It seems like the trouble with 888’s partnership with Sports Illustrated has to do in part because the sportsbook operator is based in the U.S. and 888 is not. As a result, 888 has to pay a duty which makes it more difficult to garner enough profits.
So, the Gibraltar-based 888 Holdings has launched a strategic review of its B2C dealings in the U.S., and it will end its relationship with the popular SI, an exclusive relationship since 2021.
The end result of the review could be the partial or entire sale of 888’s U.S. B2C operations. The company, which owns William Hill sportsbooks, will not shed its existing B2B deals in the U.S.
While 888 has not provided a timetable, a shareholder update is likely by the end of March, according to CEO Per Widerström.
“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,” Widerström told Yogonet. “In the U.S., the intensity of competition and requirement for scale means a huge investment is required to reach profitability.”
888 has a presence in four states, with New Jersey the only one with exclusivity through 888casino.
The company has teamed up with Authentic Brands Group for the other states. Sportsbooks operate in Michigan, Colorado and Virginia, two tied to Sports Illustrated and Michigan with an online casino as well.
The gross profit margin in the states is lower than the overall group level, attributable to direct costs of operating in the market such as the aforementioned duties, market access fees, and license fees. And 888 cannot discount the competition from well-heeled companies.
With these facts to work with, 888 cannot optimize returns hence the strategic review to decide how to proceed.
“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.”
Still, the news is not good enough given the downsides, he said.
