A revenue report revealing a precipitous decline from last year caused shares in 888 Holdings to sink 14% on the breaking financial news.
Red Tape Blues
In a dour financial report, 888 Holdings announced that it expected year-end revenues for 2023 to slip 8% year-over-year to $2.1 billion. The disappointing results were attributed to enhanced gambling red tape driven “primarily by a proactive mix shift away from dot-com markets.”
While most gaming and betting operators are moving towards online platforms, 888 Holdings reported that more stringent gambling regulations caused a 16% decline in international revenue while UK profits plunged 8% in 2023. And because of the most recent data, projections for 2024 have been lowered to the bottom of the initial expectations.
Higher marketing costs and capital investments in Artificial intelligence are also major contributors to the lowered expectations. This news caused shares in 888 Holdings to crater by 14% as investors became jumpy about the perceived gloom and doom ahead.
CEO Per Widerström said: “We are now taking rapid actions to position the group for future success, reducing our overhead costs and freeing up funds to invest in growth based upon our new strategy and value creation plan.”
Widerström also said: “The financial performance of the Group must improve.”
“The actions we are taking will build a leaner, more agile, and more effective organization structure, as well as establishing a more effective management of the customer and product life cycle,” he added.
White Paper
Last year the UK’s secretary of state for culture, media, and sport, Lucy Frazer, said that gaming companies would be subject to stricter checks on losses and a statutory levy in the government’s eagerly anticipated white paper. The proposed changes would represent the most seismic gambling overhaul since 2005 when the current regulations were enacted.
Peter Jackson, Flutter Entertainment chief executive, said the legislation was a “significant moment” for the sector. “We believe proactive change will lead to a better future for our industry,” he said.
“We will continue to constructively engage with the government and the Gambling Commission as part of any subsequent industry consultation processes, with a focus on providing support to the minority at risk of gambling harm without interfering disproportionately with the enjoyment of the vast majority.”
Neil Banbury, UK general manager at Kindred Group, which owns 32Red and Unibet, said: “Kindred looks forward to contributing to the white paper’s next steps and building upon the industry’s efforts over the last few years to strike the right balance between providing an enjoyable experience without compromising player safety.”
Asking for Change
Former Shadow Secretary of State for Culture, Media and Sport, Lucy Powell, insisted that the government was “dragging their feet” and said Labour had “long called for outdated gambling laws” to be updated for the 21st century.
“The chaos we’ve seen in government has meant many false starts,” she said.
“Analogue gambling regulation must be updated for the digital age. There’s no reason we can’t get this done by the summer recess and after years of delay, that’s what we should do.”
