888 Considers Selling US B2C Business as Part of Strategic Review
LISTEN TO THIS ARTICLE:888 has announced that it has begun a strategic review of its US B2C operations and may consider selling part or all of the business.
The company is set to look at “potential alternatives” that would deliver value. One of these alternatives is the partial or complete sale of its US B2C operations. It will also be considering a controlled exit of US B2C operations and other possible strategies.
However, the review will not affect existing B2B arrangements in the US. It is not known how long the review will take, but 888 CEO Per Widerström told shareholders that they can expect an update towards the end of March.
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. The strategic review of our US B2C operations will continue at pace. I look forward to updating shareholders on our plans for the wider Group in late March.
888’s US Presence
At present, 888 is active in Colorado, Michigan, New Jersey and Virginia. However, it is only in New Jersey where the 888 brand can be found.
In the other states, it is able to run sportsbooks and live online casinos, such as the SI Sportsbook in Colorado, Virginia and Michigan, and the SI Casino in Michigan, thanks to a partnership with Authentic Brands Group (ABG).
However, according to 888, the gross profit margin in the US is below the group level. It says that this is due to the costs involved such as taxes, market access fees, and license fees. 888 also noted that there is intense competition from other well-funded operations.
Therefore, 888 has decided that its current structure will not lead to the best returns, which in turn led to the strategic review.
End of Partnership with ABG
888 and ABG have mutually agreed to end their partnership. 888 will pay an extra $25 million to ABG in cash from its available resources and a further $25 million between 2027 and 2029.
888 has said that this will result in operating cost reductions of roughly $6 to $7 million per year in both 2024 and 2025. Widerström said that despite a number of record-breaking months for the SI Casino, they have decided that “achieving sufficient scale in the US market to generate positive returns within an accelerated timeframe is unlikely.”
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