In a significant move within the online gaming and betting industry, 888 Holdings has announced its decision to sell its U.S. Business-to-Consumer (B2C) operations to Hard Rock Digital. This strategic sale marks a pivotal shift for 888, aiming to streamline its operations and focus on markets where it sees the most potential for growth and profitability. The transaction is expected to reshape the landscape of online gaming and betting in the U.S., granting Hard Rock Digital access to new states and opportunities.
The Strategic Sale: A Closer Look
The decision by 888 Holdings to divest certain U.S. B2C assets to Hard Rock Digital comes after a thorough strategic review. This review was prompted by financial challenges faced by 888 in 2022 and 2023, with losses amounting to £115.7 million ($141 million) and £121.3 million ($151 million) respectively. The sale is part of 888’s broader strategy to revamp its North American operations, aiming for a controlled exit from the U.S. market by the fourth quarter of 2024.
Per Widerström, CEO of 888, cited intense competition and the need for significant investment to achieve profitability in the U.S. market as key reasons for the sale. The disposal of assets to Hard Rock Digital is subject to regulatory approvals and is expected to be completed in phases, with final completion anticipated in Q4 2024.
Financial Implications and Future Plans
The sale is expected to have significant financial implications for 888. The company anticipates net one-off cash costs of approximately $50.5 million related to the U.S. exit between now and 2029. However, it also expects an annualized benefit to adjusted EBITDA of about $31.6 million from 2025 onwards. Approximately £12.6 million of this benefit will be reinvested into growth and value creation initiatives.
Following the sale, 888 plans to operate under a new name, Evoke Plc, as part of its Value Creation Plan (VCP). This rebranding reflects the company’s focus on its core markets: the UK, Italy, Denmark, and Spain. Despite reporting a corporate revenue increase, 888 acknowledged disappointing financial performance in recent years, with significant revenue losses.
Impact on the U.S. Gambling and Online Gaming Market
The U.S. gambling and online gaming market continues to evolve, with limited expansion opportunities unless new states legalize gambling. The sale of 888’s B2C assets to Hard Rock Digital could potentially open new avenues for Hard Rock in states considering easing gambling restrictions. For instance, Missouri is mentioned as a state where sports teams are lobbying for eased gambling restrictions, aiming for partnerships similar to those with Hard Rock Digital.
It’s important to note that this sale does not affect the World Series of Poker (WSOP) online poker relationship. 888’s strategic shift allows it to focus on its strengths while giving Hard Rock Digital the chance to expand its footprint in the U.S. market.
Conclusion: A New Chapter for 888 and Hard Rock Digital
The sale of 888’s U.S. B2C business to Hard Rock Digital signifies a new chapter for both companies. For 888, it represents a strategic pivot towards markets where it sees the most potential for growth. For Hard Rock Digital, it offers an opportunity to expand its presence in the U.S. online gaming and betting market. As the transaction progresses towards completion, the industry will be watching closely to see how this deal reshapes the competitive landscape in the U.S. online gaming and betting sector.
