888 Explores Sale of US Operations

Eight Eight Eight is exploring the sale of its American operations, potentially in whole or in part. This move is driven by the highly competitive nature of the US market, requiring substantial investments for sustained success. The company is also considering alternative strategies, such as a managed withdrawal or other transactions. The chief executive has indicated that a progress report will be provided upon the release of the company’s annual financial results in late March.

Currently, 888 operates in four states within the United States: Colorado, Michigan, New Jersey, and Virginia. Nevertheless, only New Jersey features the genuine 888 brand, known as 888casino.

Through a collaboration with Authentic Brands Group (ABG), 888 is capable of running sports wagering and online casinos in other states under the Sports Illustrated brand. These include SI Sportsbook and SI Casino in Michigan, and SI Sportsbook in Colorado and Virginia.

However, the organization stated that profit margins in the American market are lower than the group’s overall average. They added that this reflects the “substantial” direct expenses associated with operating in the market, including taxes, market entry fees, and licensing fees. They also acknowledged intense competition from “well-funded existing players.”

Consequently, 888 believes that its current framework cannot maximize returns. This ultimately led to the initiation of a strategic evaluation of its US operations.

Separating from Sports Illustrated
As a consequence of the strategic review, 888 has also reached an accord with ABG to terminate their partnership.

888 has agreed to provide ABG with $25 million (£19.7 million/€23 million) in cash from existing resources. The group will pay an additional $25 million between 2027 and 2029.

According to 888, this is anticipated to result in annual operating cost reductions of approximately $6 million to $7 million in 2024 and 2025.

“Our partnership with Authentic has consistently driven strong demand for the SI brand in terms of consumer experience and product offerings,” Widerström stated.

Gambling establishments under the SI banner have been setting new benchmarks for months, showcasing the potency of the SI brand.

However, despite these triumphs, we’ve ascertained that attaining a substantial presence in the American marketplace that would yield favorable returns in the immediate future is improbable.

888 to reduce workforce
This evaluation follows the announcement by 888 in January that they would be implementing staff reductions.

888 confirmed the news to iGB, stating that these alterations would assist them in achieving their long-term aspirations. 888 refrained from disclosing which departments would be impacted by the job cuts.

Meanwhile, 888 reported a decline of 8% in revenue for 2023, reaching £1.71 billion. 888 attributed this primarily to proactive adjustments to their portfolio, shifting away from the on-demand market. The group stated that this influenced revenue by approximately £80 million in 2023.

888 did not explicitly mention the United States in their trading update. However, they did indicate that revenue from their international operations decreased by 16% to £517 million.

Optimistic outlook for 2024
Despite this uncertain environment, 888 maintains a “positive” outlook regarding their revenue for the 2024 fiscal year.

In their update, the company expressed confidence in robust online revenue expansion in the United Kingdom and international markets, driven by sustained growth in active participants. 888 also stated that the influence of compliance and responsible gambling would begin to normalize in February 2024, leading to a more optimistic outlook for average revenue per user.

In December of last year, 888 unveiled a worldwide cost-reduction initiative with the goal of achieving a £30 million savings target. The strategy emphasizes bolstering core competencies through investments in automation and artificial intelligence-driven data and insights. 888 indicated that these cost reductions will enable an increase in marketing expenditures in the coming year.

Although this will enhance long-term profitability, 888 acknowledged that the additional investments will result in adjusted EBITDA for the upcoming year being at the lower end of market expectations.

Widerström, who assumed the role of CEO in October of last year, will oversee these modifications. However, he will be without the Chief Commercial Officer, Phil Walker, who stepped down in January after a brief six-month tenure.

Other personnel changes at 888 in recent months include the appointment of Sean Wilkins as Chief Financial Officer. Rik Barker now holds the position of Chief Information Technology Officer, and Ian Gallagher serves as Chief Product Officer.

Fredrik Ekdahl joined the company as Group General Counsel in October, and Jeffrey Haas joined in January as Chief Growth Officer.

“I am certain that we will reduce debt and deliver robust returns for investors in the years ahead,” Widerström stated in January.

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