888 Holdings Bails Sports Illustrated Sportsbook and Other US Properties
British Bookmaker Is Starting "Strategic Review" Of US-Based Operations
British bookmaking company 888 Holdings is ending its sportsbook partnership deal with Sports Illustrated’s owner Authentic Brands after facing unexpected struggles in the American sports betting market.
The unraveling of the Sports Illustrated deal comes at a difficult time for the storied sports journalism brand, which is undergoing massive layoffs that were announced at the end of January. The future of the famed magazine was already in doubt, so this news from 888 Holdings is certainly not good for Sports Illustrated and its remaining employees.
888 Holdings launched a partnership with Sports Illustrated at the end of 2021, through which Sports Illustrated Sportsbook has operated in Colorado, Virginia, and Michigan. In a press release, 888 Holdings said it was exploring a sale of the rest of its US-based holdings, such as the New Jersey-based online 888casino, in addition to leaving the Sports Illustrated partnership.
Many sportsbook deals seem to have been going well as sports betting has grown in the U.S. The 888-SI deal is not one of those deals.
Citing how competitive the American betting market has become with certain established powerhouses—such as DraftKings and FanDuel—as well as tons of new entrants trying to get a piece of the growing pie, 888 Holdings’ CEO Per Widerström said that the company could not make the necessary investments to sufficiently scale up its US business in time to achieve the necessary profitability.
To highlight 888’s desire to get out of the deal, it will pay a $50 million breakup fee to Authentic Brands.
Deal For Naught
Entering into this kind of partnership was a seemingly inevitable one for a cash-strapped entity like Sports Illustrated, which has been gutted over the past few years by a succession of private equity-backed owners with more interest in scraping all possible revenues from the brand than in actually returning it to its journalistic heyday.
On paper, the Sports Illustrated deal provided its owner with some low-risk revenue and continued exposure.
However, in reality, 888 Holdings found it much more challenging to operate within the US market and regulatory structure. The deal was initially contracted to last for 20 years and involved not only an initial licensing fee but also provided Authentic Brands with the opportunity to acquire as much as 20% of 888 Holdings’ US-based business.
This sports betting news is interesting for multiple reasons but one is that 888 Holdings has been successful in Europe as the owner and operator of the William Hill brand there. Clearly, 888 Holdings figured that linking up with the well-known Sports Illustrated brand in the US would lead to faster market penetration than it could possibly get without having such a partner.
Unfortunately for the company, it underestimated just how different the American marketplace is from the European marketplace for a variety of reasons. It also didn’t help that Sports Illustrated just doesn’t carry the same cache as it did even 10 years ago.
What Could Be Next
From Authentic Brands’ perspective, the company will now try to look to other examples of media companies partnering with sportsbook operators on a non-exclusive basis. In the iGaming industry, DraftKings has partnered with Barstool Sports, and FanDuel has partnered with The Ringer.
Authentic Brands could look to have Sports Illustrated partner with, say, BetMGM to have Sports Illustrated writers promote BetMGM in articles, on podcasts or in video hits. Also, now with Penn Entertainment’s sale of Barstool Sports back to founder Dave Portnoy, Penn has teamed up with ESPN to create ESPN Bet.
Now, a potential issue with this strategy is that DraftKings and FanDuel are so far ahead of their competitors in the US that it’s difficult for even a BetMGM or ESPN Bet to really compete—at least right away. As 888 Holdings’ Widerström noted, there are huge costs needed to elevate a sportsbook to that higher tier, and many companies just don’t have the money or the patience to make that kind of investment.
The Sports Illustrated deal could have worked as previously constituted if 888 Holdings had more of a presence in the US, if it had been able to expand to more than three states, or if Sports Illustrated wasn’t a shell of its former self in terms of daily/weekly content output or prestige.
However, without any of those factors working in its favor, the partnership was likely not to work out in the long term.
Still, only going 2.5 years into a 20-year deal underscores just how much it was not working for 888 Holdings, not to mention the $50 million payment that will be made (in two installments).
Sports Illustrated might still be able to earn some revenues through non-exclusive partnerships but the real money is in the all-encompassing exclusive deals, of which Sports Illustrated just might not be able to get this point.
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