888, one of the world’s leading betting and gaming companies with internationally renowned brands including William Hill, 888, and Mr Green, has announced today a strategic review of its US B2C operations.
As part of this strategic process, the Group will consider all potential alternatives that can deliver value for the business. Such alternatives could include the sale (in whole or in part) of the Group’s US B2C business, the controlled exit of US B2C operations, or other possible strategic transactions.
888 is active in four states, with SI Sportsbook and SI Casino in Michigan, SI Sportsbook in Colorado and Virginia, and 888casino in New Jersey. The gross profit margin in the US is lower than the group level, reflecting significant direct costs of operating in the market including duties, market access fees, and license fees, in addition to intense competition from well-capitalized incumbent participants. The Group has determined that its current structure will not optimize returns, and has initiated a strategic review of the operations.
As a result of this determination and review, the group has mutually agreed to part ways, concluding its partnership with Authentic Brands Group. This partnership had granted exclusive use of the Sports Illustrated brand for online betting and gaming. As part of the termination agreement, 888 has agreed to pay a fee of $25 million, which will be paid in cash from available resources. Additionally, 888 will pay an extra $25 million between 2027 and 2029. The termination of this agreement is expected to result in operating cost savings of approximately $6 to $7 million per year in 2024 and 2025.
The Group has not set a timetable for the completion of its strategic review and there can be no assurance regarding the results or outcome of the review. The Group’s existing B2B arrangements in the US are unaffected 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.”
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