Home In-Depth As part of a strategic review, 888 is considering a B2C US sale.

As part of a strategic review, 888 is considering a B2C US sale.

by
149 views 5 minutes read


The US-based B2C business of 888 is undergoing a review of its strategic direction. It could sell part of or the entire operation.

Today (6 March), 888 will launch its strategic review, which includes “potential alternative” options that could deliver greater value to the group.

During the review, partial or complete sale of US B2C operation will be considered. The review will include a planned exit from US B2C and possible strategic transactions.

This review is not expected to affect the group’s existing B2B agreements in the US.

The strategic review has no end date. Per Widerstrom, CEO of 888 said that shareholders can expect a full year update in March 2023 when the company publishes their results.

Widerstrom stated, “Since I began my role as CEO, I’ve been focused on making sure the group has the right structure to create strong value in the next years.” In the US, due to the intense competition and the need for scale, huge investments are required in order to achieve profitability.

The strategic review of US B2C will proceed at a rapid pace. “I look forward to updating our shareholders in late March on the plans of the group as a whole.”

Why does 888 consider selling US assets?

Four states are currently offering 888: Colorado, Michigan New Jersey, and Virginia. Only one state has the real 888 casino, which is located in New Jersey.

A partnership between Sports Illustrated and Authentic Brands Group allows them to operate sportsbooks, online casinos, and other brands under Sports Illustrated in different states. SI Sportsbook and SI Casino are located in Michigan as well as SI Sportsbook Colorado and Virginia.

The group claims that the gross margin is less in the US than at the level of the entire group. It adds that this reflects the “significant” costs associated with operating on the market, including market access fees, duties and license fees. The report also highlights the intense competition between “well-capitalised existing participants”.

In this regard, 888 determined that its current business model would not optimize returns. The result was the start of a review strategy for US operations.

Sports Illustrated is no more

As part of the strategic review, both 888 and ABG have agreed that their partnership will end.

ABG agreed to receive $25.0m in cash (PS19.7m/EUR23.0m), from the available resources. The group is expected to pay $25.0m more between 2027-2029.

According to 888 this will result in an operating cost saving of between $6.0m and $7.0m annually in 2024-2025.

Widerstrom stated that “Our partnership has driven strong demand across consumer experiences as well as product offerings for SI.” The strength of SI Casino is evident in a series of record breaking months.

However, despite our successes in this market, we believe that it is highly unlikely to achieve sufficient scale on the US Market within a short timeframe.

Redundancies at 888 are set to take place

This review follows an announcement made in January, which confirmed that 888 would be making redundant staff.

888 confirmed the information to iGB and said that the changes would help the company achieve its long-term goals. The redundancies will affect a number of departments, but 888 has not revealed which ones.

888 also reported a 8% decline in revenues for 2023, to PS1.71bn. This was attributed to a shift in the mix away from the dotcom market. The group stated that this would impact revenues in 2023 by about PS80m.

In the latest trading update, 888 didn’t mention the US specifically. It did mention that revenue from its international operations fell by 16%, to PS517m.

Think positive for the year 2024

Even with this unsettling backdrop, 888 maintains “positive” revenue expectations for the FY24.

It said in the updated that the consistent growth of active players has led to a strong growth in revenue online, both in the UK and internationally. In February 2024, 888 said that compliance and safer gaming impacts would begin to be annualised. This will lead to an improved outlook on average revenue per player.

The launch of a global savings program in December 2023, with a target saving of PS30m. Investment in AI and automation powered data and insights will help to reinforce core capabilities. According to 888, cost savings will allow marketing budgets to be increased in 2024.

Although this investment will increase long-term profits, 888 claims that 2024 EBITDA adjusted will still be below the consensus range.

Widerstrom, who will take over as CEO of the company in October 2023, is responsible for overseeing these changes. He will not have Phil Walker as chief commercial officer, who left the position in January, after only six months.

Sean Wilkins has been appointed chief financial officer at the newly-redesigned 888. Rik Barker has been promoted to chief technology officer, and Ian Gallagher as chief product officer.

Jeffrey Haas was appointed chief growth officer and Fredrik Ekdahl as general counsel of the group in January.

Widerstrom stated in January that he was confident about the company’s ability to deleverage and deliver strong returns for shareholders in coming years.

You may also like

About Us

On iGamingWorld, we provide in-depth analysis, the latest news and opinions from famous people of the gaming industry.

Featured Posts

Newsletter