William Hill owner 888 Holdings PLC (LSE:888) has said it is exploring the sale of the company’s US business-to-consumer wing as part of a wider strategic review.
Gross profit margins of the business, which operates in Michigan, Colorado, Virginia and New Jersey, are slimmer than the wider group's, 888 said on Wednesday.
Coupled with market access and licence fees and fierce competition, 888 faces “significant direct costs” from operating in the market, it added.
“In the US, the intensity of competition and requirement for scale means huge investment is required to reach profitability,” chief executive Per Widerström commented.
888 operates under the SI Sportsbook, SI Casino, SI Sportsbook and 888casino brands in the US.
Other strategic transactions are being reviewed for these, the betting firm added, including a controlled exit from the US.
A deal with Authentic Brands Group has also been ended, with 888 paying a combined US$50 million over the coming years to exit the agreement, but savings of up to US$7 million would be generated annually in the meantime.
“We have concluded that achieving sufficient scale in the US market to generate positive returns within an accelerated timeframe is unlikely,” Widerström added.
“The strategic review of our US business-to-consumer operations will continue at pace, and I look forward to updating shareholders on our plans for the wider group in late March.”