888 Holdings Plc. released its preliminary results for 2006 today, revealing a 34% increase in pre-tax profits from the previous year. To achieve that increase despite taking a hit after the Unlawful Internet Gambling Enforcement Act was passed, the company looked to diversification and acquisitions to bolster profits.
888, which owns and operates Pacific Poker, was one of the companies hit hardest by the UIGEA. It pulled its U.S. business after the legislation was passed.
In 2005, 888 posted a pre-tax profit of $67.4 million. After the UIGEA passed, analysts expected the company to post profits between $58 and $76 million for 2006. Instead it saw an increase to $90.5 million.
Gigi Levy, 888 CEO, said the results in the face of challenges from loss of U.S. business made 2006 a significant year for the company.
"Against this background, I am delighted to report record financial results for 2006," Levy said. "Our continued success is based on the principle of providing our customers a compelling, localized, innovative, unique customer experience."
Also aiding the company's recover are its diversification efforts. Some of the actions the company took to diversify include:
- Acquisition of a bingo business
- Partnership with Rileys, a U.K. chain of snooker, pool and poker clubs
- Introduction of multi-hand poker, new casino games, blackjack in poker and backgammon
- Acquiring a sports betting license in Italy
Levy also said that operational recovery is continuing in 2007, with the company already seeing 16% revenue growth in the first quarter compared to the fourth quarter of 2006.
"Given this start to 2007, the release of new products, our bingo acquisition and our clear business strategy, we are confident of delivering future growth in 2007," Levy said.