With the Covid-19 pandemic still bubbling away, Russia’s brutal invasion of Ukraine fast unravelling and unprecedented economic headwinds storming towards us, few can deny we are living in “interesting” times, least of all Itai Pazner, Chief Executive of top iGaming company 888 Holdings.
Pazner has bet the house on 888’s £2.2 billion (US$2.87bn/€2.62bn) acquisition of William Hill’s non-American assets, featuring the 1,400 iconic high street bookies–with their distinctive, italicised yellow scroll of “William” and bold white lettering of “HILL” on a classy background of royal blue—that personify the very essence of traditional British gambling.
But it’s difficult to ignore the financial beating inflicted on retail gambling outlets during the wave of Covid-19 lockdowns and such a move is termed by many as counter-intuitive, at best.
Surely if we learned only one lesson during lockdown it was that online is the future of gaming?
And wasn’t 888.com already just that, a fully formed all-iGaming leader that was streets ahead of the trailing pack?
But as one iGaming insider explained to this reporter: Nothing quite beats the “authenticity” of a local, community-based, high street bookie.
“It’s a living, breathing advertisement for the thrill and excitement of having a flutter on the horses, even a chat with the old timers,” I was reminded.
Perhaps many would term such a view: rose-tinted nostalgia.
Yet, paradoxically, on closer inspection, the cost of running a betting shop may well be cheaper than paying for a billboard.
And retail, most concur, is just waiting to be revolutionised. What to do with all those lovely shops?
Certainly Itai Pazner, a 20-year veteran with 888.com, believes as much.
Once the acquisition of William Hill International completes, in Q2 this year, he estimates the joint revenue of the two groups will touch an annual US$2.5 billion (£1.91bn/€2.27bn), more than double the US$980.1 million (£749.11m/€892.51m) posted in 888.com’s latest FY21 accounts.
“From a financial perspective 2021 was a very successful year for 888, as we continued to position the group to become a global leader in online betting and gaming,” says Pazner.
“We have truly transformed the scale of the business over the past two years.”
Revenue from 888’s consumer-facing operations was up nearly 16 per cent, year-on-year, to US$941.9 million (£719.91m/€857.72m). The UK represented some 40 per cent of this total. Italian revenue was up 37 per cent to US$118.3 million (£90.41m/€107.72m); remaining Europe, Africa and the Middle East contributed US$333.5 million (£254.9m/€303.69m), an increase of four per cent.
Pazner now wants to redouble efforts to crack the newly re-regulated Dutch and German markets and continue the drive on The Americas, with particular focus on Ontario’s new sports betting market, which opens for business on April 4.
“Canada [in particular] represents an attractive long-term growth opportunity for the group, where 888 has an established brand presence and can exploit its sources of competitive advantage,” Pazner said in a statement when FY21 results were published earlier this week.
888’s adjusted EBITDA in FY21 was US$165 million (£126.11m/€150.25m), an increase of six per cent over 2020. Profit was posted as US$68.9 million (£52.66m/€62.74m).
If there’s a stain on an otherwise most satisfactory year for 888.com then it has to be last week’s massive—and certainly embarrassing–£9.4 million (US$12.29m/€11.19m) fine for money laundering and social responsibility lapses, imposed on the group by the UK’s regulatory Gambling Commission (UKGC).
It’s not the first time that 888 has been caught with its trousers down.
In August 2017 it was fined a then-record £7.8 million (US$10.2m/€9.29m) by the commission for allowing 7,000 self-excluded players to retain access to their betting accounts.
Referring to the latest sanction, Pazner concedes: “This is not something that we’re proud of as a company. It’s not a happy moment for us.
“[At] 888 we see ourselves as a responsible operator that takes customer safety and adhering to the highest standards extremely seriously.
“We recognise that we had some policies at the time that didn’t work as they should have and we deeply regret those. But we have worked to quickly fix those as fast as we could.”
In response, UKGC Chief Executive Andrew Rhodes notes, tersely: “The circumstances of the last enforcement action may be different but both cases involve failing consumers – and this is something that is not acceptable.
“Today’s fine is one of our largest to date, and all should be clear that if there is a repeat of the failures at 888 then we have to seriously consider the suitability of the operator to uphold the licensing objectives and keep gambling safe and crime-free.”
As it awaits the imminent assimilation of storied William Hill, FTSE250 888.com stands on the cusp of joining the titans of the international gambling industry at the top table.
It remains to be seen if Pazner’s bold gamble, of mixing the old with the new, pays off — and helps 888.com square the magic circle of triple eight.