888 Ends Sports Illustrated Sportsbook, May Exit US Market

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British betting operator 888 has terminated its SI Sportsbook and the related branding agreement with legacy media giant Sports Illustrated.

The SI Sportsbook is currently live for sports betting in Colorado, Virginia, and Michigan. It is now expected to close up shop in the next six months to a year.

888 also announced all of its U.S. operations, including its presence among online casinos in New Jersey, will be under a strategic review from this week.

That could include a full sale of the business.

888 Holdings reportedly signed a 20-year deal with Sports Illustrated. It said this week it will be paying $50 million over five years to end the contract early.

“Our partnership with Authentic has consistently driven strong demand for the SI brand across both consumer experiences and product offerings,” said Per Widerström, 888 CEO, in a company statement.

“A series of record-breaking months for SI Casino has underscored the strength of the SI brand. However, despite these successes, we have concluded that achieving sufficient scale in the U.S. market to generate positive returns within an accelerated time frame is unlikely.”

Sufficient Scale

The U.S. sports betting market generates massive numbers and headline news. But few operators actually make a consistent profit.

Even at the top of the market, where FanDuel and DraftKings completely dominate in most states they are available, neither company has managed consistent quarters in the green.

In fact, DraftKings reported a $789 million loss for 2023, despite revenues being up across the board.

This questionably sustainable state of the market has essentially priced many smaller operators out of the game.

When DraftKings and FanDuel have such massive revenues, they can outspend everyone else on offers and marketing and not care too much. Operators like the recently deceased WynnBET, Unibet, and now SI Sportsbook often can’t, or won’t, compete.

In fact, reports are DraftKings made a bid to buy 888 in 2023, which was rejected.

The Massachusetts-based operator may have a dodged a bullet on that one, as 888’s shares are currently down 33% in the last six months.

Strategic Review Incoming

Although it is paying out $50 million over five years to cancel its contract, 888 Holdings expects to save $7 million to $8 million a year in losses by terminating the ‘book.

SI failed to gain more than 1% market share in any state it operated in, and in 2022, it made a loss of $12 million.

In 2023, non-UK revenues for the firm decline by 16%.

“In the U.S., the intensity of competition and requirement for scale means huge investment is required to reach profitability,” Widerström said.

“The strategic review of our U.S. B2C operations will continue at pace, and I look forward to updating shareholders on our plans for the wider group in late March.”

The exit could include a complete sale of all its U.S. business to consumer operations. It says its business to business platforms and game development will be unaffected by the review.

Meanwhile, at Sports Illustrated, a company insider told journalists that the veteran publication will be pursuing some kind of new sports betting promotional partner. But probably not on an exclusive basis.

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