmaking. Entain has been at the centre of bids from American fantasy sports site DraftKings and the Las Vegas casino giant MGM, while FTSE 250 gambling software firm Playtech has agreed a takeover with Australian operator Aristocrat. FTSE 100 firm Flutter is a combination of Paddy Power Betfair and The Stars Group. William Hill even tried to buy 888 in 2015, before its largest shareholder blocked the deal. Then, a year later, 888 teamed up with Rank for an attempt at William Hill.

Based in Israel, Pazner, 49, has come to the UK to spend a few days working at 888’s small third-floor office in London’s Marylebone. The business has its headquarters in Gibraltar, a tax haven for online gaming companies, and employs 400 people in its office near Tel Aviv. Pazner, who has spent most of his career at 888, is dressed in jeans and a denim shirt. “The Israeli hi-tech culture is very informal,” he explains.

Pazner is acutely aware that his industry is facing an uphill battle to prove it is doing enough to protect problem gamblers. Ministers are holding a review of the Gambling Act to ensure legislation is fit for the digital age. The current regulations have largely remained the same since 2005, when online gambling was still in its infancy. The government is looking at measures such as adding extra protections for young adults and imposing online stake and spend limits, along with restrictions on advertising.

Pazner is unfazed, remaining bullish about the company’s chances. “888 has been dealing with regulatory headwinds since its inception,” he says. “There have been much worse risks that we have managed to overcome.”

An example is America, 888’s biggest market until 2006, when the US outlawed online gambling. “It shut down from one day to the next,” says Pazner, who was running its UK business at the time. Instead of cutting back, 888 ploughed investment into other markets, including the UK and Europe. “We didn’t fire a single person at the time — we took a punt.”

A US Supreme Court ruling in 2018 liberalised sports betting in America and 888 has since re-entered the market, striking up a partnership with Sports Illustrated magazine.

Pazner is taking a further bet against regulation through the acquisition of William Hill, which will give it a 15 per cent UK market share. “With all the changes in regulations that could come in, I still think the UK’s going to be one of the biggest and most attractive markets for a very, very long time,” he says.

Pazner insists that holding on to William Hill’s high street shops — instead of selling them off — will provide a leg up if rules on advertising tighten. “We actually see the shops as a core asset of William Hill,” he says. “A presence on the high street is an added benefit from a brand perspective. Some of the biggest online retail companies are now opening shops to create that omni-experience.”

The son of a diplomat, Pazner spent his childhood in Israel and America while his father was on overseas postings. After school, he served in an anti-aircraft unit in the Israeli military before taking a job at Internet Gold, a communications service provider. He joined 888 as a marketing manager in 2001 and had worked his way up to chief operating officer by 2017. In January 2019, he replaced Itai Frieberger as chief executive.

In Israel, 888 is at the centre of a growing technology sector, which has formed companies such as Waze, Viber and Mobileye and has earned it a moniker: the “start-up nation”. Google, Facebook and Microsoft all have large regional offices in Israel, which is home to almost 100 unicorns — private companies worth more than $1 billion.

Israel’s short history has contributed to this entrepreneurial culture, according to Pazner, while the military’s technology training has helped create a skilled workforce. “A lot of people who come out of the tech units start companies after they leave the military,” he says.

Another factor is education: universities lean towards computer science, engineering and maths. Shay Ben-Yitzhak, one of the founders of 888, studied at the Technion — the Israel Institute of Technology — in Haifa.

Shares in 888, which is chaired by Labour peer Jon Mendelsohn, have been volatile since it listed in the UK in 2005. They climbed steadily at the start of the pandemic to 478p in September but have drifted since, closing on Friday at 325p to value the company at £1.2 billion.

In the face of regulation, 888 has shifted its model away slightly from high rollers towards mass-market punters. It has also invested in safer-gambling measures — including a tool, The Observer, able to flag concerning customer activity. Safer gambling has become an increasing focus in recent years, not least because of blunders on 888’s part that forced action by the regulator. In 2017, it was fined £7.8 million by the Gambling Commission after more than 7,000 people who had voluntarily banned themselves from gambling were still able to access their accounts due to a technical failure.

“We can always do more,” says Pazner of the company’s efforts. He points to a recent Gambling Commission survey that showed the percentage of people who had been harmed by online gambling had fallen from 0.6 per cent in 2020 to 0.3 per cent in September this year. A voluntary ban on advertising, however, is not on the cards; neither are hard-and-fast voluntary limits. “We just think ads need to be done in a responsible way,” he says. “People have the right, if they have the money, to spend within their means. As long as they’re not doing it in a harmful way.”

During the various lockdowns, while sporting events were cancelled and casinos were shut, punters chose to spend their money online. Pazner is careful to argue that the lockdown helped online businesses “in general” — Netflix, online retailers and video games — not just gambling operators.

“There was a big shift [online] and we were well positioned to benefit from it,” he insists, rejecting the suggestion that talking about 888’s strong pandemic performance is tricky in terms of PR.

“If you don’t think what your business is doing is a bad thing, you don’t feel bad about your business benefiting,” he says. “We don’t think what our business is doing is a bad thing.” He says 888 doubled its responsible-gambling team during the pandemic, allowing it to intervene with more customers, and it set more limits on the amounts customers could lose. “So no, I don’t feel bad the business did well.”

In the six months to June 30, 888 reported a 39 per cent jump in revenues to £528.4 million, including 50 per cent growth in UK sales, and a 14 per cent rise in pre-tax profits to £57.9 million.

888 has already secured the support of almost a quarter of its investors, including Aberdeen Standard Investments, which owns 8.7 per cent, for William Hill, agreeing to pay hundreds of millions more than the second-highest bidder. Roger Devlin, William Hill’s former chairman, said 888 had “paid a handsome price given the UK regulatory uncertainty ... but with Jon Mendelsohn’s political connections and Itai’s technology expertise, they are well placed to grow an iconic sports brand.”

A question now is whether 888 will be a target itself. The US casino firm Las Vegas Sands is rumoured to have been interested. “Interest can come our way at any point in time, and has come our way and will come our way,” says Pazner.

“I’m focused on executing our strategy: combining these two businesses and creating the best-in-class leading gaming company,” he continues. “William Hill has a world-class sports book, with a huge amount of heritage and talented people, so think about the combination. What’s better than that?” And do his plans include being a long-term owner of William Hill’s shops? “I’m not saying it’s a decision for ever, but it’s a decision for now.”

Prince, Apple’s Watch and Pulp Fiction are all on Pazner’s favourites list

THEO WARGO/GETTY IMAGES; ALAMY; MIRAMAX/BUENA VISTA/KOBAL/REX/SHUTTERSTOCK

The life of Itai Pazner

Vital statistics Born:July 24, 1972 Status: married to Didi, 45. The couple have four children and a dog School: Gymnasia Ha’ivrit Comprehensive High School in Jerusalem University: The College of Management Academic Studies in Rishon LeZion, south of Tel Aviv First job: assistant in a video rental shop Pay: $2.6 million total compensation Home: Ramat HaSharon, close to Tel Aviv Car: white Toyota Land Cruiser Favourite book: The Old Man and the Sea by Ernest Hemingway Drink: The Macallan whisky, and coffee. “I became a coffee obsessive during Covid” Film: Pulp Fiction Music: Prince, Pearl Jam and Red Hot Chilli Peppers Gadget: Tesla, recently bought for his wife Watch: Swiss brand IWC and an Apple Watch Charity: a charity in Israel hosting children who live away from their families Last holiday: Greece in August

Working day

The chief executive of 888 gets up at about 7am and organises his children for school. He then spends time exercising — either on his Peloton bike, running or playing tennis — then drives to the office to spend the day in meetings before going home at 7pm. He sees his children for a while before holding meetings with America from 9pm to 10pm.

Downtime

Itai Pazner enjoys watersports including kitesurfing. On the weekends, he spends time with his children. “We go to the desert, we like spending time outdoors and we go to the beach,” he says.

Risky business

1961 The first betting shops open in the UK

1986 New legislation allows bookies to provide hot drinks and TV screens

Early 2000s New machines, known as fixed-odds betting terminals (FOBTs), are introduced to betting shops. Bookmakers begin stuffing them with as many FOBTs as possible

2005 The UK Gambling Act limits FOBTs to four per shop. The legislation leads to an explosion in the number of betting shops

2018 Ministers slash the maximum stake in one spin on FOBTs from £100 to £2. William Hill closes more than 700 shops in the UK

2021 Betting shops put a greater focus on digital, including touchscreen displays