Less than six years after launching into the US gaming market, gambling giant 888, parent company of William Hill, announced it would be making a strategic exit from the competitive US gaming industry last week.
The move comes amid its shrinking market presence despite the phenomenal boom in US sports-betting revenues, which generated over $66 billion in revenue in 2023.
As a result, the company also announced that it would have to pay $50 million to Authentic Brands Group (ABG) to terminate its existing partnership, which had allowed 888 to operate the SI Sportsbook and Casino in multiple states.
Ever since it launched in New Jersey in September 2018, 888 has struggled to gain traction in the US, where it had hoped to capitalize on the exponential growth of sports betting and online casinos.
After securing what amounted to just 0.2% of the market share in 2022, generating a meager $24.7 million in revenue, 888 declared a sizable $14.8 million loss that not only dashed any hopes of a resurgence but added yet another nail into the coffin.
In direct contrast to 888’s effort to penetrate the market, competitors such as Flutter Entertainment’s FanDuel and DraftKings have enjoyed substantial success in courting US bettors, with the latter reporting a total US market revenue of $2.24 billion in the same year.
In the face of intense competition and exceptionally high operational costs, the challenge for 888 ultimately began after failing to scale up quickly enough to secure profitability.
Initially refocusing their efforts, 888 then switched tact, pivoting instead towards online casino games. However, this attempt was hampered by legislators in a number of US states being slow to legalize online casinos, and the resulting lag kept adding to the company’s woes.
Despite the exponential growth of the US gaming industry, 888’s exit perhaps highlights the challenges smaller operators face in unseating the market leaders’ market domination. As a result, 888 now plans to conduct a strategic review of its business-to-consumer (B2C) US operations and explore how to exit the market with minimal losses while maintaining its existing business-to-business services.
Exploring New Global Markets
While 888’s withdrawal from the US market is a stark warning to other firms and enterprises keen to capitalize on the US gaming revenues, a stealth-like movement into newer, emerging markets is beginning to attract the attention of gambling operators.
As other governments take note of the sizable benefits of monetizing regulated sports betting and gaming markets, one nation has jumped to the fore as the next untapped goldmine – Brazil.
Similar to the United States Supreme Court’s 2018 decision to declare a federal ban on sports gambling unconstitutional, Brazil’s National Congress kickstarted approving its own legislation for online betting in November of the same year. However, Brazilian gamblers were left in limbo for nearly five years as the Chamber of Deputies only recently gave the go-ahead in December last year.
The logic behind the move is irrefutable – after all, Brazil is soccer-obsessed, whose passion for the game supersedes any other nation’s love for the world’s favorite sport; add to that fact, its population exceeds 200 million, and it’s a compelling argument for legalization. It also proposes an opening for gambling companies like 888 looking for markets outside of the saturated US sector.
With increased regulation, Brazil has promised a more level playing field for betting operators in comparison to the US, and while 888 has yet to make a declaration of interest, other global betting brands, including Bet365, Entain, and Flutter, are already eyeing up the Brazilian market.
After just a few months since legalization, industry experts’ initial forecasts are already touting that Brazilian regulated gaming revenue will surpass $3 billion by 2025.
While Brazil is the latest high-profile nation to regulate gaming, other potentially lucrative markets remain, such as the cricket-loving Asian nations yet to legalize gambling, which, if it happens, could open the floodgates to a marketplace numbering in the billions.
So, while 888’s recent admission of failure to infiltrate the US iGaming sector, it could inspire the company to seize an early advantage in emerging gambling markets elsewhere.