888 initiates strategic B2C review in US as it parts ways with SI brand

Under the stewardship of Per Widerström, 888 Holdings has rebuffed a takeover bid and launched an ambitious cost-saving program which seeks to save the company around $40m (£30m).

Yet, headwinds in the United States could make the company’s model in the country unsustainable as 888 has confirmed in a statement today that it is breaking up with Authentic Brands Group, the company that owns the Sports Illustrated brand operated by 888 in the country.

The premature withdrawal will see the company pay a $50m severance fee, which will be due in two installments, with $25m paid right away, and an additional $25m settled between 2027 and 2029. The decision to cut ties with Sports Illustrated, though, is motivated by the company's expectation to gain between $6m and $7m in cost savings both this and next year.

This is not all, though, as the company is embarking on a strategic review that will help the company decide whether it wants to maintain a B2C presence in the country. Other companies, including PointsBet and Kindred Group, have already pulled the plug on the US market.

888 could potentially envisage a similar scenario for its business, as high operational costs, and market access fees, along with licensing fees, have all been adding up and sapping the profitability of operations on the ground.

Presently, 888 is available in several US states, among which are New Jersey, Virginia, Colorado, and Michigan. The high level of competition has been confirmed by Widerström himself, who explained the company’s decisions so far.

"In the US, the intensity of competition and requirement for scale means huge investment is required to reach profitability", the CEO mused in a press release. The divorce with Sports Illustrated was not because of spite or miscalculation, either.

Rather, Widerström insisted that the Sports Illustrated brand has performed strongly and has indeed delivered strong casino results, for one. Yet, the main challenge of "generating positive returns within an accelerated timeframe" remained unlikely.

The strategic review that the company has commenced is not necessarily said to result in a sale, however. 888 will consider its options. So far, the business’s B2B segment has not been affected by the factors that have depressed the B2C sector.

Presently, the US market is dominated by a pair of companies in the face of DraftKings and FanDuel that together hold an accounted 60% of the market across both sports betting and online casinos.

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