B-to-B Will Be Significant Medium-Term Contributor, 888 Says

17 November 2008

Although quarter-on-quarter growth for 888 Holdings stalled in the third quarter, Chief Executive Gigi Levy said his company's business-to-business arm will become an increasingly large contributor over the medium term.

Net gaming revenue for the quarter came in at $65.8 million, up 23 percent against last year but down 1.8 percent versus the second quarter.

Casino totaled $34.4 million, up 19 percent year over year but down 3 percent against the previous quarter. Poker revenue, $18.7 million, was unchanged compared to last year and down 5 percent, sequentially.

So-called emerging offerings -- a revenue segment covering bingo, sports betting, live-dealer casino and other products -- totaled $12 million, up 115 percent versus the same period last year and 9 percent quarter on quarter.

Currency movements, however, played havoc with deposit metrics. The United States dollar -- 888's reporting currency -- gained 14 percent and 16 percent against the British pound and Euro, respectively, between August and October.

"This has adversely affected turnover since late August," it said. On the upside, the company said that because an undisclosed portion of its expenses are in currencies other than the dollar, the effect on the bottom line was "partly mitigated."

The company said fourth-quarter trading, still rattled by forex movements, started "slowly" but that revenue for the first nine days of November -- driven by positive performance in casino and bingo -- was 8 percent better than the same period in October.

"November revenue has encouragingly seen an . . . increase on October which in our view demonstrates the group's business model remains solid, despite the impact of currency movements," Richard Carter, an analyst with Numis Securities in London, wrote in a research note today.

On earlier occasions, Mr. Levy has remarked to IGamingNews that 888 is seeking to be among the b-to-b industry leaders.

"There is actually a very nice opening for us to take some leadership in the market, to be at the forefront of potential deals together with Playtech, which is where I think we are -- the Sportech deal proves that," he said in June.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.