Record Year for 888 Despite Regulatory Headwinds Threatening UK Profits

Casino revenue at 888 Holdings improved by 8 percent last year, helping the online gaming operator achieve record underlying profits.

888 Holdings report Itai Pazner

888 Holdings CEO Itai Pazner is pleased with the company’s progress in 2018 and is looking forward to more growth this year. (Image: CincoDías)

Publishing its 2018 financial report on March 12, 888’s balance sheet showed a 11 percent increase in adjusted profit before tax. However, while the jump from $78.3 million to $86.7 million was impressive, it was unadjusted profits that really shone.

As per the filing, overall profit before any cost adjustments was up from $18.8 million in 2017 to $108.7 million.

Profits Soar Despite Regulatory Backdraft

Although overall group revenue was down by 2 percent, the underlying earnings are a testament to the company’s growth over the last 12 months.

In the UK, regulatory issues, including the forthcoming changes to remote betting tax, caused local revenue to drop in 2018. 888 chairman Brian Mattingley noted the effects of increased spending due to tighter regulatory controls in the UK.

However, despite what he described as “strong headwinds,” he remained buoyant, highlighting positive trends towards the end of the year.

“Improving trends in the UK B2C business towards the end of the year following the prudent and proactive customer protection measures taken by 888 over the past 18 months; positive trends in the UK market have continued in Q1 2019 with UK B2C revenue up more than 10% year-on-year at constant currency,” reads the March 12 report.

Outside of the UK, 888 has continued to expand its presence in regulated markets with 70 percent of group revenue now coming from licensed territories.

888 Poised for Further Growth

Looking forward, the UK will remain a key market. In tandem with the recent takeover of Costa Bingo and its network of bingo sites, 888 acquired BetBright on March 4.

Although the timing of the deal caused some consternation among BetBright customers, it will add to the group’s online sports betting provisions within the UK.

Across the Atlantic, the US will also play an increasingly important role in the company’s growth over the next few years. Despite acknowledging a potential stumbling block with the Wire Act, both Mattingley and CEO Itai Pazner are confident they can build on their current opportunities.

“In September, we were delighted to launch 888sport in New Jersey, marking the first time 888 has offered sports betting in the US and paving the way for the Group to expand its sports offer on a state-by-state basis as future regulation allows,” Mattingley said.

Overall, 2018 proved to be a positive year for 888. Although online poker and bingo revenue were down 37 percent and 17 percent respectively, casino and sports betting earnings soared.

Indeed, with 14 percent combined growth between the two verticals, the company is well positioned to expand in new and existing markets this year.

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