^{Per Widerström, CEO of 888, will lead the company out of its highly hyped partnership with Sports Illustrated, and potentially out of the US entirely. (Image: courtesy of 888)}

Gibraltar-based 888 Holdings has instigated an end to its high-profile partnership with Sports Illustrated, and with that announced a strategic review of its B2C operations in the US.

Updating the market, the London-listed operator confirmed it will consider all “potential alternatives” to deliver shareholder value, including the possible sale of its US B2C holdings and an exit from the United States. 

At present, 888 is active in four states across the US, namely operating the Sports Illustrated (SI) sportsbook and casino brand in Michigan, the SI Sportsbook brand in Colorado and Virginia, and the 888casino brand in New Jersey.

Intensity of Competition

888 has agreed to pay $50 million to extricate itself from the SI partnership that was supposed to last 20 years when it was struck in 2021.

“In the US, the intensity of competition and requirement for scale means huge investment is required to reach profitability,” 888 CEO Per Widerström explained. 

“A series of record-breaking months for SI Casino has underscored the strength of the SI brand," Widerström said. "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.”

Expanding on this decision, 888 revealed that its US gross profit margin was lower than that of the wider group, due to “significant direct costs” including taxes, market access fees and license fees. The presence of intense competition from well-capitalised incumbent participants, including the likes of FanDuel, DraftKings and BetMGM was also cited by the firm as a factor.

“The group has determined that its current structure will not optimise returns, and has initiated a strategic review of the operations,” 888 said in a statement on the London Stock Exchange.

No timetable has been set for the completion of the strategic review, and no preferred option has been revealed by 888. However, the firm has confirmed that its existing B2B arrangements, which include a partnership with Caesars Entertainment to power its World Series of Poker brand, are unaffected by the review process.

Sports Illustrated Severance

As part of its strategy to expand into the US, 888 inked a 20-year broadbase licensing partnership with Authentic Brands Group (ABG), the publishers of Sports Illustrated in June 2021, ostensibly to develop a SI Sportsbook and online casino site brand.

Under that deal, ABG received a 5% stake in 888, with an option to increase its stake up to 15%, with 888 receiving exclusive rights to SI’s digital channels and brands for sportsbook and igaming opportunities in the US, with an option for Canada.

Sports Illustrated has more than 250 million social media followers, with 60 million unique monthly visitors to its brand websites and more than 200 million engagements annually on its various media properties. 

Initially, 888 was keen to leverage that brand equity to break the dominance of brands like DraftKings, FanDuel and Penn Entertainment’s Barstool Sports. Buoyed by the deal, 888 announced ambitious plans to expand into 2-4 US states a year.

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. The termination of this agreement is expected to result in operating cost savings of approximately $6 to $7 million per year in 2024 and 2025.

Eyeing a US Retreat

The ABG deal and US expansion were overseen by 888’s longstanding CEO Itai Pazner, who left 888 in January 2023, while the firm’s share price dropped by over a quarter following the suspension of VIP activities in the Middle East.

In March, 888 agreed to pay a £19.2m penalty package to the UK Gambling Commission after a regulatory investigation identified failings in William Hill’s social responsibility and anti-money laundering policies in 2020 and 2021.

888 looked to steady the ship in October with the appointment of Widerström to the CEO role, with the former Fortuna Entertainment Group CEO tasked with shaping up compliance efforts and growing the business over the coming years.

“The strategic review of our US B2C operations will continue at pace," Widerström said, "and I look forward to updating shareholders on our plans for the wider Group in late March."