LONDON: 888 Holdings, one of the world’s leading betting and gaming companies, has announced a strategic review of its US consumer-facing operations, which could lead to a sale or exit of the market.
The company, which owns brands such as William Hill, 888 and Mr Green, said it would consider all potential alternatives that can deliver value for the business, including selling or winding down its US B2C business, or pursuing other strategic transactions.
888 operates in four states in the US, offering sports betting and casino products under the Sports Illustrated and 888 brands. However, the company faces lower gross profit margins in the US than at the group level, due to high operating costs such as duties, market access fees, and licence fees, as well as fierce competition from well-funded rivals.
The company said it had decided that its current structure in the US was not optimal for generating returns, and had therefore initiated a strategic review of the operations.
As part of this process, 888 has also agreed to end its partnership with Authentic Brands Group, which gave it the exclusive rights to use the Sports Illustrated brand for online betting and gaming in the US. 888 will pay a fee of $25 million to terminate the agreement, as well as an additional $25 million between 2027 and 2029. The company expects to save around $6 to $7 million per year in operating costs in 2024 and 2025 as a result of this move.
888 did not provide a timeline for the completion of its strategic review, and cautioned that there was no certainty about the outcome or results of the review. The company said its existing B2B arrangements in the US, where it provides technology and services to other operators, were not affected by today’s announcement.
Per Widerström, CEO of 888, commented: “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.”