The fierce competition in the U.S. online gaming market has caused 888 Holdings, the parent company of legendary English sportsbook William Hill, to reevaluate its options and walk away from its deal with Sports Illustrated.
End of an Error
888 Holdings announced it has terminated its partnership with Sports Illustrated after only three years together and will immediately pay $25 million to SI’s parent company, Authentic Brands Group (ABG), and another $25 million between 2027 and 2029. The British bookmaker operates SI Sportsbook and SI Casino in Michigan, as well as SI Sportsbook in Colorado and Virginia.
The move is part of a comprehensive evaluation of its assets in the U.S. online gaming market, and its divorce from its exclusive partnership with Sports Illustrated is projected to save the company between $6 million to $7 million annually in 2024 and 2025. 888 Holdings also operates its 888 Casino in New Jersey, which could also be up for sale as the company steers away from its business-to-consumer (B2C) in the states.
888 CEO 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.”
“The strategic review of our US B2C operations will continue at pace. I look forward to updating shareholders on our plans for the wider group in late March,” he added.
Mixed Signals
Although Widerström pointed to a few optimistic results, the overall financial picture for 888 Holdings in the U.S. market appears too bleak to continue.
“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,” he concluded.
Split With Delaware
On a related note, and perhaps a foreshadowing of 888 Holding’s strategic review of its U.S. assets, the company announced in May 2023 its withdrawal of their tender to reengage with the Delaware Lottery to run its online casino and poker sites after the expiration of their 10-year agreement.
A request for proposals (RFP) issued in January by the Delaware Lottery saw only two possible candidates emerge with 888 Holdings as the incumbent vendor, while Rush Street Interactive (RSI) was the other suitor.
Strategy and advisory consultant Brendan Bussmann, of B Global Advisors, said that the withdrawal should trigger a reset of the Delaware online gaming framework.
“It’s disappointing to see an RFP process fall apart but either clearly market expectations were not met by potential bidders or expectations were placed too high on what will continue to be a relatively small market that is further limited by the legislative and regulatory structure,” Bussmann said.
In August, it was reported that RSI and the Delaware Lottery did indeed reach an agreement for the Chicago-based gaming company to assume operations, which launched in December 2023.
