888 Holdings is shaking up its U.S. B2C strategy.
The London-based sports betting company announced Wednesday that it is ending a partnership with Sports Illustrated because of profit margin concerns and reviewing other strategy options that include exiting the U.S. market entirely.
SI Sportsbook has carried the 888 sports betting platform since 2021 and currently operates in Michigan, Colorado, and Virginia while 888’s iGaming platform is active in New Jersey.
“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,” 888 CEO Per Widerström said in a statement. “In the U.S., the intensity of competition and requirement for scale means huge investment is required to reach profitability.”
In a mutually agreed upon deal, 888 is sending a $25 million termination payment to Authentic Brands Group-owned SI now, with another $25 million going to the sports media company in between 2027 and 2029.
Optimizing returns
Ending the partnership will end up saving 888 $6 million to $7 million per year in 2024 and 2025.
888 said in a statement that operating costs, including market access and license fees, and competition from “well-capitalized incumbent participants” are making it difficult to optimize return, sparking a need to review strategy.
“Our partnership with Authentic has consistently driven strong demand for the SI brand across both consumer experiences and product offerings,” Widerström 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 US market to generate positive returns within an accelerated timeframe is unlikely.”
Additional B2C changes
Moving on from SI is just the start for the company that also owns the non-U.S. holdings for popular sportsbook operator William Hill.
888 could sell part or all of its U.S. business, depart from the market, or consider several other transactions.
There is no timetable for the decision-making, but the reviewing process is ongoing, and 888’s B2B strategy is not expected to be impacted.
“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,” Widerström said.
