888 Exits US Market, Sells Assets to Hard Rock Digital, and Rebrands to Evoke
Hard Rock Digital is acquiring certain assets of 888’s US online gaming operations. The exact nature of the acquisition is unclear, but it’s being implemented in phases.
888 decided to divest after evaluating their US operations and concluding that they weren’t generating the desired revenue. They attributed this to the high costs of operating in the US, including regulatory fees and intense competition. They believe that selling will ultimately enhance their profitability.
The transaction is expected to be finalized by year-end, subject to regulatory clearance.
The company declared they were thinking about withdrawing from the American consumer market when they unveiled their evaluation. Now, the company has sold some of their possessions to Hard Rock Digital and is leaving the American consumer market.
The company has started to gradually shut down the rest of their American consumer operations. The organization plans to completely cease these activities by the end of the year. This is, of course, dependent on regulatory approval and procedures.
The company states that leaving the American consumer market will generate £25 million (€29.2 million/$31.6 million) in annual recurring revenue for adjusted EBITDA. This will begin in 2025, and the company intends to reinvest £10 million in growth and value-creation projects.
The operator anticipates incurring about £40 million in net one-time cash expenses from leaving the American market. The firm says this includes the already announced brand licensing termination fees, which will continue from 2024 to 2029.
**Exiting the Sports Illustrated Brand**
The company is exiting the American market, where it currently operates in four states: Colorado, Michigan, New Jersey, and Virginia. However, only New Jersey uses the company brand, namely 888casino.
The other operations are run in collaboration with Authentic Brands Group and their Sports Illustrated brand. This includes SI Sportsbook and SI Casino in Michigan, and SI Sportsbook in Colorado and Virginia.
Following a thorough strategic evaluation, 888 has determined to terminate its association with the collaborating entity. 888 will disburse $25 million in cash from existing reserves and an additional $25 million between 2027 and 2029.
888 will undergo a comprehensive brand transformation.
The combined net effect of the sale and departure from the US B2C sector has been incorporated into the financial objectives declared by the group this week.
These objectives were announced when 888 released its complete 2023 financial report. Revenue expanded from £1.24 billion to £1.7 billion, and adjusted EBITDA also rose from £217.9 million to £308.3 million. The net loss also contracted from £120.5 million to £56.4 million.
During the earnings conference call discussing the outcomes, Chief Financial Officer Sean Wilkins acknowledged that the performance was “unsatisfactory”. However, CEO Per Widerström expressed appreciation for the “new chapter” and suggested a rebranding of the business.
In an unexpected move, 888 stated it would be renamed Evoke, contingent on shareholder approval at 888’s upcoming shareholder gathering. 888 asserted this would “better reflect the group’s diverse brand operational model strengths”.
Widerström stated the proposed rebranding symbolizes a new era for the business. He remarked that while 888 has a “distinguished customer service brand”, Evoke will establish a clear direction for the company.
888’s “restructuring” and value creation strategy
This week also witnessed the announcement of a new value creation strategy (VCP). Widerström and the senior leadership team will implement the plan to attain a long-term “successful strategy”.
The 888 Group is undergoing a reorganization with the aim of saving an extra £30 million in expenses annually. The organization will implement six strategic plans to support its objective.
888 will streamline its market approach, dividing it into two categories. The first category encompasses core markets (the UK, Italy, Spain, and Denmark), while the second category will optimize markets, investing more in markets that can “generate strong returns and maximize cash flow across all markets.”
888 will also endeavor to enhance efficiency, aiming to increase adjusted EBITDA margin by approximately 100 basis points each year. The group will also allocate capital more prudently, with its leverage below 3.5x by the end of 2026.
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