888 profit doubles in H1 as American opportunities beckon

TAGs: 888, 888 Holdings, all american poker network, brian mattingley, Italy, kambi sports solutions, spain

888-holdings-us-gamblingOnline gambling operator 888 Holdings saw revenue rise 7% to a record $200.1m in H1 2013 thanks to continued strength in its poker and casino product. Earnings rose 7.2% to $38.6m while profit after tax rose 205% to $32.1m. CEO Brian Mattingley said the results were a testament to 888’s “excellent product offering, supported by constantly innovative marketing and CRM capabilities.” Notwithstanding those efforts, the company reported that daily revenue in Q3 has so far been flat year-on-year.

888’s B2C revenue rose 8% to $177m thanks to 13% gains in poker, casino and 888’s emerging offering, generating revenue of $94.1m, $46.9m and $13.9m respectively. Bingo was the contrarian channel, with revenue falling 18% to $22.1m. Mattingley said the company has undertaken a strategic review of its bingo segment in the hopes of replicating the success enjoyed by poker and casino following similar revamps. Revenue from 888’s Dragonfish B2B product was up 1% to $23.1m.

888Sport accounted for just 2% of 888’s overall revenue pie, but the company has high hopes that the deal it struck in May with Kambi Sports Solutions will help boost the sports betting vertical. Work on a new mobile sportsbook app has been completed and while the product missed its opportunity to make it to market ahead of the new football season, the app is set for imminent release.

Mattingley revealed that 17% of 888’s UK wagers are now placed via mobile devices, well under the 40% range reported by rivals such as Paddy Power and William Hill, but Mattingley hopes to double its UK mobile share in the next 18 months. Counting 888’s operations in Italy and Spain, mobile accounts for 7.1% of 888 overall revenue, up from just 2% in H1 2012 and first time depositors via mobile more than doubled year-on-year. Numis Securities said the mobile growth was testament to 888 “having its principal technologies, as well as its operations, under one corporate roof.”

The UK represents 41% of 888’s overall revenue, down from 43% in H1 2012. Continental Europe accounted for 40%, up from 38%. In Spain, 888’s online casino is the most popular in the country and 888 expects to get a further boost when it adds slots to that mix sometime before 2013 comes to a close. 888’s Spanish poker operations also continue to impress and the company hopes to soon add sports betting to its Spanish offering. 888 similarly hopes to add poker to its Italian-facing operation, which currently commands a 6.3% share of the online casino market (up from 5.7% last year).

Stateside, 888 has its fingers in just about every pie currently cooling on state windowsills. In March, 888 teamed with hedge fund billionaire Marc Lasry’s Avenue Capital Group on the All American Poker Network (AAPN) joint venture to launch 888-branded sites in whatever US states will have them. Mattingley said the US regulatory process had been “frustrating” but acknowledged that online gambling “really is a new territory” for state gaming watchdogs and the long slog was “getting faster.”

Mattingley said 888 still expects to launch a Nevada-facing online poker site sometime in Q3, pending regulatory approval of its software. The Nevada operation will be a partnership with local casino operator Treasure Island, and will operate under both companies’ brands. 888 will also power the Nevada-facing site operated by Caesars Interactive Entertainment (CIE), which is set to make its debut “imminently.” Pending regulatory approval, 888 will serve up a similar B2B/B2C buffet in New Jersey when that market goes live on Nov. 23. In Delaware, 888 has teamed with Scientific Games to power that state’s full-slate of online gambling options when the market opens in late October. All that wasn’t enough to satisfy investors, who pushed 888’s shares down nearly 3.6% to 145.2p at the close of Wednesday’s trading.


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