Starting life as an online casino, 888 is now a fully diversified business that can provide its customers with online gambling products in every area; casino, live casino, poker, sports, and until 2022 bingo as well. They also do some business to business (B2B) trade.
They have made a lot of smaller acquisitions over the years but it has always been very much a case of smaller companies being folded into 888 rather than a merger; they aren’t a company that wants to relinquish control in any way.
Operating in multiple countries around the world, they were hit hard by the USA online gambling ban in 2006, but have since recovered well and are now even in a position to claim a substantial stake in the newly reopened American market, as well as taking a significant slice of the retail market in the UK.
888 Holdings Brands
There are actually many more subsidiaries under the 888 umbrella, but most of them only exist to hold licenses in various different jurisdictions, while others are for marketing and advertising and even more are dormant.
The same could once be said for the brands operating under the 888 umbrella. They had a huge list of white labels operating under their license, but a shift in strategy saw them sell off their bingo assets including all of their white labels to the Broadway Gaming Group, and focus on core brands in core markets.
Whereas the 888 company used to spread themselves far and wide, they are now consolidating are taking a much more targeted approach, and tidying up a lot of loose ends. This will make the company much leaner, a much easier to understand.
Although the financials for 888 are smaller compared to some of the other big gambling groups, the share price has been going steadily up for years as the company has solidified its offering and brought more and more aspects of the business in house, so increased revenues are bound to follow if they stick to their new plan.
Mergers and Acquisitions
Inaugural Acquisition – Globalcom Ltd
Almost a decade after opening for business, 888 made their first ever acquisition in Globalcom Ltd, an online bingo business. This could be seen as the catalyst for how bingo heavy the business would later become.
The deal was struck for $43.4 million in cash, and included the 45 UK bingo sites operating under Globalcom at the time, so it was a big move for 888, and something of a game changer.
Wink Bingo Joins 888
Online bingo was doing roaring trade in the UK at this time, and was also becoming a much bigger area of revenue for 888, so the purchase of popular site Wink Bingo to strengthen this position made a lot of sense.
£11 million was paid up front, with further payments due based on the performance of the site, capped at £60 million. This was also an attempt to dampen the blow to 888’s business after they lost almost half of their revenue thanks to the USA making online gambling illegal.
Remaining Shares in AAPN
Having set it up in partnership with Avenue in 2013, 888 took full control of the All American Poker Network when they paid $28 million for the remaining 53% of shares they didn’t already own.
The purchase was a strategic move to manoeuvre 888 into a favourable position for long term growth in the USA which, given the law changes, all gambling companies were looking to capitalise on.
888 Acquires BetBright
The group paid £15 million for Dublin based BetBright in 2019, but they were less interested in the brand and more interested in the scalable sportsbook technology.
This would fill a gap in 888 Holding’s sportsbook offering and bring their capabilities in this vertical up to standard with the rest of the business.
The BetBright brand didn’t last long but the team was folded into 888 and continue to provide an essential sportsbook service from their Dublin office.
JPJ Group – Costa Bingo
The brands included in this deal were Costa Bingo, City Bingo, and Sing Bingo, all of which already ran on the Dragonfish bingo network, so integration in this instance would be a breeze.
The £18 million paid worked out as £12 million up front and another £6 million later in the year, and the aim was to continue the company’s expansion across global regulated markets, as bingo was becoming increasingly competitive.
Taking Over William Hill
The acquisition of William Hill’s European assets was biggest and most important deal in 888’s history.
Not only did it cost them a staggering £2.2 billion, but it launched them into the world of high street betting shops with zero previous experience, so it was a huge step for them.
The deal would give the company huge amounts of exposure to the sports betting market where they had previously been most focussed on casino gaming, as well as strengthening their foothold in the UK in a big big way thanks to the iconic William Hill brand.
It also meant they took the reigns of the Mr Green brand, which Hill’s had acquired a few years previously.
About the Company
Many big businesses have a complicated and multi layered structure that can be extremely difficult to unpick, but for a long time, 888 Holdings took the biscuit.
On the face of it things were simple enough; they had a few flagship brands, a few smaller brands (plus hundreds of white label brands), and lots of subsidiaries that provide support and essentially run the group. However the number of brands and subsidiaries and the way in which they overlap is where things got tricky.
This is something 888 publicly recognised as holding them back in comparison to their competitors. Basically, there was so much going on that the business became messy and difficult to run, costs due to inefficiencies were high, and the group lacked focus.
Having shed a great deal of weight in offloading their white labels and bingo products, the new plan is to split into 3 divisions – UK and Ireland, Retail, and International – then bring all of their brands onto the same proprietary platform (currently William Hill, 888, and Mr Green all run on different ones) to reduce costs and become cohesive.
Another issue is that the 888 brands and the teams behind them are often in direct competition with each other, so restructuring the target market for each brand is another priority, to make sure brands within the 888 Group are only doing battle with competitors, and not with each other.
The number of subsidiaries is being trimmed too, with many dormant companies now being dissolved, although subsidiaries will still be used to power the group’s logistical, tech, and financial needs. For instance Dixie Operations handle customer service, Sparkware Tech handle software, Gisland Ltd are involved with payment transmission – but all are owned by 888 Holdings.
In terms of product, the group are undoubtedly best known as an online casino and this is where they draw a huge percentage of their revenue, but they are a big name in the world of poker too, and with William Hill now part of the team sports betting will be an important and imposing vertical.
In fact, in 2019 online casino accounted for 64% of the business, while sports betting came in at just 16%, poker at 8%, and bingo at 7%. The remaining 5% came from their B2B services.
In 2022, pro-forma results show that online casino gaming accounted for 52% of the revenue, retail was 28%, and online betting was 20%.
These figures are adjusted to assume the 888 Group had owned William Hill for the full year rather than just half of it (this is what pro-forma means in this context). So it’s not an audited number, but it shows the direction the group is heading.
Although listed on the London Stock Exchange, the online UK market only accounted for 37.3% of the group’s revenue in 2022, which is actually down on the previous year, showing that 888 are improving their market share elsewhere. That said, retail accounted for 20.93%, and this is essentially the William Hill high street shops which are all in the UK, so this makes a combined total of 58.23%.
The remaining 41.6% of the group’s revenue came from international markets, but interestingly, the UK has twice as many monthly active users than everywhere else combined, 1.1 million compared with 500,000. This could well change next year though, as 888 launched a sportsbook with Sports Illustrated in the US.
As well as their more practical subsidiaries, 888 Group also have an in house game studio by the name of Section8.
It deserves a brief mention because the benefits a proprietary game studio can have to a business best known for online casino gaming is significant.
Section8 develops new slots, jackpots, and scratch cards that players at 888 Group brands can use exclusively. These games are not available elsewhere which gives the company an edge. They are very popular too; in 2019 around 1.5 million players tried a Section8 game and of the company’s 20 top performing games in 2021, 6 were from Section8.
Again, this is doubly advantageous because the company do not have to pay royalties on these games, which will be the case with games from 3rd party providers.
888 then are a gambling company that are all about keeping things in house where possible, from their back end technology to the platform their customers use and even the games that are available to play on them.
History of 888
The company was founded in the British Virgin Islands in 1997 as Virtual Holdings Ltd, and their first online casino was Casino-on-Net. Their research, marketing, and development subsidiary Random Logic was launched the year after in Tel Aviv and it continues to this day.
It wasn’t until 2002 that the 888 brand was first launched, and the next year the firm relocated to Gibraltar which remains one of the places the company calls home. During these early years a number of other brands were launched and subsidiaries established, and as the company grew this became more difficult to manage effectively with the setup as it was.
In 2005, 888 listed on the London Stock Exchange, and around the same time they decided to bring all brands and subsidiaries under the same 888 Holdings company. As the company was getting bigger, this was a good way to keep it under control.
It was a bitter sweet time for the company, because at the same time as they were expanding and even winning internationally recognised industry awards, the law changes in America snatched away a good chunk of their business overnight.
This setback came at the same time as talks with Ladbrokes concerning a possible merger fell apart, so the company went back to the drawing board and decided to double down on growth via acquisition, something they began to do in 2007 and which continues to be a key part of their strategy.
The business built back up through a series of further acquisitions and diversification to the point that it offered linked brands across all areas of the online gambling industry, and is now once again a front runner in the newly re-legalised American market, although the newly acquired William Hill brand will not be a part of that since the brand has a different owner in the US.
Still, the acquisition of William Hill in 2021/22 was a huge step for 888 as they began to make major transformations to their business, offloading their white label B2B vertical around the same time and completely changing their approach.
A Tale of Four Brothers
We have two sets of brothers to thank for 888; Avi Shaked, Aaron Shaked, Shay Ben-Yitzhak, and Ron Ben-Yitzhak.
Avi had the initial idea – remember this was during the mid 90s when internet gambling didn’t really exist – and took it to his brother Aaron and together they worked on it for a few years before realising they needed help.
This they got from Shay and Ron who were already friends of the Shakeds, and who also happened to have experience in gambling and software development. It was a perfect match.
The brothers all had different roles at the company and held a 25% stake each, but after the bad news from America in 2006 Aaron decided to retire and spend more time with family as well as doing a lot for charitable causes, and Avi wasn’t far behind him, although he went into politics and worked hard to try and establish peace between Palestine and Israel.
Ron also left around this time, choosing to stay out of the spotlight and retire to family life. The last to leave was Shay who departed in 2010, spending the years travelling and taking part in charity clean up programs.
Tragically, Shay was killed in a plane crash in 2020. He wasn’t the first of the four to pass away either; Aaaron Shaked passed away from what was thought to be a rare form of Lyme disease in 2010, although the doctors were never quite sure.
UK Tax and Contributions
The UK is one of 888’s core markets, contributing £456 million towards their revenue in 2022 – that’s about 37.3% – and this will grow considerably now William Hill is part of the group.
888 paid a total of £588 million in various taxes in 2022, and although they operate in 100+ countries which all have different tax rates and laws, we can roughly work out that 36.5% of £588 million would work out as £219.32 million paid in UK tax.
That’s an awful lot of money going direct to HMRC, plus, William Hill employs around 10,000 people to work in their UK shops, and that’s not to mention the London Headquarters which is also home to one of 888’s subsidiaires, Virtual Marketing Services.
Considering 888 Group only employ around 11,800 people, that means a huge proportion of their talent pool are UK based, all being paid and taxed, and then going on to spend their wages here in the UK.
Other than that there are marketing and sponsorship deals which will filter money back into the economy (they spent £114 million on sponsorship and levies in 2022), and of course 888 is listed on the London Stock Exchange.
This means traders and investors buying 888 stock are spending their money on the UK stock market, and while much of this stays in the system until dividends are paid out, it is yet another way in which 888 contributes to the UK economy.
Lastly, 888 made £6.4 million in voluntary contributions to research and treatment of gambling related harm in 2022, that represents around 8% of their profit for the year.