888 Issues Profit Warning as COVID-19 Cancels Major Sport Events

  • 2020 core profit could be disrupted by “millions of dollars” due to sporting event cancellations
  • Company observing moratorium on reporting, will not release 2019 results for at least two weeks
  • Recent 20% bounce in casino and poker activity could compensate for sports betting disruption
  • Operator committed to safe gambling and preventing gambling-related harm in uncertain times
graph showing downward trend in red
888 Holdings has warned it could suffer a loss of millions following the cancellation of sporting events due to the COVID-19 pandemic. [Image: Shutterstock.com]

Company hints at “single-digit millions” in losses

Online gambling company 888 Holdings has warned that the coronavirus pandemic could hit its financial prospects hard.

2020 core profit could be disrupted by “high single-digit millions of dollars”

The leading gaming operator and platform provider released a statement projecting that its 2020 core profit could be disrupted by “high single-digit millions of dollars” if the current cancellation of sporting events continues until September. 888’s sports betting vertical accounted for 16% of its income in 2019.

It did, however, point to an increase of around 20% in the number of customers playing online casino and poker games.

Operator following FCA rules

While 888 Holdings was expected to announce good news for 2019 – having ended the year on a particularly strong momentum – it confirmed that the report would include a stark profit warning for 2020. This is due to the effect that the coronavirus has had so far, including the cancellation of major leagues that provided forecasted sports betting revenue.

As the company is listed on the London Stock Exchange, it has agreed to observe a moratorium for at least the next two weeks on any publication of preliminary financial results for the year 2019. The Financial Conduct Authority (FCA) believes that updating the stocks and shares market with such warnings would only cause panic among traders.

A statement issued by the authority held that “The FCA believes the practice of issuing preliminary financial statements in advance of the full audited financial statements is adding unnecessarily to the pressure on companies and the audit profession at this moment.” It also noted that, while issuing such preliminary statements is common for UK-listed companies, it is not required by either the Listing Rules or the Transparency Directive.

888’s annual results for 2019 were intended to be published on Tuesday. A new date will be announced in due course.

Surge in online casino and poker play

While the future is uncertain, 888 is also profiting from a recent surge in online gambling among newly housebound players. It noted, “There is currently evidence of increased customer activity in the Group’s Casino and Poker products that might, in part, compensate for the sports betting disruption for a period of time.”

Casino and Poker products that might, in part, compensate for the sports betting disruption”

Shareholders too received some good news as the gambling operator confirmed that its monthly revenue from December has registered an all-time monthly record for 888 Holdings.  

Increased focus on safe gambling

As 888 Holdings is a purely online operator with a strong balance sheet ($99.5m of cash and equivalents was recorded at the end of 2019), the company board is confident it will manage whatever challenges the rest of the year has in store.

One issue that was raised in the short statement was the impact that severe social disruption may have on customers, causing concerns over gambling harm and player safety. Acknowledging the risk of vulnerable players, 888 said it would focus on safety and prevention.

It added, “The 888 Company Board recognizes that, with people spending more time at home and with potentially increased stress from economic uncertainty, 888’s vigilance on safe gambling and preventing gambling-related harm is even more important than ever.”

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