Target market: How 888 plans to unlock value from the William Hill acquisition through realignment 

Earlier this month, 888 unveiled an ambitious three-year growth strategy aiming to springboard its long-term growth to a revenue target of £2bn by 2025. The single biggest corporate move since the completion of its £1.95bn acquisition of William Hill International, the Capital Markets Day (CMD) also saw the group disclose plans to integrate the bookmaker into 888, as well as a strategic realignment of its financial and operational objectives.

Chatting to EGR Intel about this process and the synergies arising from the multi-billion-pound deal, CEO Itai Pazner gives the lowdown on the mood at 888 HQ.

EGR Intel: As a CEO of a business that has gone through significant strategic change, how important to you is the setting of long-term financial and strategic targets?

Itai Pazner (IP): It’s very important for any business to have strategic targets and specifically so for large businesses. With a lot of employees in many locations around the world it’s crucial you focus everyone in the right direction. That’s extremely important.

EGR Intel: Why was it essential to strengthen the business in key European markets?

IP: Europe is a foundation from a business perspective of both 888 and William Hill. That’s where we have our strongest footfall, that’s where we have a lot of our competitive advantages. These are not only more mature markets, but they’re also more stable markets, markets where we have very strong brand presence, where we know the customers and their needs. These are markets where we have the right products to cater to these customers. The natural choice was Europe as a core of the business. We are expanding into the US and have done the same with Africa via a JV, which has started off very well. We are looking at all opportunities, but the strong core of this group is Europe, and specifically the UK.

EGR Intel: In what ways is the larger talent pool coming from the combined business benefitting 888 at an operational level?

IP: We completed the acquisition in July of this year and since then there’s been a new executive management that’s been put in place that has a cross-section of people from 888, William Hill and a few people that we’ve recruited from outside the business. Each part of the group has something that was really critical for me to preserve through the acquisition, not only technological assets but also a lot of knowledge and human resources that we wanted to maintain.

In order to do that, we needed to make sure we identified the right people and put them in the right positions. If you look across the group now, not only at executive level but filtering down to the rest of the organisation, there’s a very good representation on all of the senior management levels as well as employee and lower levels from both sides of the group.

EGR Intel: In your unified proprietary technology plan, almost 90% of it involves the utilisation of existing 888 resources, with only the William Hill sportsbook being integrated into the 888 platform. What does this mean for the wider Hills ecosystem?

IP: One of the strategic rationales of the deal, as both companies are competing in the same product categories and almost a mirror of the same markets, was to rationalise. 888 was supporting four different tech stacks when we acquired William Hill, which in turn was operating over two tech stacks and developing an additional tech stack. Technology, development, platform and products are probably the costliest part of operating an online gaming business, and having your own proprietary technology is one of the most important components to have as a leading operator. It’s something that 888 has always believed in; always developed and always supported.

One of the clear strategic benefits of the merger was to essentially take the scale of the William Hill business and put that on the 888 platform, thus creating huge economy of scale benefits. The first thing we had to do was to make a choice and to be sure that this was the right platform for us out of all of the ones we had in the group. And very early on, it was quite clear to everyone that it was the right choice, so we made that decision quickly. Now we can start migrating the different parts of the William Hill business onto the 888 platform.

There are some very strong components and competitive advantages that William Hill developed over the years. One example is the global trading platform that will become the trading platform of the 888 Group, including all of the trading capabilities in the trading team and algorithms that they built over the years.

It’s one of the best, most sophisticated in the market, creating the best margins in sports betting on a very, very high scale. That’s something that we obviously wanted to keep and we’re bringing that into the 888 platform. Retail, again, is something that 888 did not have and so we’re taking the elements that were developed for supporting retail over from William Hill to 888. William Hill didn’t develop their own igaming, they used third parties, and therefore it naturally makes sense to move everything to 888’s global platform that supports 20 different regulations, as well as all the product categories: casino, sports betting and poker.

EGR Intel: In your comments regarding the William Hill business, you’ve talked about M&A distracting its focus and allowing for operational inefficiencies to creep in. Can you expand on these remarks?

IP: They [William Hill] went through two phases of M&A; firstly being acquired by Caesars, and then shortly after when Caesars decided to sell them. These separate sales over the two periods left the business effectively in ‘sale mode’, which creates inefficiencies from an operational side because you’re not optimising the business for the future. Now that that period has passed, we feel there are further opportunities to optimise the business going forward within 888.

EGR Intel: What can 888’s existing platform technology bring to the William Hill retail setting?

IP: The first thing and probably the main thing is 888’s games. 888 has an in-house studio [Section 8] with over 150 games developed on its proprietary platform that are exclusively for 888, representing about 20% of the RMG volume. If you compare that studio to all the other studios, it’s the second largest studio on the platform in terms of volume. That’s an asset we have that we can bring in and integrate into William Hill’s gaming products or FOBTs that are in the shops. That’s something that we’re planning to do next year.

EGR Intel: Where are the most exciting elements of 888’s future post-acquisition?

IP: The most exciting elements, and we’re seeing this almost on a daily basis, is that there are a lot of buckets of knowledge, experience and excellence that were created in the different parts of the group following the deal. The excitement comes from essentially bringing them from one place to another place in the group and benefiting from the added value, and one of the ways we’re doing that is by identifying those buckets. As an example, in our presentation slides we illustrated SEO traffic in Italy for 888 versus William Hill; both have strong operations in the Italian market and will both continue to exist there going forward. We have a new head of Italy who sees the capabilities that can be utilised for William Hill by the team that did it for 888, so, what we’re doing is taking those capabilities, centralising them and offering them to the wider group.

We’re doing the same thing on William Hill in respect to sports betting, trading and carrying that through to 888sport. We’ve identified quite a few pockets like that and we’ve structured the organisation in the way so the wider organisation can benefit from them. After moving to one platform, all of those benefits will be much easier to exploit or enjoy. That’s the plan, to integrate quickly into the new platform, while benefitting from the things which do not require integration to be profitable. There’s still a huge amount of what we call growth synergies or opportunities that we would like to exploit very, very quickly.