(888.L) has terminated talks on management changes proposed by shareholder FS Gaming after the industry watchdog on Friday launched a review of the company's licence to operate in the UK, sending its shares plunging 26%.
The review by the GB Gambling Commission (GBGC) into FS Gaming's stake and the mooted boardroom shake-up could force 888 out of its biggest market.
FS Gaming, which is a group of investors with a 6.6% stake in 888, had proposed its own candidates to be appointed as 888 chair, chief executive and finance chief.
However, the move attracted the GBGC's attention because the trio of executives - Lee Feldman, Kenny Alexander and Stephen Morana - all held senior leadership roles at GVC Holdings, now known as Entain (ENT.L), which is the subject of an ongoing investigation by Britain's tax authority.
"Following in-depth regulatory due diligence including engaging closely with the GBGC, the board had no option but to terminate discussions as it simply could not put licences in our largest market at significant risk," 888 Chair Lord Mendelsohn said in a statement.
FS Gaming did not respond immediately to a request for comment.
The situation also interrupts the search for a new CEO of Gibraltar-based 888 after Itai Pazner stepped down in January.
The GBGC has taken a harder line on bad practice within Britain's multibillion-pound gambling industry in recent years, imposing heavy penalties such as a record 19.2 million pound ($25.18 million) fine for the William Hill group, which is owned by 888.