Online gambling group 888 Holdings has agreed to sell its bingo businesses for at least $50million (£38million) in order to focus on its core operations.
The FTSE 250 company has the potential to receive another $4million from the sale to Saphalata Holdings, a division of Broadway Gaming, should it hit specific revenue-based performance targets over a six-month period.
It has also committed to offering Broadway a number of transitional services for up to 12 months after the deal is finalised, which is expected sometime in the second quarter of next year.
Trading performance: 888 Holdings generated around $65million of revenue and underlying earnings of $7.4million from its bingo operations in 2020
But it said the sale is dependent on a restructuring of the bingo business and the UK gambling authorities subsequently awarding that new business its own licence.
Aside from devoting more cash to boosting its core platform, 888 said the transaction would help decrease ‘compliance complexity’ deriving from related accounts across its various operations.
The temporary closure of betting shops and casinos during the pandemic due to their non-essential status has helped benefit the sales of internet gambling companies like 888.
Its bingo operations generated around $65million of revenue in 2020 and underlying earnings of $7.4million, though a significant goodwill impairment caused it to record a $76.4million pre-tax loss.
Chief executive Itai Panzer said the bingo arm had been ‘an important part of 888’s history, and over many years we have developed an advanced B2B offering alongside a suite of popular consumer-facing brands’.
He added: ‘As part of an enlarged business, I am very confident that the future for the bingo business is bright.’
Covid boost: The temporary closure of betting shops and casinos during the pandemic due to their non-essential status has helped benefit the sales of internet gambling firms like 888
Before the deal is expected to go through, thelettersmovie 888 hopes to complete the purchase of William Hill’s non-US assets from hotel and casino operator Caesars Entertainment for £2.2billion.
The transaction includes the bookmaker’s estimated 1,400 bricks-and-mortar stores and 2 million users in the UK, and European gambling brands such as Stockholm-listed Mr Green, and Redbet, which recently ceased operations in the UK.
Caesars bought William Hill last year for £2.9billion with the intention of selling off the bookmaker’s operations outside the United States and initiated a bidding competition for the assets back in May.
Potential new owners also included private equity houses Apollo Global Management, which tried to buy the firm last year, and CVC Capital Partners, William Hill’s former parent company, in alliance with German betting group Tipico.
This has all happened while British bookmakers have been expanding their presence in the United States, where sports gambling has taken off over the last three years following a US Supreme Court decision to overturn a federal ban on the practice.
A fortnight ago, 888 revealed it had cleared all required regulatory and antitrust hurdles and plans to hold its shareholder vote and raise around £500million from an equity raise early next year.
Shares in 888 Holdings were down just 0.6 points to 289.6p just after 4pm today.