888 Holdings Shares Plummet Following Revenue Warning

888 Holdings issues a revenue warning to its investors which resulted in a drop in share price in excess of seven per cent.

London Stock Exchange-listed 888 Holdings blames ever-increasing restrictions in the United Kingdom’s gambling industry for issuing a revenue warning. 888 warned investors it expects lower half-year revenue than previously reported.

Shares in 888 plummeted more than 7% following the revenue warning. Shares traded at 175.3 pence per share ($3.10) but dropped to 160.7 pence per share ($2.84) as a result of the negative news. The current share price is a far cry from the 494.0 pence ($8.73), the company’s 52-week high. 888 announced its revenue targets in a statement to the London Stock Exchange.

“888 currently expects to report revenue of between £330-335 million for the six months ended 30 June 2022. This result is broadly in line with board expectations, with growth in certain European markets offset by the impact of additional safer gambling measures as well as the temporary exit from the Netherlands.”

Not Only 888 Experiencing Reduced Revenue

It is not only 888 experiencing lower revenue because William Hill is suffering, too. Unfortunately for 888 investors, they own William Hill assets, or it will officially on 1 July 2022.

“William hill revenue for the 26 weeks ended 28 June 2022 is currently expected to be between £620-630 million. This performance reflects the re-opening of retail operations, offset by the impact of increased safer gambling measures in the UK Online, and certain market adjustments or exits within International Online such as the Netherlands.”

888 agreed to pay £2.2 billion ($4.09 billion) to acquire William Hill’s non-US operations. The joint company should enjoy a raft of money-saving initiatives, but maintaining two separate businesses of this scale is leading to increased costs.

The company announced it secured a loan worth £1.02 billion ($1.80 billion) on the same day of its revenue warning. 888 is using the funds to reduce debt and financial its William Hill acquisition.

888 Still Reeling From a Massive Fine

It has not been the best of months for 888. Not only is its revenue down, but it also received a huge fine from the UK Gambling Commission (UKGC). The UKGC fined the company £9.4 million ($16.56 million) after 888 failed several customers on multiple occasions.

The fine is the third-largest the UKGC has imposed. It comes only five years after the UKGC levied a £7.8 million ($13.74 million) fine on 888 for similar failings.

The company’s social gambling responsibility was brought into question on many occasions. 888 did not carry out any interaction with a customer who lost £37,000 ($65,400) in six weeks during the COVID-19 pandemic lockdown. Another failing saw 888 give an NHS a £1,300 ($2,300) deposit cap despite knowing they earned £1,400 ($2,475) a month.

Will 888 Shares Rebound?

888 remains a solid investment despite the recent revenue warnings. The company operates almost 80 websites and generates vast sums of money. Its 2021 financial figures reveal US$980.1 million ($1.41 billion), a 15% increase on 2020.

The company has a significant presence in the United States, too. It has partnerships with several key casinos and sports books. Being an early adopter should reap long-term rewards.

In addition to casino and sports betting, 888 is well known for its online poker product. It once had a major presence in the Australian online poker world with its now-defunct Pacific Poker product. It mostly operates as 888poker these days, although it has a long-running partnership with the World Series of Poker.

888 was the first online poker site to legally operate in Ontario, Canada. The province recently opened the door for legalized internet poker. There is a twist: Ontario residents can only play against fellow Ontarians. This has vastly reduced player numbers and resulted in 888 Ontario’s tournaments costing the site money in addition to having almost non-existent cash games.