Gambling giant 888 Holdings disclosed earlier today that the company is considering halting its B2C operations within the United States. The William Hill owner currently operates a range of Sports Illustrated-branded online casinos and bookmakers in several US states, including Michigan, Colorado, Virginia, and New Jersey.
According to 888 Holdings, the profit margins of the aforementioned US operations are “lower than the group level,” which has rendered the company’s presence in the US in need of assessment. A strategic review surrounding the matter is currently ongoing. Based on the results, the company will consider a variety of alternative solutions such as the sale of the US B2C business, a “controlled exit,” or other potential options. In addition, the strategic review resulted in 888 Holdings and Authentic Brands Group, the latter being the brand owner of Sports Illustrated, making the mutual decision to end the companies’ partnership.
Although the termination agreement mandates that 888 needs to pay Authentic Brands Group an initial $25 million in legal fees, along with an additional $25 million, which will be split into separate payments and paid between 2027 and 2029, 888 Holdings projects that its annual costs will fall by an estimated $6 to $7 million as a result.
The Issues of the US Gambling Market
In its announcement, 888 Holdings stressed that the costs of operating a gambling business in the US are the core reason behind the disappointing performance of the company’s US operations. As outlined, factors such as market access fees, licensing fees, duties, and significant competition from local prominent brands make the US market incredibly difficult to enter and achieve profitability in.
Per Widerström, who currently serves as 888’s chief executive officer, also put an emphasis on these issues, highlighting how even “a series of record-breaking months” that Sports Interactive enjoyed could not help the business reach satisfactory profitability. He also stated that an update on the matter will be given to shareholders in late March.
Indeed, other international businesses have also struggled to gain a foothold in the United States’ gambling sector. In December 2023, the Kindred Group announced that by the end of 2024’s second quarter, its Unibet brand will have officially exited the US. Kindred Group Interim CEO Nils Andén said that the actions undertaken with the aim of cost reduction were “necessary and decisive,” and that they will give the company the opportunity to pursue more profitable markets.
Even household names are not guaranteed success, as was clearly evidenced by WynnBet undertaking a significant downsizing of its operations across multiple states last year. While not a complete US exit, WynnBet no longer offers iGaming or sports betting to gamblers in states like New Jersey, Arizona, Tennessee, and more. In addition to the factors mentioned thus far, CEO Julie Cameron-Doe also cited iGaming’s scarcity in terms of legislation to be another major issue for US gambling businesses.
