Mendelsohn said the 888 board remained focused on its sustainability and compliance initiatives. He termed this “fundamental” to the business the team was building.
The chairman added as a result the business expected full-year revenue to be lower than it was last year. He said this resulted from actions that were “both planned and necessary”.
Mendelsohn said the reduced revenue reflected “our combination of actions in reducing our exposure to higher risk offshore markets, implementing safer gambling regulations and removing revenue generated from unprofitable marketing spend”.
The company has in the recent past boasted large revenue from offshore markets. In H1 it reported 95% of Q2 revenue is now sourced from locally regulated or taxes markets.
“While this means overall revenues were lower in this period, it is significantly improving both the quality and sustainability of our business – and improving our future growth profile,” said chief strategy officer Vaughan Lewis.
Recreational customers take centre stage
Lewis pointed to the company’s efforts to ensure revenue is sustainable. He highlighted the UK as one market where this is a high priority. This is due to the ongoing implementation of the Gambling Act white paper.
Due to self-imposed implementation of safer gambling protections, such as affordability checks and slot limits, Lewis said most of the business’ GB growth “is coming from lower spending recreational cohorts”.
While Lewis said the business’ current player protections created frictions for its customers, he added 888 agreed with the goals of the white paper in mitigating it.
As such Lewis pointed to “improving the customer experience [and] creating a level playing field for all operators” as positive outcomes of UK regulatory reform for the business.
Progress in pipeline markets
Lewis said the 888 was “delighted” with its progress in its pipeline markets. He highlighted the growth of the company’s Africa-facing joint venture, 888Africa, as being particularly strong.
“We launched in September and at the end of the tenth full month, we have already passed one million customers and have seen continued strong revenue growth here,” he said.
As such Lewis hinted this is a group of markets in which the company may invest further in future.
“The success here gives us real confidence about the value creation,” he said. “We have recently completed the acquisition of BetLion to support our African expansion.”
888 acquired BetLion, which is an African bookmaker, at the beginning of August. The subsidiary has a presence in Kenya, Zambia and the Democratic Republic of Congo.
Operator faces regulatory risk in 2023
The operator’s decision to highlight progress made on customer sustainability, regulatory compliance and a reduction in the size of its offshore segment comes in the wake of a series of scandals in 2023.
These led to 888 facing several significant periods of regulatory risk in the year.
In January, the business announced it had uncovered significant failings in its anti-money laundering and know your customer practices relating to its VIP activities in its Middle Eastern dot.com operations. This resulted in the resignation of CEO Itai Pazner.
In July, the Gambling Commission announced 888 Holdings GB licence, the source of the operator’s largest revenue stream, was under investigation.
This followed an investment in the company by a fund backed by former Entain CEO Kenny Alexander. HMRC are investigating due to historic actions in Turkey relating to the company’s offshore operations.