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Shops might be closed, but 888 is still searching for bargains in the wake of coronavirus.
The London-listed company said Wednesday it expects an acceleration of M&A activity in the US online gambling space thanks to the ongoing pandemic, with affected companies evaluating new options.
CEO Itai Pazner encouraged 888 investors to look ahead during the FY19 results presentation.
“I do think companies in situations less fortunate than ours — and even ones in stronger positions — will be launching new processes,” Pazner said. “These do take some time, but I definitely feel there will be opportunities that crop up in the next few weeks and months.”
The operator is better-situated than most in the current crisis, with close to $100 million in cash on the balance sheet at the end of 2019.
It has also been less impacted by sports closures than some rivals, as sports betting made up just 16% of the company’s revenues in 2019. Meanwhile, poker and casino verticals have been boosted with a number of customers forced to stay home.
Pazner said inorganic growth was a key part of 888’s US strategy. That could include acquisition of struggling smaller companies as mentioned or partnerships with land-based giants and media outlets.
“We come into the market with unique assets and expertise, and have a lot to offer a local partner who wants to expand into [online gambling],” he said.
As Legal Sports Report noted recently, US casino giants would likely have interest in a digitally native outfit like 888 as they seek to build out their own online capabilities post-COVID.
US revenue for 888 climbed 7% to $51.7 million in FY19. The firm booked a $3 million EBITDA loss from the region thanks to expansion and marketing costs around sports betting.
It also forecasts a loss of around $8 million for 2020, with B2C launches planned in a further “three of four” states. That will likely include the launch of a WSOP poker site in Pennsylvania to take advantage of the current poker mini-boom.
Indeed, 888 said it aimed to secure the “pole position” in US online poker thanks to the strength of the WSOP brand it powers. It also plans to launch its new Poker 8 tech in the market, which has boosted poker revenues in other jurisdictions.
The company said it ultimately expects 50% of US online gambling revenue to come from poker and casino, and it is well situated to secure “significant” market share.
On the sportsbook side, 888 recently launched its new sportsbook platform in Sweden and pledged to bring the proprietary tech to the US market via 888 Sport — although likely not until later in 2020. The so-called Spectate platform is the BetBright technology 888 acquired last year.
“During 2020, we intend to further invest in our team, marketing, and product development to deliver continued progress in the US,” Pazner added.