888 Holdings (LON: 888) (OTCPK: EIHDF) shares are down 15% in London this morning. 888 shares have fallen on the current trading report. And, well, company results can vary and perhaps this is just that. A 10% fall in gross revenues to the company, different markets reacting differently and so on. It’s also possible to point to one particular line and think, well, hang on, that shouldn’t happen. This is the William Hill group, after all, and they should know how to run a sports book.
The announcement: “Performance across the Group has been mixed, with overall revenue for Q3 2023 expected to be down around 10% to approximately £400m. The Group has made significant and ongoing improvements to the sustainability and quality of the mix of the business, and while this is weighing on short-term performance, the Group continues to drive strong double digit active customer growth. The main drivers of the year-over-year revenue decline include: Ongoing significant impact from compliance changes implemented in dotcom markets, with slower recovery in customer activity and revenues than initially anticipated. Customer friendly sports results impacting win margin across both UK and International markets in September. The ongoing impact of safer gambling changes within the UK, with trends consistent with prior commentary, with strong growth in active customers supporting a return to revenue growth in 2024.”
It’s possible to be in two minds about parts of that. The safer gambling changes in the UK aren’t going to go away so that might be a permanent, not just passing, influence upon the business. So too with all that know your customer stuff in the online markets.
888 Holdings share price from Google Finance
It’s the other one that worries us a bit more. If sporting results change the house winnings then that means the house it taking a position on the sporting events. They’re betting against the customers that is, instead of running a balanced book which enables the customers to bet. Now, views on this can differ but the house taking a position is indeed different from the house being result neutral. Risk is higher for a start.
We’ve looked before at 888 Holding: “888 Holdings (LON: 888) (OTCPK: EIHDF) shares are up 21% in London on the back of some stake building by gambling industry veterans. The real proof here being that everything has its price, even a risk. Something that is not a good deal, not a risk worth taking, at one price can be an eminently sensible one to take at a different - usually lower - price. Which is, in effect, what we are seeing here.” Well, yes, that stake building got killed off when the bidders were told they’d been naughty boys in another business and therefore weren’t fit to be back in the business.
