New gaming duties drove a 35% fall in 888’s cash profits in 2019

Profits for 888 fall by half last year, company halves final dividend

"We are proactively communicating with our customers to provide information on safer gambling and, where necessary, offer support," said 888 CEO Itai Pazner.
2020-04-15
Gibraltar
Reading time 2:19 min
The online gambling group reported an adjusted pre-tax profit of USD 53.2 M, down from USD 86.7 M in 2018, despite revenues increasing 6% to a record USD 560.3 M. 888 remarked its commitment to help prevent problem gambling issues amid the global lockdown.

888 Holdings shares turned downwards on Wednesday as the online gambling firm reported a drop in profits for 2019 and cut its final dividend in half. New gaming duties drove a 35% fall in 888’s cash profits last year, while the gambling operator warned that it could breach a loan covenant under a worst case scenario modelled for coronavirus trading disruption.

For the year ended 31 December, the group reported an adjusted pre-tax profit of USD 53.2 million, down from USD 86.7 million in 2018, despite revenues increasing 6% to a record USD 560.3 million, and the firm's casino arm saw a 13% growth.

Online gambling giant 888 has also claimed its “unwavering commitment” to help prevent people spiralling into problem gambling remains “more important than ever” amid the global lockdown. Acknowledging that the stress and economic uncertainty triggered by the coronavirus pandemic was taking its toll on people, the group said it was continuing to communicate with its customers about the need for “safer gambling,” as reported by This is Money.

Despite the decline in profit last year, 888 dished out an upbeat outlook for 2020, saying rising customer interest across its virtual casino and online poker products, initially highlighted in March, were continuing at pace. The company said it remained confident that it will be able to deliver its plans for this year, despite the coronavirus pandemic, adding that it was currently performing in line with expectations. The group said 1 million new customers joined one or more of its services in the last year. 

888's final dividend was cut to $0.03 a share from $0.06 last year, leaving its total dividend for the year at $0.06 from $0.12 in 2018. On the London Stock Exchange, the group's share price is currently down 5.63 per cent or 8.00p to 134.00p.  

CEO Itai Pazner said: “2019 was a year of further strategic progress for 888. During the year, 888 welcomed a record number of new customers - more than a million - to its international brands, launched in new regulated markets with very encouraging initial results, and completed the acquisition of a first-class sports betting platform and team.”

Sports betting is crucial to the business model, accounting for 16% of 888’s 2019 turnover. The company has modelled for a range of scenarios, and its doomsday forecast, which assumes a “very substantial decline” in non-sports betting alongside no sports turnover until April 2021, could push the company beyond its finance cost to trading profit ratio covenant in its $50 million revolving credit facility.

As an online-only business, 888 should be capable of weathering the coronavirus pandemic, the group's bosses said Wednesday. But it recognised that customers who are stuck inside all day might be more exposed to picking up harmful online gambling habits.

Pazner said: “We continue to recognise that, with people spending more time at home and with increased levels of stress and economic uncertainty, 888's unwavering commitment to preventing gambling related harm is even more important than ever. We are proactively communicating with our customers to provide information on safer gambling and, where necessary, offer support.”

The company's computers have also been set up to look out for new forms of potentially problematic gambling behaviour, so they can be flagged to human reviewers.

Leave your comment:
Subscribe to our newsletter
Enter your email to receive the latest news
EVENTS CALENDAR