The newest victim of the U.S. sports betting market is global sport betting operator 888 Holdings, which has recently announced its plan to focus its efforts on its casino business amidst a struggle to maintain a competitive advantage in the sportsbook sector. Its sportsbook, SI Sportsbook, is not leaving the U.S., but the company will focus on the growth of SI Sportsbook in states where their iGaming and casino services are also offered.
William Hill Purchase & Aftermath
The decision comes in an attempt to thwart its growth-inhibiting $1.9 billion in debt that the company currently faces aftering borrowing heavily to purchase William Hill International from Caesars in 2021. Last month, the company reported a 13% drop in third quarter earnings.
“The ultimate structure of the William Hill acquisition has left the Group more exposed to changes in interest rates (36% of gross debt is fixed and 64% has floating rates), which has, in turn, impacted its ability to reinvest excess cash flow in accelerating growth in the short term,” 888 said in a press release. “In the coming weeks and months, the Group may look to access debt capital markets, using proceeds to repay up to £347m (equivalent) of bank loans which were drawn to redeem the William Hill 2026 Notes.”
888 CEO Itai Pazner said he does not have buyer’s remorse over the William Hill acquisition, regardless of the current state it has left the company in. Instead, he noted that the current inflated economic environment caused unforeseen consequences for the company that they simply couldn’t control.
They plan to “focus on building leading positions in fewer markets by our combined competitive advantages,” according to their presentation at its Capital Markets Day on Nov. 29.
The U.S. market is “intensively competitive,” said Chief Strategy Officer Vaughn Lewis. “Our original plan here was to build a nationwide sports bet operation in 12-15 states. It’s become clear to us that the intense competition in sports betting and the dominance of the top four brands, means it will be very difficult to deliver positive returns without evolving our plan.”
The top four brands he refers to are DraftKings Sportsbook, FanDuel Sportsbook, Caesars Sportsbook, and BetMGM Sportsbook, which own the vast majority of U.S. market share.
“Our evolved plan is called “Betting 2.0”…our plan focuses much more on casino and iGaming,” Lewis continued.
The Sad New Wave
888 is not alone though – in fact, for some operators, they had to say goodbye to sports betting altogether.
This is part of the new wave of struggles that the sports betting industry has seen of late where smaller operators struggle to keep their head above water. In an effort to cut their losses, they bow out. MaximBet was the most recent to cease its sports betting operations, joining FuboTV who shut down one month before, and Unibet which pulled its operations out of Iowa.
All of these operators cited profitability, economic conditions, and stiff competition as the reasons for the ultimate demise.
Despite these trends, the American Gaming Association (AGA) released its industry outlook in October, which noted that “gaming executives remain positive on current business conditions and many expect future conditions to be better.”
888 CEO Itai Pazner seems to agree – at its Capital Markets Day he said “our long-term potential remains exciting. Building our unified tech platform will present us with real future growth opportunities as we take advantage of our world-class brands, product and content leadership, and customer excellence to set our business for the next decade of growth.”