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The CEO of Australian retail wagering giant Tabcorp Holdings has resigned over sexually offensive language targeted at a senior female gambling regulator in Victoria state.

CEO and managing director Adam Rytenskild resigned after being confronted by the company board on Wednesday (March 13) over allegations of “inappropriate and offensive language used by Mr Rytenskild in the workplace”, Tabcorp said in a filing to the Australian Securities Exchange (ASX) on Thursday.

“The Board considered the language to be inconsistent with Mr Rytenskild’s continued leadership of the organisation and following discussion with the Board, Mr Rytenskild has tendered his resignation and will step down immediately,” it said.

Tabcorp did not disclose the location or date of the incident, nor name the target of Rytenskild’s comment, citing privacy.

But the Sydney Morning Herald reported on Thursday and Friday that during negotiations for renewing Tabcorp’s exclusive wagering licence in Victoria, Rytenskild had jokingly “referred to performing a sexual act on a female regulatory official [in Victoria] if the group secured a lucrative deal”.

The target of the comment was not present, the Herald reported, but a complaint was made to the Tabcorp board, which appointed an external law firm to investigate. The firm’s report then verified the incident.

The Tabcorp statement quoted Rytenskild as saying that he did not “recall making the alleged comment and it’s not language I would usually use”, but he also did not deny making the comment.

A 14-year executive with the company and appointed CEO in June 2022, Rytenskild is likely to lose millions of dollars in incentives, with the board saying he will “forfeit all his unvested short term and long term incentive awards”.

Tabcorp added that chairman Bruce Akhurst will take over Rytenskild’s duties until a new CEO and managing director are appointed.

“Today’s change does not impact the strategic direction of the company,” Akhurst said. “We have the depth and capability across the executive and the senior leadership team to continue our transformation.”

Tabcorp shares on the ASX closed down 5.23 percent at A$0.725 ($0.48) on Friday.

The Victorian Gambling and Casino Control Commission (VGCCC) on Friday acknowledged Rytenskild’s removal, but did not engage with the alleged details of his conduct.

“The commission will continue to regulate as a fierce advocate in the public interest, ensuring integrity, safety and fairness in the gambling industry,” VGCCC chair Fran Thorn said.

“I am proud to be the chair of an organisation that champions strong female leadership and a gender-inclusive, respectful workplace culture.”

Rytenskild’s resignation on Wednesday came only hours after he presented a keynote speech at the Regulating the Game conference in Sydney, an event designed to bring together federal and state gambling regulators and operators and build regulatory capability.

Rytenskild used the platform to attack corporate bookmaker attempts to expand into retail outlets, most of which Tabcorp monopolises under agreements with state and territory governments.

This year’s event, like last year’s, featured a presentation by a senior female official with the VGCCC.