888 to end US affairs agreeing on $50m closure of Sports Illustrated JV

888 Holdings has notified investors that it has begun a strategic review of its US B2C operations, considering all available options for its US joint-venture with the Authentic Brands Group.

This morning, 888 notified that US partner Authentic Brands Group the apparel and entertainment fund that owns Sports Illustrated has “agreed to consensual license termination for US territories”.

The decision allows 888 to review all options related to the Sports Illustrated (SI) Sportsbook-&-Casino joint venture including “the sale (in whole or in part) of the Group’s US B2C business, the controlled exit of US B2C operations, or other possible strategic transactions.”

The SI Sportsbook-&-Casino JV was initiated back in 2021, launching in the state of Colorado, and would later be expanded to the states of Michigan, Colorado and New Jersey.

The filing saw 888 disclose that “The group has determined that its current structure will not optimise returns, and has initiated a strategic review of the operations.”

“Gross profit margin in the US is lower than the group level, reflecting significant direct costs of operating in the market including duties, market access fees, and licence fees, in addition to intense competition from well-capitalised incumbent participants.”

JV partners have decided to part ways ending 888’s exclusive relationship with Sports Illustrated for online betting and gaming.

Investors were informed that “as part of the termination agreement, 888 has agreed to pay a fee of $25 million, which will be paid in cash from available resources. Additionally, 888 will pay an extra $25 million between 2027 and 2029”.

888 expects the termination of the SI JV agreements to result in cost savings of approximately $6 to $7 million per year in 2024 and 2025. No Timetable has been set on 888 to complete its strategic review, in which the LSE gambling group maintains that there can be no assurance regarding a final outcome.

888 CEO Per Widerström,  commented: “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.”