888 bullish following half-year results but points to impact of affordability checks for fall in online revenue

A drop of nine per cent in 888’s UK and Ireland online revenue for the first half of 2023 was yesterday attributed to enhanced affordability measures, but the betting giant's chair Lord Mendelsohn said he was pleased with the firm's financial results.

888, the parent company of William Hill, has endured a turbulent few months, but Mendelsohn, overseeing operations until Per Widerstrom takes over as chief executive in October, took a positive stance after the half-year results up to June 30 were released yesterday.

He said: "I'm very pleased with the progress we have made in the first half of the year as the group delivered against the plans we committed to at our investor day last year, while also successfully navigating business, market and regulatory volatility."

Vaughan Lewis, 888's chief strategy officer, highlighted a growth "in lower-spending, recreational" players, which came against the backdrop of "significant and ongoing reduction in our exposure to higher-spending cohorts".

Of that change, he said: "We see this as a really positive shift in terms of future mix and it has positioned us well for the full implementation of the white paper outcomes, which are now being consulted on further and will be implemented over the coming years.

"We already have stringent affordability measures in place and low slots limits of between £5 and £10. These limitations and interventions do create friction with our customers. We agree with the aims of the white paper in reducing this friction and improving the customer experience, and creating a level playing field for all operators. 

"We look forward to working with the industry on responding to the live consultation to produce an evidence-based outcome that is good for customers."

Last week, Peter Jackson, the chief executive of gambling giant Flutter Entertainment, voiced concerns the consultation on affordability checks launched by the Gambling Commission last month did not tally with the principles set out by British government in the white paper that the checks should be "frictionless", and expressed his fears many more bettors could be impacted if the commission did not get the system right.

The checks, which threaten to have a major impact on British racing's finances, are not the only regulatory challenge 888 has faced in recent times as the Gambling Commission determined a review of its licence was appropriate after a stake in the firm was purchased by a team of investors that includes Honeysuckle's owner Kenny Alexander.

Kenny Alexander: part of a team of investors to have acquired a stake in 888 HoldingsCredit: Kathleen Sarg

Alexander, an industry veteran, is part of FS Gaming, but was formerly in charge of GVC Holdings, which is now known as Entain and had interests in Turkey that have caught the attention of HM Revenue & Customs (HMRC).

It emerged last month Entain had set aside £585 million to cover any potential penalty. Mendelsohn said he was not concerned about the review and did not envisage any suspension of 888's licence.

"We would hope it would end at some point during the course of this year, either at the tailend of this quarter or the beginning of the next quarter," he said, describing the situation as "fairly unique".

"It does depend on the Gambling Commission's view of the external issues we are being judged on and what our approach is to them. The timing is in their hands and we're hoping this will be resolved in a reasonable time."

Asked about the intentions of FS Gaming, Mendelsohn, who stepped in former chief executive Itai Pazner left abruptly in January following the suspension of the company's VIP activities in the Middle East over failures in its anti-money laundering (AML) processes, replied: "Unsurprisingly, I won't be speaking on behalf of other people. It's not really possible for me to speak about the intentions of FS Gaming regarding their shareholding.

"All I can say is the rationale of when they acquired their shares and how they felt there was a large opportunity for massive growth for us and for the development of the business, which still holds."

Group revenue rose by 165 per cent to £882m, while adjusted Ebitda grew 211 per cent to £156m due to the acquisition of William Hill last July.

The company registered a loss of £32.5m after tax in the period up to June 30, as against a profit of £12m in the same period last year, driven by increased costs and expenditure related to the acquisition. Adjusted profit after tax was down 63 per cent on 2022 at £11.8m (from £31.9m), but £66m of cash synergies were delivered in the first half of the year, which means a full target benefit of £150m is set to be realised in 2024 – 12 months earlier than planned.  

888's share price was down in the immediate aftermath of publication of the half-year results, but bounced back to finish up 1.64 per cent at 111.40p on Tuesday.

Read these next:

Affordability proposals are not 'frictionless' warns Flutter chief 

Ladbrokes and Coral owner Entain sets aside £585 million to settle HMRC bribery investigation 

Racing must react as another leading punter says no to affordability checks 

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