The turbulent start of 2023 had exacerbated the fear that 888's acquisition of William Hill might have been a too risky operation. However, the good data presented last week seems promising for shareholders. We analyze the role of Spain in the present and future of the company, with Ceuta as the primary axis to reinforce its positioning in the market.
After a forgettable first quarter of 2023, the shares of 888 Holdings Plc (which already include William Hill and the other brands of the group) rebounded strongly on Thursday and Friday last week with a rise of almost 50%.
The good reception of the 2022 Financial Report by investors is behind this outstanding revaluation of the share price. But in addition to the financial situation of 888-William Hill, it is worth analyzing additional details provided by the explanatory notes and the abundant textual quotes of President Lord Mendelsohn.
Supported by other sources that provide first-hand information on the subject (LinkedIn, social networks, and employees of group companies), we try to provide unique and valuable details and perspectives on what seems to be a prominent role of subsidiary brands operating in the Spanish market, with the headquarters in Ceuta as the focus of growth and mobilization of human resources necessary to achieve their objectives.
A much more efficient structure
The results of the fiscal year 2022 and the commercial update for the first quarter of 2023 confirm the general lines shown in the Investor Presentation on April 3, which highlighted that the merger between William Hill and 888 brands would result in benefiting from economies of scale that, in addition to fiscal optimization, would mean greater revenue diversification and a greater weight of more solid regulated markets such as those in the UK, Italy, and Spain.
The organizational chart and decision-making structure that will be in place to face the years 2023, 2024, and 2025 will be based on three large divisions, in which the main established brands will have almost total independence in terms of positioning and strategy:
- United Kingdom and Ireland
Having well-known brands like William Hill, which stands out for a significant weight of its physical retail division (William Hill has more than 1,300 physical points of sale in the region), requires a specific treatment of the regulations and operations in the UK and Ireland. With the aim of gaining market share from the sports betting specialist operator, the 888 WH project will continue to be led mainly by William Hill employees.
The international division, which will have its nerve center at 888 offices in Herzilya (Israel), will continue to focus on marketing and product development of the poker vertical. Without losing sight of emerging jurisdictions such as Canada, Denmark, Brazil, Mexico, and Germany and projects such as 888 Africa.
Under the direction of this division, the company puts faith in growth thanks to the potential to incorporate new markets, based on the successful management of the Poker division, which made it ultimately 888 that bought WH and not the other way around, as was presumed just two years ago.
Also depending on International, everything points to greater strategic freedom, personalizing strategies and brand in betting and casino, where Spain and Italy will work with new employees and supported by a solid international Poker unit.
With young brands already operating in the most important regulated states in the United States (Sports Illustrated in casino and sports betting) and the strategic alliance with Caesars Entertainment to exploit the World Series of Poker brand in an online poker network that shares liquidity with several states.
Strong presence of William Hill in the new structure
Contrary to what may initially seem, the new structure highlights mainly William Hill employees. This has been more evident since the departure of Itai Pazner on January 30, 2023, which has been accompanied by the departure of some of the most important executives of 888 in Israel in recent weeks, including:
- Guy Cohen: who left the company after ten years, having achieved the position of Chief Operating Officer (COO).
- Doron Ziony: responsible for the company's physical poker and Head of 888poker Business Development since 2021.
- Yariv Dafna: the Chief Financial Officer (CFO) who, although initially was going to leave the company immediately after the scandal in January that led to Pazner's resignation, will continue to oversee financial operations for a prudent period until the regulatory and tax obligations of the previous year are met.
With so many departures, Amit Berkovich
will be the new head of Poker and in charge of the International Unit of the new company (888 & WH) with such important challenges as betting on emerging markets such as Brazil or African countries.
How William Hill and 888 wil be like in Spain
Effectively, after the changes announced in recent weeks, Spain can be considered an independent regulated market. This was de facto from the beginning of operations in Ceuta, but now it is more evident with the incorporation of new employees and the creation of a new team with staff from 888 and WH dedicated exclusively to the "dot es" brands.
If we have talked about the predominance of William Hill employees, in the 888-WH project in Spain, it should be noted that the Spanish team will be led by Sofía Santos
, who went from being the Spain Managing Director of William Hill Spain to leading the William Hill and 888 Spain brands since January 2023. Sofia will be accompanied by existing WH employees in areas such as marketing, CRM, operations, and affiliates, as well as Pedro Barreda (architect of strategic agreements and 888's leap to television in recent years, in addition to being responsible for important international sponsorships).
As has happened in similar cases (Betfair and Poker Stars or Bwin and PartyPoker), the licenses granted by the DGOJ are not going to change in the short term, and the strategic positioning of WH Spain, MrGreen Spain, and the three 888 brands (Casino, Sport, and Poker) is not going to change too much.
The key contribution of Ceuta
The arrival of new jobs at 888's offices in Ceuta confirms the reinforcement that will take place in the Spanish market to meet the needs of such powerful brands as 888 Poker or William Hill.
Some of the 888 employees in Ceuta just one year ago (2022)
Thus, the significant role of Ceuta in the determined bet on the Spanish market is reflected in the jump in quality in how Spain is positioned within the company's internal structure. Since the beginning of the year, we have witnessed an exponential increase in the employee selection processes for 888's offices in Ceuta, where in addition to the usual positions for the Operations team (Fraud and Customer Service), selection processes have been initiated for executive positions, several of which are still open on the 888Jobs group job website.
These executive positions include:
- Brand Activation Executive (Marketing)
- Customer Protection Officer (Operations)
- Digital Marketing Specialist (Marketing)
- Gaming Commercial (Marketing)
The Priorities (2023-2024)
Regardless of the jurisdiction and returning to 888's global vision, the four main priorities for the next three years will be to: consolidate the financial situation, focus on regulated markets, pursue technological integration, and prioritize responsible gaming.
- Regarding the financial situation, the data reflected in the Annual Report leaves no doubt: the revenues of 2022 exceeded those of 2021 by 74%, resulting in an EBITDA of 311 million. The evaluation of the company's profitability and operational performance is much more positive than expected, thanks to tax savings and lower depreciation and amortization expenses. The merger of the 888 and William Hill brands demonstrates the new company's ability to generate profits from its operations.
- With Spain and Ceuta as key areas in 2023, the bet on regulated markets and those in which the company already has years of experience will be crucial. The data suggests that growth will continue in the UK, Italy, and Spain, which represent nearly 70% of the company's online revenue
- In terms of integration, in addition to activating brands such as Mr. Green in Germany, there will be continuity in allowing existing sports products (such as the successful Mr. Green in Sweden) to be successfully migrated to 888's proprietary betting platform, called Spectate. It has gradually replaced Kambi, which was the partner in the sports segment in most markets since 2021.
- Responsible and safety gaming, based on improving and creating higher standards of player protection, will also help investors forget about the compliance and control problems that both 888 and WH have faced in the UK and several other dot-com markets, such as those in the Middle East, which caused Itai Pazner's departure in 2023.
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