888 considers strategic alternatives following split from Sports Illustrated

News Team March 6, 2024

Share it :

888 considers strategic alternatives following split from Sports Illustrated

888 Holdings, a prominent player in the online gaming industry, has recently initiated a comprehensive review of its business-to-consumer (B2C) operations in the United States.?This strategic reassessment comes in the wake of the company’s decision to sever its ties with Sports Illustrated, a move that has sparked considerable interest in the industry.

The review process will involve a thorough examination of all potential alternatives that could enhance the company’s value.?These alternatives could range from selling all or a portion of its US B2C operations, gradually withdrawing from US operations, or engaging in other strategic transactions.

This strategic shift was spearheaded by the company’s new CEO, Per Widerstr?m, who took the reins in December 2023.?Under his leadership, the company has undergone a significant restructuring, including a global cost-saving programme that saved ￡30 million.

Currently, 888 Holdings operates in four US states: Michigan, Colorado, Virginia, and New Jersey.?Its portfolio includes SI Sportsbook and SI Casino in Michigan, SI Sportsbook in Colorado and Virginia, and 888casino in New Jersey.?However, the company has noted that the gross profit margin in the US is lower than the group level due to high direct operating costs such as duties, market-access fees, and license fees.?This, coupled with stiff competition from well-capitalised rivals, has impacted profitability.

As part of the review, 888 Holdings has mutually agreed to terminate its partnership with the Authentic Brands Group.?This partnership had granted 888 exclusive rights to use the Sports Illustrated brand for online betting and gaming.?The termination agreement stipulates that 888 will pay a fee of $25 million in cash upfront, with an additional $25 million scheduled between 2027 and 2029.?The company anticipates that this termination will result in operating cost savings of approximately $6 million to $7 million annually in 2024 and 2025.

Future prospects and market challenges

Despite the uncertainty surrounding the timeline for completing its strategic review, 888 Holdings has assured that its existing business-to-business (B2B) arrangements in the US will remain unaffected.

Reflecting on these developments, CEO Per Widerstr?m stated, “In the US, the intensity of competition and requirement for scale means huge investment is required to reach profitability.” He further added, “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 company plans to update shareholders on its plans for the wider group in late March.?This announcement comes at a time when 888’s US operations have faced persistent scrutiny.?Initially, the company aimed to establish a sports-centric presence across 12 to 15 states.?

In FY 2023, 888 reported an 8 percent decline in annual revenue, with significant decreases observed in both the UK online and international markets.?Particularly, revenue for 888’s international business experienced a sharp 16 percent decline to ￡517 million.

As of now, 888 Holdings plc (888.L) is trading at GBp85.70 (3.38%).

———-Stop Press:?The next SiGMA Africa Summit takes place in Cape Town between 11-13 March?!??SiGMA Africa?event kicks off in Cape Town, South Africa on the 11 March. Building on the success of its inaugural edition in Nairobi, Kenya, in January 2023,?SiGMA Group recognizes the need to foster collaboration and innovation within the industry.