888 begins strategic review of US B2C operations as sale or shuttering posed as outcomes
London-listed operator also confirms staggered termination agreement over its Sports Illustrated license deal with initial $25m cash payment
888 has begun a strategic review of the its US B2C business, which could see the division sold, a total shuttering of US operations, or other possible transactions.
888 said there was no confirmed timetable for the completion of the review, while noting there could be no assurances regarding its outcome.
The London-listed firm added that its existing US B2B operations would remain unaffected.
As part of the review, 888 has also mutually agreed to conclude its relationship with Authentic Brands Group, via which it had licensed the Sports Illustrated (SI) brand for its sportsbook and casino efforts.
The pair entered into a partnership in June 2021, under which Authentic granted 888 an exclusive license to use the SI brand and trademarks for sports betting and igaming purposes.
Advertising and editorial integration rights on selected SI digital assets were also included in the deal for 888, while Authentic was awarded brand licensing and affiliate fees.
The SI Sportsbook is live in Michigan, Colorado, and Virginia, with the SI Casino also having a presence in Michigan. The group runs the 888casino brand in New Jersey.
As part of the termination agreement between the pair, 888 has agreed to pay $25m to Authentic, which will be paid in cash from available resources.
A further $25m payment will be made between 2027 and 2029. The SI branded operations will continue to operate while the review is ongoing.
888 said the termination of its partnership with Authentic is expected to result in operating cost savings of around $6m to $7m per year in 2024 and 2025.
In an update released today, management cited costs and “intense competition from well-capitalized incumbent participants” as reasons for the US gross profit margin being lower than the group level.
888 said it had come to the conclusion that the “current structure will not optimize returns and has initiated a strategic review of the operations”.
Per Widerström, 888 CEO, expanded on the operator’s decision to sanction a strategic review in comments made this morning.
He 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 recordbreaking 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,” he concluded.
Earlier this week, 888 confirmed the appointments of Mark Kemp and Stephen Sheridan to its new look C-suite.