888 eyes Canada entry with Sports Illustrated sportsbook

888 will look to expand its new Sports Illustrated (SI) sportsbook business into Canada after single-event sports betting legislation was approved in the country.

Canadian legislators voted to approve the vertical earlier this week, and while royal assent is required before the bill becomes law, this is expected to be granted imminently.

888 yesterday announced a joint venture agreement with SI publisher Authentic Brands Group in a deal to develop a SI-branded sportsbook for initial launch in four US states: Colorado, New Jersey, Indiana and Iowa.

888 is currently engaged in additional market-access discussions and the firm will look to expand into between two and four new US states each year.

However, EGR has learned the deal includes an option to expand the SI sportsbook into Canada as well.

In an analyst call, 888 SVP and head of US Yaniv Sherman said: “We’ve obviously been monitoring developments in the market for quite some time and when we negotiated the deal we wanted to build in optionality into the structure.

“We weren’t prescriptive about the deal terms, they may be similar or identical, but this is something we need to graph now based on the actual legislation and how the market develops.

“We see that naturally the Sports Illustrated footprint extends north of the border, but this is something that we’ll definitely look at now that the Criminal Code was changed in Canada, so it’s become more pragmatic.

“We’ll definitely be tending to that in the near term,” Sherman added.

888 revealed that its agreement with SI is long-term and could run for 20 years, with SI receiving a 5% initial stake in the JV business.

SI has also been optioned to purchase more shares in the business at increments of 5% for $15m within the first four and a half years of the partnership, followed by an additional 5% stake for $25m within the first six and a half years.

In addition, it is understood SI will receive performance-related warrants, which could increase its total potential ownership to 20%.

EGR has learned the SI Sportsbook will become the primary B2C brand for 888 in the US market, replacing its existing 888sport brand.

888’s existing legacy B2C igaming brands are excluded from the SI JV, while its existing deals with Harrah’s, the Delaware Lottery, and Caesars, which includes the World Series of Poker business, are also excluded.

In addition, 888 will create a “unified” marketing and media team with SI as part of the JV.

“This team will be producing high quality, betting-focused sports content in various formats that will complement the vast portfolio that SI offers across all channels,” Sherman explained.

“Sports betting and engagement through sports betting content will support SI in the process of digitalising its brand and making it even more relevant to younger audiences,” he added.

888 CEO Itai Pazner paid tribute to the firm’s new JV partner, suggesting the SI partnership would “turbocharge” 888’s US push.

“This partnership reinforces 888’s planned growth plan and complements our platform, which is now better placed for growth,” Pazner explained.

“Since online sports betting regulated, we have been actively pursuing potential media partnerships and brands in the US market. “Sports Illustrated has been on the top of our list and I’m absolutely delighted that we have formed this partnership with SI brands and ABG,” he added.

Pazner suggested the combined business would look to achieve a 5% market share in all operational US markets.

“We do believe that this will help us to achieve more market-access deals for a few reasons,” Pazner explained.

“Market-access deals are achieved with local partners and local partners prefer to work with brands that they feel have a higher chance of success of scaling their business.

“We feel that with this combination of 888’s core competencies, technology, marketing know-how and the SI brand, which is a household name, that we have a higher chance of reaching a larger market share, increasing the revenue and obviously giving a bigger revenue inflow for the market-access partner.

“The SI brand carries a lot of weight in different places in the US and we feel that associating ourselves with such a brand increases our chances of getting market-access deals in several states in the US,” the 888 CEO added.