Wiping its hands
888 Holdings has terminated its exclusive licensing agreement with Sports Illustrated (SI) and is now considering a full exit from the US market. The company announced on Wednesday morning that it agreed to pay $50m to exit the deal with the media giant’s parent company, the Authentic Brands Group. Half of this sum will be paid up-front and the remainder will be spread between 2027 and 2029.
did not provide a timeline for when it will deliver a final recommendation
The William Hill owner has also started a review of its US business-to-consumer (B2C) operations, which could mean a sale of its assets in the region, a controlled exit, or some other type of strategic transaction. It is excluding the US-focused business-to-business (B2B) services from the review. The company did not provide a timeline for when it will deliver a final recommendation.
A tough nut to crack
888 partnered with SI in 2021 in a 20-year agreement that saw the gaming company pay an upfront fee and give Authentic an option to buy as much as 20% of its US B2C business.
888 launched its first SI-branded platform in the country in September 2021 and failed to generate any real momentum, with revenue only reaching £20m ($25.5m) in 2022. This led to a £12m ($15m) loss and just 0.2% market share.
An attempt to pivot to focus more on the higher-margin online casino business did not live up to expectations. The statement mentioned that the direct costs of operating in the US are much higher than in other regions, including market access fees, duties, and license fees.
Plenty of turbulence
Talking about the reasoning behind the decision to reassess its US operations, 888 Holdings CEO Per Widerstrom spoke about the huge investment that is necessary to be successful due to the “intensity of competition and requirement for scale.”
will save the company up to $7m in costs both in 2024 and 2025
He plans to provide an update to shareholders about the company’s wider plans towards the end of the month. 888 expects that the termination of the deal will save the company up to $7m in costs both in 2024 and 2025.
SI is having its own struggles as the traditional print publishing industry continues to lose ground to online rivals. It laid off more than 100 people in January and might even have to eventually halt the publication of its magazine which dates back to 1954. According to a Sportico source, Authentic will now look to enter non-exclusive agreements with other sportsbook operators.