888 Initiates Strategic Review of US Operations Amid Market Challenges
888, a global leader in the betting and gaming industry, recognized for its top brands like William Hill, 888, and Mr Green, has today announced a strategic review of its US consumer business.
The review will explore a range of potential avenues to enhance value, including the possible sale of its US operations, either wholly or in part, a controlled exit, or other strategic transactions.
Assessing Options for US Market Engagement
The company’s presence in the US includes SI Sportsbook and SI Casino in Michigan, SI Sportsbook in Colorado and Virginia, and 888casino in New Jersey. However, the Group has identified challenges in the market, particularly a lower gross profit margin in the US compared to the group level, largely due to the high costs of operation, including taxes, fees for market access and licenses, and stiff competition from established entities.
This strategic assessment is designed to realign the Group’s structure to maximize returns. It has already led to a mutual agreement to conclude the partnership with Authentic Brands Group, which had provided exclusive rights to the Sports Illustrated brand for online betting and gaming ventures.
Financial Implications of Strategic Shifts
In conjunction with this decision, 888 is set to pay Authentic Brands Group a termination fee of $25 million from its available cash resources. An additional payment of $25 million is scheduled between 2027 and 2029. This strategic move is anticipated to save the Group an estimated $6 to $7 million annually in operating costs for the years 2024 and 2025.
Per Widerström, CEO of 888, reflects on the developments, stating, “Since commencing my role as CEO I have been focused on ensuring the Group is set up to deliver strong value creation in the coming years. In the US, the intensity of competition and requirement for scale means huge investment is required to reach profitability.
“Our partnership with Authentic has consistently driven strong demand for the SI brand across both consumer experiences and product offerings. A series of record-breaking months for SI Casino has underscored the strength of the SI brand. However, despite these successes, we have concluded that achieving sufficient scale in the US market to generate positive returns within an accelerated timeframe is unlikely.
“The strategic review of our US B2C operations will continue at pace, and I look forward to updating shareholders on our plans for the wider Group in late March.”
Our Comment on the Strategic Review
The pivot in strategy by 888 underlines the dynamic and highly competitive nature of the US gaming market. This calculated move suggests a reevaluation of investment and growth strategies to ensure long-term profitability and shareholder value. It also reflects the need for agility in adjusting to market conditions, affirming 888’s commitment to responsible and strategic business decisions. As the company navigates through these changes, the industry watches closely to see how this will reshape 888’s presence in the US and potentially set new precedents in the iGaming business landscape.
