888 ends Sports Illustrated deal and begins review of US operations

888 Holdings has launched a review of its business in the United States after pulling the plug on its Sports Illustrated (SI) licensing deal with Authentic Brands Group.

888 is active in four US states, offering the SI Sportsbook and SI Casino in Michigan, SI Sportsbook in Colorado and Virginia, and 888casino in New Jersey.

The company said Wednesday that intense competition from well-capitalised market participants and significant direct operating costs mean that gross profit margin in the US is lower than at the group level.

As a result, 888 has mutually agreed to terminate the SI licensing agreement with Authentic Brands Group and has launched a strategic review that will consider all potential alternatives to deliver value for the business.

This could include the sale of the group's US B2C business, the controlled exit of US B2C operations, or other possible strategic transactions.

888 will pay $25 million upfront to terminate the SI deal, with a further $25 million payable between 2027 and 2029. This will be partly offset by expected operating cost savings of approximately $6-7 million per year in 2024 and 2025.

888 chief executive Per Widerström said: “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. In the US, the intensity of competition and requirement for scale means huge investment is required to reach profitability.

“Our partnership with Authentic has consistently driven strong demand for the SI brand across both consumer experiences and product offerings. 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.

“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.”

Shares in 888 Holdings plc. (LSE:888) were trading 0.60 per cent lower on the news at 82.40 pence per share in London early Wednesday morning.