888 shifts focus to online sports betting in “challenging” German market

888 will focus its German market efforts on sports betting at the expense of its online casino operations following the implementation of wide-ranging restrictions on the vertical. In its H1 2021 financial results, the London-listed operator confirmed it had received a licence to operate sports betting in the new German regulated market, which went live in July. 888 has also submitted a licence application for online casino and poker gaming, pledging to operate within the regulation set out by German authorities. Restrictions placed on online casino operators include deposit and stake limits, advertising restrictions and limiting operators to online slots at the expense of table and live casino games. These restrictions have led to operators including Flutter, Betsson, Kindred and LeoVegas reporting significant drops in German gaming revenue over the last six months. Speaking to EGR, CEO Itai Pazner said addressing the diminishing profitability of its online casino and poker operations had created a difficult period in Germany. “Overall, the German market has gone through a significantly challenging period, both for gaming and for sports betting and we feel that the emerging opportunity after the recent changes is actually in the world of sports betting,” Pazner explained. “We were actually more active in the German market for the last few years in gaming, so we had a really good casino and poker business and sports betting was largely secondary. “Now we’re changing the order of things based on the new regulations and putting much more emphasis on sports betting,” he added. That emphasis, Pazner explained, would comprise a significant reallocation of 888’s German marketing resource towards sports betting, with the firm utilising its products and data-driven marketing to grow market share. “We feel that there is a place in the market for us,” Pazner explained. “On one hand, it is obviously competitive, you have some very good and strong brands there like bwin, Tipico and others, but we do feel that there is space for another top brand in the market, so we’re starting to build out our share while the market is going through a lot of transformation,” he added. German online casino operators have also been subject to a 5.3% turnover tax, which has made it difficult to maintain online casino operations. Despite the tax and restrictions, Pazner suggested there was still a place for online gaming in 888’s German arsenal, due to its marketing potential as a cross-selling mechanism to sports betting. “We will still provide online gaming products to the market, but we will put less emphasis and investment in the gaming product,” he explained. “We know that sports also lends itself well to cross selling into gaming, so we’ll use online gaming as a cross-sell product from sports betting, which will serve as our lead product,” Pazner added. 888’s H1 European market revenue (excluding the UK and Italy) increased by 9% to $165.8m, with triple-digit rises in Romania (138%) and Ireland (126%) and further growth in Portugal (47%) and Spain (13%).