Evoke Plc, the gambling giant listed on the FTSE, has announced a strategic review of its operations as it navigates an evolving industry landscape. Formerly known as 888 Holdings, the company is considering multiple options, including the sale of its entire business or specific assets. This review involves its portfolio, which includes William Hill’s European operations, Mr Green, the 888 brands, and Romania’s Winner.ro.
On December 10th, Evoke disclosed through the London Stock Exchange that it would examine a variety of strategic alternatives. The company has brought on board financial advisers Morgan Stanley & Co International and Rothschild & Co to guide the process. However, Evoke emphasized that this review might not result in any transaction. Following the announcement, Evoke’s stock experienced a 14% surge.
The review is designed to identify opportunities that could enhance shareholder value. This could involve selling the entire group or divesting certain business units and assets. The company plans to keep its stakeholders informed as decisions are made.
Prior to this strategic announcement, Evoke was reportedly considering closing 200 William Hill betting shops in the UK due to increasing gambling taxes. Additionally, rumors circulated about the company’s intention to sell its Italian operations, which recently secured a renewed license under Italy’s updated gambling regulations.
The UK gambling sector has been subject to increased regulatory scrutiny and taxation. The recent rise in the Remote Gaming Duty, part of the UK’s Autumn Budget, has placed financial pressure on online gambling operators. Evoke was notably impacted, with its share price plummeting by 18% on the day of the budget announcement. The company has traditionally focused on online gambling, making it particularly vulnerable to such fiscal changes.
CEO Per Widerström stated that Evoke, previously known as 888 Holdings, planned to mitigate the effects of the tax increase. Strategies included possible retail closures, cutting down on marketing expenses, achieving supplier savings, reducing operating costs, and potentially altering its product offerings.
Evoke has faced challenges over recent years, including regulatory scrutiny from the UK’s Gambling Commission and an unsuccessful leadership bid by Kenny Alexander, the former head of GVC (now Entain). The company’s acquisition of William Hill’s European business from Caesars left it with a significant debt burden.
Recent performance improvements, especially within its international division, have provided some relief. In the third quarter, international revenue increased by 8% to £150.4 million, thanks to a 13% rise in gaming revenue. Key markets such as Italy, Denmark, and Romania reported double-digit growth, with Italy being a significant driver.
Overall, Evoke’s group-wide revenue for Q3 was £435.4 million, marking a 5% increase year-on-year. In the UK and Ireland, online operations generated £163.3 million, a slight 1% rise, while UK’s retail revenue increased by 6% to £121.7 million.
Despite these gains, Evoke continues to face uncertainties, particularly in its domestic market, where regulatory and tax changes could affect future profitability. International markets, however, present a positive outlook due to favorable growth trends.
The company remains committed to achieving an adjusted EBITDA margin of at least 20%. Looking towards the future, Evoke aims for 5–9% annual revenue growth and approximately 1% annual EBITDA margin improvement through 2027.
In historical context, the gambling industry has often faced regulatory changes as governments worldwide increase oversight and taxation to address social concerns and boost public coffers. The UK’s recent tax hikes are part of an ongoing trend where gambling operators must adapt to shifting legislative environments.
A potential risk to Evoke’s strategic review is the volatility in the global gambling market, influenced by factors such as changing consumer preferences, technological advancements, and economic fluctuations. As the company evaluates its next steps, it must consider these dynamics to ensure sustainable growth.
As Evoke navigates this strategic review, the outcome could redefine its position in the gambling sector. Whether through asset sales, operational adjustments, or possibly company-wide divestiture, the decisions made will shape its future trajectory in an industry marked by both opportunity and challenge.
David Garato is a luminary in gaming journalism, renowned for peeling back the curtain on the gaming world with his witty and insightful commentary. A decade into weaving stories from the pixelated edges of indie games to the expansive universes of AAA titles, David’s work is a thrilling blend of analysis and adventure. When not writing, he’s live-streaming, sharing his gaming exploits with an engaged and growing audience. David doesn’t just write about games; he lives them, making him a trusted guide in the gaming community.
