One of the world’s leading betting and gaming companies, 888, has launched a strategic review of its U.S. operations that may see the business be sold or closed altogether.
The company announced the review on Wednesday, saying they 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 U.S. business, the controlled exit of U.S. operations, or other possible strategic transactions,” the company said in a press statement. “The group has determined that its current structure will not optimize returns and has initiated a strategic review of the operations.”
888 is active in four U.S. states with SI Casino and Sportsbook in Michigan, SI Sportsbook in Colorado and Virginia, and 888casino in New Jersey.
The company said the gross profit margin in the U.S. 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.
Struggle for Market Share
In Virginia alone, the company’s SI Sportsbook sports wagering app had a 0.12% market share between January 2023 and November 2023. Market leaders FanDuel held 40% with DraftKings at 28% for the same period, according to the Virginia Lottery.
SI Sportsbook launched in Virginia on May 9, 2022, and today competes with 15 other mobile sports wagering apps in the Commonwealth.
The SI Sportsbook app was launched under a partnership between 888 and Authentic Brands Group. The partnership had granted exclusive use of the Sports Illustrated brand for the SI Sportsbook app.
The group has mutually agreed to part ways, concluding its partnership with Authentic Brands Group, 888 said on Wednesday.
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. Terminating this agreement is expected to result in operating cost savings of approximately $6 to $7 million per year in 2024 and 2025, the company said.
888 has not set a timetable for the completion of its strategic review but CEO Per Widerstr?m plans to update shareholders in late March.
“Our partnership with Authentic has consistently driven strong demand for the SI brand across both consumer experiences and product offerings,” Widerstr?m said. “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 U.S. market to generate positive returns within an accelerated timeframe is unlikely.”
Widerstrom added, “In the U.S., the intensity of competition and requirement for scale means huge investment is required to reach profitability.”
The Switch in Delaware
In August 2023, the Delaware State Lottery selected Rush Street Interactive (RSI) to replace 888’s online casino services in the state. The switch from 888 to RSI started in late December. The move to RSI brought new online casinos and sports betting services for players.
“We reviewed proposed bids from other online gaming companies and suppliers, and the combination of experience and commitment to quality products, customer service, and responsible gaming is why we selected RSI,” said Helene Keeley, Director of the Delaware Lottery.
RSI currently provides three online gambling brands, BetRivers, SugerHouse, and RushBet.
Initially, RSI will provide online gaming in Delaware for five years and then have options to renew for additional one-year terms for an additional five years pending regulatory approvals.
