- 888 is active in four US states: Michigan, Colorado, Virginia and New Jersey
- William Hill owner agrees to pay Authentic Brands £39.4m in fees
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888 Holdings could exit the US consumer sports betting market after launching a review of the business in response to weak profitability and significant competition.
The owner of William Hill has begun a strategic review of its business-to-consumer operations in the United States with a view to a possible sale, a “controlled exit” from the sector or “other possible strategic transactions.”
It entered the United States just three years ago, joining a host of other British companies hoping to capitalize on the growing legalization of sports gambling across the country.
Possible exit: 888 Holdings could exit the US consumer sports betting market due to weak profitability and significant competition
At that time, the Gibraltar-based sportsbook reached an agreement with Authentic Brands Group to exclusively use the Sports Illustrated brand, known for its eponymous magazine, in betting and casino games.
888 is active in four US states: SI Sportsbook operates in Michigan, Colorado and Virginia; its SI Casino business is in Michigan and its 888casino brand is in New Jersey.
However, the company said the U.S. division’s gross profit margins are quite low due to the huge operating costs involved, as well as “intense competition from well-capitalized traditional players.”
After concluding that this setup will not “sufficiently optimize profitability,” it decided to initiate a review of operations and end the partnership with Authentic Brands.
Per Widerström, CEO of 888, said: “Since beginning my role as CEO, I have been focused on ensuring the group is poised to deliver strong value creation in the years ahead.
“In the United States, the intensity of competition and the need for scale mean that enormous investments are required to achieve profitability.”
He added that despite the high demand for SI-branded services, “it is unlikely to achieve sufficient scale in the US market to generate positive returns in an accelerated time frame.”
888, which also runs digital gambling company Mr Green, has agreed to pay Authentic Brands $50m (£39.4m) in cancellation fees.
The group predicts that dissolving the alliance will save it between $6 million and $7 million (£4.7 million to £5.5 million) a year in operating costs both this year and next.
888 has not implemented a timeline for completing the review, but has told investors that all current B2B deals in the US will not be affected.
David Brohan, gaming and entertainment analyst at Goodbody, believes the 888 move “isn’t too surprising given the challenges subscale companies have had in the US with FoxBet, Wynn Bet and Kindred closing operations in the US. USA.”
888 participation shares They rose 2.4 per cent to 84.9 pence late on Wednesday morning, although they have plummeted around 83 per cent since their summer 2021 peak.