888 Holdings is offloading some assets in the US to milky way online casino sports betting and interactive gaming group Hard Rock Digital ahead of plans to exit consumer-facing operations in the country.
The sale of the ailing unit is expected to boost adjusted earnings before nasties by £25million each year from 2025 onwards, £10million of which will be reinvested into ‘growth and value-creation initiatives’, the William Hill owner told investors.
888 said the deal would probably close in the fourth quarter of this year, and result in one-off cash costs of £40million.
Deal: 888 Holdings is offloading its B2C operations in the US to Hard Rock Digital
888 shares rose over 4 per cent early on Thursday, before resting up 0.45 per cent or 0.4p to 88.90p, having climbed over 40 per cent in the last year.
888 said earlier this month it was looking at options to deliver value for the business, including a sale and controlled exit of its US B2C operations, which are active in four states across the US.
On Tuesday it revealed plans to change its name to Evoke to reflect its multi-brand model as it shifts its focus to core markets.
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The unit, which operates SI Sportsbook and SI pa online casino in Michigan, SI Sportsbook in Colorado and Virginia and 888casino in New Jersey, operates at a lower profit margin than the rest of 888 due to significant direct costs of operating in the market.
These include duties, market access fees and licence fees, in addition to intense competition from well-capitalised incumbent participants.
In January, 888 tempered 2024 earnings expectations, after heavy investment in artificial intelligence and other automation programmes offset the impact of cost-saving measures.
Boss Per Widerström told shareholders in January that the group was taking ‘rapid actions’ to cut overhead costs in a bid to free up cash to invest in future growth plans.
The William Hill owner launched a £30million cost saving programme in December, but also invested in areas such as intelligent automation and AI-powered data and insights.
Full-year revenue reached £1.71billion, down 8 per cent year-on-year, which 888 said was ‘driven primarily by a proactive mix shift away from dotcom markets, which impacted revenues by approximately £80million during FY23’.
UK and Ireland milky way online casino revenue slipped 8 per cent to £658million. The group said this was ‘primarily driven by the impact of safer gambling changes and a refined marketing approach’.
Retail revenue increased by 3 per cent to £535million, while international revenue fell 16 per cent to £517million.
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