888 Holdings has announced a strategic review of its US B2C operations, aiming to optimise returns and explore potential alternatives to enhance business value. The review encompasses evaluating various options, including the sale or partial sale of the US B2C business, controlled exit from the market or other strategic transactions.
Active in four states, 888 operates under brands like William Hill, 888 and Mr Green, offering SI Sportsbook and SI Casino in Michigan, SI Sportsbook in Colorado and Virginia and 888 Casino in New Jersey.
However, the company faces challenges in the US market due to competition, high operating costs including duties and licensing fees and lower gross profit margins compared to global standards.
As part of its strategic realignment, 888 has mutually agreed to terminate its partnership with Authentic Brands Group, resulting in the conclusion of their agreement granting exclusive use of the Sports Illustrated (SI) brand for online betting and gaming.
Under the termination agreement, 888 will pay a fee of $25m upfront and an additional $25m between 2027 and 2029. This termination is expected to yield operating cost savings of approximately $6m to $7m annually in 2024 and 2025.
Per Widerström, 888 CEO, 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.
Widerström added: “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."
The strategic review process does not have a defined timeline and the outcomes remain uncertain. However, the company assures that its existing Business-to-Business (B2B) arrangements in the US remain unaffected by this announcement.
In January 2024, 888's share price experienced a decline, dropping by 20% since the financial update for the three and twelve-month periods ending December 2023. Despite challenges, 888 reports that it is committed to evolving strategic plans and unveiling new medium-term financial targets in March 2024.
