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888 has said that it will hold a strategic review of its US consumer-facing operations, as it considers options including a sale or “controlled exit”, citing “intense competition from well-capitalised incumbent participants”.
The company’s gross profit margin in the US is lower than the company as a whole, reflecting the costs of operating in the market, including duties, market access fees and license fees, as well as the competitive market, 888 said today (March 6).
“The group has determined that its current structure will not optimise returns,” the Gibraltar-based company said.
The London-listed online gambling company also said it has mutually agreed to end its Sports Illustrated brand partnership with Authentic Brands, which it had been using for online betting and casinos in the US.
888 will pay Authentic Brands $25m this year, and another $25m between 2007 and 2009, the company said.
The agreement’s termination is expected to save $6m to $7m this year and next, 888 said.
The US online gambling market has coalesced around market leaders DraftKings and Flutter Entertainment-owned FanDuel, with others including BetMGM trailing behind.
In addition, only half a dozen states have approved online casinos, leaving most online gambling companies facing losses.
In November, Stockholm-listed Kindred Group announced it would pull out of the US by the end of June.
888 currently operates in Michigan, Virginia, New Jersey and Colorado.
The company’s B2B operations in the US will be unaffected by any actions resulting from the announcement, it said.
No timetable has been set for the results of the strategic review.
“In the US, the intensity of competition and requirement for scale means huge investment is required to reach profitability,” said chief executive Per Widerström, who assumed the role in October last year.
The Authentic Brands partnership “has consistently driven strong demand”, he said, but “despite these successes, we have concluded that achieving sufficient scale in the US market to generate positive returns within an accelerated timeframe is unlikely”.
888’s brands include William Hill, Mr Green and 888.
