888 Holdings shares plummet as online gambling is hit by slowdown

888 Holdings shares plummeted on Friday after the gambling group revealed a massive drop in profits.

Pre-tax profits at the Gibraltar-based business tumbled by two-thirds to £14.4million in the first half of 2022 as loosening Covid restrictions and stricter safety measures led to a decline in Britons gambling online.

Profits were also dented by costs associated with selling its bingo division and acquiring William Hill’s non-US operations, both of which were completed in early July.

Slowdown: 888 Holdings saw its pre-tax profits tumble by two-thirds due to loosening Covid restrictions and stricter safety measures causing a decline in Britons gambling online

888 Holdings shares dived 14.3 per cent to 137.1p by the late morning, meaning their value has declined by just under two-thirds in the past 12 months.

The firm revealed total revenues fell by 13 per cent to £332.1million, with the largest fall occurring in the UK, where they plunged by a quarter after the group implemented lower affordability thresholds and caps on slots stakes.

Trade in Europe was further affected by the closure of its operations in the Netherlands last year ahead of a gambling licence overhaul that legalised internet-based betting in the country.

By comparison, revenues earned in the US climbed by 29 per cent thanks to the company launching in Pennsylvania and its tie-up with the World Series of Poker tournament.

However, 888’s sales across the Americas remained flat due to its promotional investment to support its launch in Canada, and the beginning of its SI Sportsbook moving in the states of Virginia and Colorado.

Sports betting has skyrocketed in popularity in the US ever since the country’s Supreme Court overturned a law that effectively banned the activity across all bar a few states.

British bookmakers have received a substantial financial boost as states that have gradually liberalised their gambling laws, but they have also become targets for potential takeovers.

Caesars purchased William Hill in 2021, intending to sell the European assets of the business and launching a bidding contest about a month after the transaction was finalised.

Private equity giants CVC Capital Partners and Apollo Global Management joined the race, but the company decided to agree a deal with 888 instead.

As part of the deal, 888 took control of all 1,400 William Hill betting shops in the UK and digital gaming brands Mr Green and Redbet for £1.95billion from American hotel and casino operator Caesars Entertainment.

888 chief executive Itai Pazner said: ‘The combination with William Hill, which we completed soon after the period end, transformed the Group and creates very strong foundations to support our ambitious growth plans.’

This post first appeared on Dailymail.co.uk