SPORTS BETTING
Gibraltar – 888 expects to recover half of Middle Eastern revenues after compliance review
By Phil - 14 April 2023
888, one of the world’s leading betting and gaming companies with internationally renowned brands including William Hill, 888, Mr Green and SI Sportsbook, has said it has now reinstated Middle Eastern accounts after compliance overhaul but has outlined the cost of the review in its latest financials.
The conclusion of an internal investigation into certain shortfalls in best practices in relation to Middle East VIP customers was announced in January 2023 with robust policies and procedures implemented to reopen accounts and onboard new customers in the region. No further impacts are expected and the Board currently expects to recover 40 to 50 per cent of revenue from the cohort, resulting in a £25 to 30m revenue headwind for FY23.
In line with previously announced expectations, group revenue for the year was up 74 per cent to £1,238.8m and and Adjusted EBITDA was up 82 per cent to £217.9m, both principally driven by the addition of William Hill results following completion of the acquisition on 1 July 2022.
The normalisation of retail revenues substantially offset a 15 per cent decline in online, which was driven by proactive investment in enhanced player safety measures in the UK Online segment, and the closure of the Netherlands from Q4 2021. Online revenue outside of the UK and the Netherlands was down by four per cent, principally reflecting the strong comparative period and refined market focus under the company’s evolved strategic framework.
The fourth quarter brought revenue of £446m with continued momentum in Spain and Italy and a strong performance in Retail partially offsetting online revenue declines due to the ongoing impact of safer gambling changes in the UK, and refined market focus in International together with the impact of compliance changes in the Middle East. The quarter saw the launch of Mr Green in Germany on the 888 platform in March, following receipt of new German gaming licence. SI Casino went live in Michigan in February 2023, with an encouraging early performance, validating the company’s refined strategic focus on gaming-driven US market opportunities.
Lord Mendelsohn, Executive Chair of 888, commented: “The combination with William Hill transformed the Group and brought together two exceptional and complementary businesses to create one of the world’s leading betting and gaming businesses.
“The Group’s financial performance in the period primarily reflected the extensive actions being taken to drive higher standards of player protection. While recent compliance issues in the Middle East were very disappointing, they have underlined the importance of our enhanced and proactive risk management framework.”
“We have made positive progress with the integration enabling us to upgrade our synergy target from £100m to £150m. In 2023 we remain on track to deliver higher profitability as we deliver against our clear strategic priorities. Our clear priorities of integration, market focus, and deleveraging give us confidence in our 2025 targets, as we build a stronger and more sustainable business for the future,” he added.
The company added: “The Board expects 2023 revenues to be lower than 2022 by a low to mid single digit percentage, but Adjusted EBITDA to be significantly higher as we focus on building sustainable revenues, with an Adjusted EBITDA margin of at least 20. With strong progress in the realisation of synergies and effective implementation of the new market focus plan post acquisition of William Hill, the Board remains confident in its 2025 targets of at least £2 billion of revenue, an Adjusted EBITDA margin of at least 23% and more than 35p of Adjusted EPS, with adjusted net debt to EBITDA of below 3.5x.”
