888 regulated market efficiency clears German/Dutch hurdles
888 Holdings hails ‘another record breaking year’, as the FTSE250 gambling group publishes its pre-close trading statement ahead of its transformative enlargement with William Hill.
Of significance, expansion within regulated markets offset German regulatory challenges for 888, as the firm detailed that a strong performance in four key markets helped drive revenue by 14% in 2021.
Updating investors, the company reported expansion in regulated and taxed markets accounting for 74% of total earnings (2020: 73%) with the UK, Italy, Portugal and Romania identified as particularly successful markets.
However, the group did acknowledge that during the fourth quarter there was an overall year-on-year revenue decline of 16%, with Q4 income standing at $214 million (Q4 2020 $255m).
This was largely attributed to the firm’s exit from the Netherlands following the launch of the online Dutch sports betting market under the terms of the KOA Act, as well as ‘taxation challenges’ attributed to Germany following the implementation of the Fourth Interstate Gambling Treaty (GlüNeuRStv).
The impact of the Netherlands withdrawal was also reflected in the LSE-listed gambling group’s full year unit-by-unit breakdown, with sports betting operations experiencing a slight growth rate of 4% in comparison to casino, which expanded by 24% – overall B2C revenue stood at $934 million, a 15% increase on 2020.
Moving forward, 888 aims to optimise its German market trading, following the launch of 888Sport, operating under a ‘market customised platform’ that was granted its local licence during Q3.
On schedule, 888 has completed its acquisition of William Hill’s non-US assets, ending a long-running auction initiated by the latter company’s new American owner, Caesars Entertainment.
First announced during Q3 after a successful £2.2 billion bid on 9 September. 888 was able to secure mandatory antitrust and pre-completion gaming regulatory clearances the following quarter, with the merger expected to be fully completed in Q2 of this year.
Meanwhile, the company has also highlighted the launch of the SI Sportsbook in Colorado – in partnership with Sports Illustrated – as it seeks to bolster its position in the rapidly expanding US market.
Itai Pazner 888 CEO, said: “2021 was a year of outstanding strategic progress for 888 as we announced the transformational acquisition of William Hill International, and reached an agreement to sell our bingo business to increase our focus on our B2C and US growth plans, as we continue to execute our plan to build a global online betting and gaming leader.
“In addition, we successfully launched SI Sportsbook in the US shortly after signing a long-term brand partnership and began operating 888sport under a new licence in Germany, all using our in-house sports platform.”
Additional Q4 developments saw the sale of the Dragonfish online bingo business to Broadway Gaming for a total of $50 million, referred to by Pazner, following a strategic review which resulted in 888 re-evaluating its approach to instead focus on greater B2C and US-facing operations.
The sale of the Dragonfish network helped 888 strengthen its balance sheet with cash and cash equivalents, net of customer balances, of $147 million as at 31 December 2021.
Pazner added – “I am pleased to report another year of record revenues alongside these important strategic milestones, delivering double-digit revenue growth despite a very tough comparative period.
“This performance reflects the continued success of our data-driven investments and execution against our product-leadership focus that delivers ongoing improvements in the usability, quality and safety of our sports betting and gaming products.”