CEO Special 2020: 888 - The weight of the crown

888 CEO Itai Pazner reflects on his first year in the role with Tim Poole, refusing to rule out M & A activity and recounting how the operator responded to its 2017 “wake-up call.”


888 CEO Itai Pazner reflects on his first year in the role with Tim Poole, refusing to rule out M & A activity and recounting how the operator responded to its 2017 “wake-up call.”

It’s no surprise to hear how 888 Holdings CEO Itai Pazner describes his work life right now. Speaking to Gambling Insider last January – when succeeding 888 veteran Itai Frieberger – Pazner said he hoped we can speak 12 months on with plenty of positives to look back on. The CEO Special offers us the perfect opportunity for that catch-up. But, for Pazner: “It feels like much more than a year; apparently it’s not!”

During his busy debut year, the job has taken Pazner to the US, the UK, Gibraltar, 888’s new sports betting headquarters in Dublin and the operator’s development centre in Romania. It was Pazner’s first year as 888 CEO – but actually his 19th at the company. “For me, it’s a very good evolution,” he says. “If you asked me if I was aiming for that role when I started at 888, I would say definitely not. I always thought because I was in marketing, my previous role of SVP, Head of the B2C Division was where I’d end up.”

After several years on the marketing side however, and eventually a period as COO, Pazner wanted to take ownership of the technological and strategic sides of the business. He explains: “The difference between the first few months and now is getting around all the different areas and territories. Now, I feel more comfortable and am spending more time on the strategic side and in the external world, letting the management team run the day-to-day operations.”

Although Pazner’s journey involved a variety of experiences early on, his career has predominantly been spent at 888. In some ways, this showcases the different career paths of those featuring in our CEO Special, with Evolution Gaming’s Martin Carlesund spending a greater portion of his time in a number of different industries. “I think experience is extremely powerful and important in a role like mine,” Pazner says. “I can imagine a CEO coming from a different industry into ours and specifically into 888: it would be challenging in many aspects. But it does also have advantages.”

For the 888 CEO, the “business side of things” was an interest from quite an early age, with a young Pazner always having “a bit of entrepreneurship” about him. That led to a degree in business administration, which Pazner supplemented with work in the Israeli wine industry. Getting to know the whisky, vodka and premium wine markets, he began working on the promotion of beverages, before going into sales and sales management. Pazner was, in essence, practising his degree while studying for it. “In general, I think I’m a less academic, more practical person,” he observes.

Now, I feel more comfortable and am spending more time on the strategic side and in the external world, letting the team run the day-to-day operations

An interest in business was useful once Pazner finished his studies in 1998, as the conclusion of his degree coincided with the early days of the internet boom. Israel was home to numerous online start-ups and after “a few years of experience in sales,” the 888 CEO became more acquainted with the technology sector. “I was quite fascinated by it,” he recalls. “It was clear to me I found the place I want to be in. There was also a lot of investment in the area, with a lot of venture capital going into it. So I thought it was good timing for me as I finished my studies.”

Once Pazner was already familiar with the online world – still a relatively new domain back then – he met the founders of 888 through mutual friends. It’s safe to say this was an important moment in his career, considering the next two decades – and counting – he was to spend with the online operator. Pazner’s first assignment was in the UK, growing 888’s presence in the “physical, offline world,” with the company already spending a large amount on online advertising.

“That’s how I got into 888, relocating from Israel to London, spending about nine years there,” he explains. “I started working in London, and then expanded to regional management roles across European territories: the UK, then Italy, Spain, France, the Netherlands, Germany and all the gaming markets. Those were my first years with 888 and  I developed  within, becoming SVP, Head of Global Regional Division. I came back to the main marketing headquarters in Israel after nine years. After a couple of years, I was promoted to running the whole B2C marketing organisation, which is the second-biggest division – the first is technology. I oversaw 250 to 300 people at a time.”

The final two chapters of Pazner’s distinguished 888 story saw him become COO – a role he held  for 15 months – before stepping into Frieberger’s shoes as CEO. Many COOs out there, not just in the gaming industry, may wonder exactly how those two roles compare. On the surface, it’s just one letter that has changed: how different is “Executive” to “Operating?”

“There are the clichés about the weight of the crown,” Pazner says. “Obviously, it’s not only the responsibility but the fact is it’s the ultimate responsibility, so it is a change. For example, I wasn’t officially on the board before. But 888 couldn’t groom me better – growing through the ranks, becoming Head of B2C then COO. Operationally, I know the company inside out – I know the teams very well. I always thought before I worked as much as I could, but I’ve found out I can work more; or more intensively, let’s say.”

In his first year, Pazner has tried not to rely too much on his own experience. This sounds like a paradox but, as the CEO explains, “you need to let people experience things themselves and not let the experience you have lead to too much conservatism.” Pazner is keen not to curtail new ideas. He adds: “Experience definitely helps, but I think it’s a quality that needs to be managed. You need to let other people experience things themselves and come up with ideas that might have not worked in the past but could work now.”

On the business side, Pazner aims to afford people the freedom to expand. On the people side, he aims to grow his team as managers. One such example is Andrew Anthony, 888’s VP, Customer Safety & Due Diligence, who featured in the November/December edition of Gambling Insider magazine. In that issue, he discussed 888’s merger of its safer gaming and customer due diligence teams – part of the organisational change 888 has undergone since Pazner’s appointment. Reporting into Yaniv Schwartz, SVP, Customer Risk Management, Andrew is another long-term 888 employee who is given the freedom and support he needs to expand and operate effectively.

Anthony’s department however, represents an area driving even more compelling change within 888. According to Pazner, the industry has received “several wake-up calls” with regards to responsible gaming. In 2017, 888 suffered its own when it entered a review process with the Gambling Commission. In August of that year, the operator was fined a staggering £7.8m ($10.3m) for failing vulnerable customers. Pazner admits it was at that point “everything started to change” for the organisation.

We got a wake-up call relatively early. One of the things I love about 888 is our ability to adapt, change and react very quickly to changing environments

“We got a wake-up call relatively early,” he says. “One of the things I love about 888 is our ability to adapt, change and react very quickly to changing environments. The company had an overall restructure around the areas of responsible gaming and compliance. We have made huge progress, but there’s so much more to do. Responsible gaming is an endless effort. I think we’re in a strong position, but there’s a lot we and the industry can do to make it better.”

A perception among some analysts is that 888’s growth and financial performance in recent years has been slow and steady – reliable without wowing investors. Like other firms in the gaming sector, this is partly impacted by that increased need for responsible gaming measures, along with regulatory pressure. Pazner though, believes the operator has demonstrated exceptional growth, especially within the UK, in spite of those added commitments.

“I think if you manage compliance and responsible gaming well and if you adapt your commercial strategy like we did to a mass-market strategy, with enhanced tools, you can actually benefit from it,” he affirms. “The UK is probably the best case study for this globally. We managed to grow our UK business with double-digit growth in the first half of 2019. Our casino business grew revenue-wise 50% (at constant currency) and our sports business grew 28%; on the back of the most rigorous responsible gaming processes and tools we put into place.”

Investors haven’t quite been able to share Pazner’s confidence recently, with 888’s share price halving since hitting a peak of £3.17 in May 2018; it is £1.47 at the time of writing. But, as the CEO points out, this is a sector-wide problem. “I think share prices in the industry have declined in the last year plus,” he concedes. “This does have a lot to do with regulation. The financial risk is coming from more restrictions on regulated operators. That’s reflected in share prices, because investors don’t know how to predict the effect of these restrictions. When there’s uncertainty, investors tend to pull out.”

There is no denial from Pazner that 888’s share price “is not where it should be.” However, the executive believes the company has a strong set of underlying assets, owning proprietary technology in all its verticals: casino, sports betting, poker and bingo. He insists 888 has “all the components of a mega group in the industry,” showing “much more value than is reflected in the share price.” But that mention of “mega groups” prompts intrigue from Gambling Insider.

Out of all the biggest players in the gaming industry (which are public companies), only 888 and William Hill now stand independently after years of M & A. Flutter Entertainment’s merger with Stars Group, announced in October, will bring together Paddy Power, Betfair, Sky Bet, PokerStars, FanDuel and Fox Bet. Up to this point, 888 has not been discussed as a potential subject of similar consolidation. But will this always remain the case?

I would definitely not discount M & A activity in our future. Obviously, consolidation in our industry is quite clear. I would definitely not discount our will, ability or intention to be in those processes

“I would definitely not discount M & A activity in our future,” Pazner responds openly. “Obviously, consolidation in our industry is quite clear. Regulation leads to higher taxation and stricter procedures. All of those things lead industries into natural forms of consolidation. I would definitely not discount our will, ability or intention to be in those processes. But, like I always say, you have one chance to get those right or wrong. If we do it in my term, it should definitely be with the right kind of partner.”

With his first few months as CEO under his belt, Pazner is confident he is settled enough with the role’s fundamentals to focus on the company’s strategic ambitions. M & A activity falls right under this category. But so too does the US; when we spoke a year ago, that was a market Pazner was bullish about. “If anything, we’re more bullish about the US in general as a marketplace,” he asserts. “In terms of territories, the US has massive potential. But Scandinavia also has high potential as we have a relatively small base there; the Netherlands is a big potential territory; in Germany, we hope it will regulate on the right side of things. In the UK, there’s still plenty of room for growth, like we’ve shown in the last year.”

As well as the jurisdictions listed above, the CEO has specific ambitions for certain verticals too. With a heavy product-first and user-experience focus, Pazner wants to build on 888’s growth in online casino – driven by its new Orbit platform. He also wants to reshape poker, as it’s “quite clear it’s been in decline,” even if he admits “I don’t want to sound too ambitious.” In sports wagering, Pazner has equally high hopes, thanks to 888’s £15m acquisition of BetBright’s sports betting platform last March.

“I think the strategy we set at the beginning of last year is still very much valid and relevant, as we will continue to pursue it,” he reflects. “If the strategy’s right, it’s something you define once every few years; and I think our strategy right now is going in the right direction.”

Read the rest of the CEO Special below or click here to receive the print edition

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