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888 has initiated a strategic review of its US B2C operations and has severed ties with Sports Illustrated.

As part of this process, the group will consider all potential alternatives that can deliver value for the business. 

These options may involve selling all or part of its US B2C business, gradually exiting US operations, or engaging in other strategic transactions.

The move comes after new 888 CEO Per Widerström overhauled its C-suite and implemented a global cost-saving programme of £30m in December 2023.

Currently, 888 operates in four US states: Michigan, Colorado, Virginia, and New Jersey. 

This structure includes SI Sportsbook and SI Casino in Michigan, SI Sportsbook in Colorado and Virginia, and 888casino in New Jersey. 

However, 888 said gross profit margin in the US is lower than at group level due to high direct operating costs such as duties, market-access fees, and licence fees. 

Moreover, stiff competition from well-capitalised rivals further impacts profitability.

Consequently, the company believes its existing structure does not maximise returns.

Termination of SI partnership

As a first step of this review, the group has mutually agreed to part ways with the Authentic Brands Group. 

This partnership had granted 888 exclusive rights to use the Sports Illustrated brand for online betting and gaming. 

As per the termination agreement, 888 will pay a fee of $25m in cash upfront, with an additional $25m scheduled between 2027 and 2029. 

888 anticipates that the termination will yield operating cost savings of approximately $6m to $7m annually in 2024 and 2025.

888 has not established a timeline for completing its strategic review, and the outcome remains uncertain. 

The group said its existing B2B arrangements in the US remain unaffected by the review.

CEO comment

888 CEO Per Widerström said: “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 company intends to update shareholders on its plans for the wider group in late March.

888’s US operations have faced persistent scrutiny. Initially, the company aimed to establish a sports-centric presence across 12 to 15 states. 

However, at the end of 2022 it pivoted its focus towards targeting male iGaming customers aged 39 and above, describing them as the “unsexy sweet spot.”

In FY 2023, 888 reported an 8% decline in annual revenue, with significant decreases observed in both the UK online and international markets.

Particularly, revenue for 888’s international business experienced a sharp 16% decline to £517m.

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