888 Holdings, a prominent betting company listed as 888.L, has revised its annual core profit outlook downwards in response to a 10% decrease in third-quarter revenue.
This decline is attributed, in part, to the tightening of regulations in the United Kingdom.
As a result of this news, the company’s shares experienced a sharp decline of more than 14% in early trading, falling to a low of 94 pence, marking a level not seen in over two months.
The UK government recently unveiled plans to combat problem gambling, proposing new restrictions on online betting stakes, enhanced affordability checks for customers, and the introduction of a statutory levy on betting firms.
In a statement, Jon Mendelsohn, the Executive Chair of 888 Holdings, acknowledged that the company’s Q3 performance had fallen short of expectations.
Consequently, the company now anticipates ending the year with lower EBITDA (earnings before interest, taxes, depreciation, and amortization) than previously projected.
Several factors contributed to the decline in third-quarter revenue, including customer-friendly sports results affecting the win margin across markets in September and the impact of regulatory changes in its dotcom markets.
888 Holdings, renowned for operating brands like 888casino, 888poker, and 888sport, has adjusted its fiscal 2023 core profit margin projection to approximately 18-19%, down from the earlier estimate of 20%.
While the company did not specify the monetary value of its profit expectations, it is evident that they have been revised downwards.
This announcement coincides with a period of organizational restructuring, as 888 Holdings has recently appointed Per Widerström as CEO in July and Sean Wilkins as the new finance chief.
Looking ahead, 888 Holdings anticipates that fourth-quarter revenues will show a sequential increase compared to the third quarter but will still experience a year-on-year decrease in the mid-single-digit percentage range.
This development comes on the heels of a similar warning from Entain, the owner of Ladbrokes, regarding its annual and third-quarter online net gaming revenues.
Entain cited the impact of the UK regulatory crackdown and slower growth in markets like Australia and Italy as contributing factors to its revised outlook.