Q&A: 888 HOLDINGS

888: ILLUSTRATING SPORTS BETTING

Gaming America sits down with 888 US President Howard Mittman to discuss his company’s approach to capturing a loyal sports betting customer base.

What is 888’s strategy for growth in the US?

888 has been in the US for a long time, pre-PASPA we were an early entrant and again after it was overturned. Throughout that time, there have been a lot of highs and lows in the strategies involved. The way we see it now, sports betting in the US is at the epicenter of sports, media, technology and betting – it’s become a cultural phenomenon. Throughout my career, the things I’ve enjoyed the most sit at interesting cross-sections. This cross-section we sit at now, which allows us to develop this exclusive partnership with Authentic Brands Group and Sports Illustrated (SI) means we have the chance to introduce a vertically aligned, content-first sportsbook that taps into the power of one of the most iconic brands in sports.

We’re now live in Colorado, Virginia and Michigan. In Q1, we’ll be launching a casino offering in Michigan and we’re excited about that because 888 is world-class when it comes to casino products. The casino launch in Michigan will be the pivot point for us – we’re looking at where we take his brand in states that have both sportsbooks and casinos; they’re the most attractive to us. There’s just a handful of criteria that we look at, but it has to start with the state having sportsbook and casino offerings.

HOWARD MITTMAN

888 Holdings US President

Is there a danger of reducing your options here, as there are only sixseven states with both? Is it worth it to have the double offering?

I think the combination of the SI brand with its storied content combined with 888’s knowledge and sophistication of betting means there isn’t a risk. We see that as our ‘secret sauce formula,’ and so whatever it might do in the short term, in limiting penetration for us in the US, we still see it as a prudent and necessary part of the strategy.

Some operators are going out of business, consolidation will continue and I think we’re moving out of the stage where it’s acquisition at all costs. We’ll be moving into the mindset of an industry of retention and long-term value (LTV) ratio. So for us, this plays nicely into retention and LTV. It’s part of how we have a more targeted roll-out strategy instead of just spreading our chips out all over the board.

What would you say your core demographic is at the moment? With the customers you engaged with the most, what were the strategies you used?

If you think about SI here in the US, the things that come to mind are history, legacy, heritage and creditability. For a generation of sports fans, the magazine was a window into the world of sports. It gave them knowledge and proximity to the games and the athletes that they love, so it shouldn’t come as any great surprise that these are the individuals that we’re targeting.

Many brands are marketed towards ‘sharps’ and that’s great, that’s where you get your VIP customers and the 80-20 rule. However, that’s not our target demographic. We believe there’s an audience that creates a tremendous amount of opportunity for us that we call ‘the unsexy sweet spot.’ This is 40-60 plus-year-old sports fans who bet casually or who don’t bet yet, and we think we can bring them along for this journey and ultimately teach them how to embrace sports betting. There’s 90% brand awareness of SI for sports fans in general. Around 80% have said that they are highly

likely to use our service. And, 43% of the US market is 40-60 plus year-old men. Their age and user behavior suggests they are probably a little more loyal and a little less likely to chase bonus offers.

We’re gearing ourselves towards this cadre of sports fans and we’re focused on our strategy. The way we reach them is through our customer journey which has five stages: inform, inspire, educate, engage and entertain. Those are the five ways we think a vertically aligned consumer-focused sportsbook brand can make inroads in the US – without a billion-plus dollars in marketing budget that have become ubiquitous.

What is it you do to target this age group?

Fundamentally, we’ve evolved the product in a significant way. We made some significant enhancements specifically up to and then throughout this NFL season. So when it comes to informing audiences, you have to let people know there’s a game and when it is. You have to focus on game times, news, box score stats, betting lines, scores – all the things that matter to sports bettors in terms of inspiring them. Then the emotional part of the journey is getting these people to care about the soap opera of sports. That involves articles from trusted sources, iconic imagery and compelling stories. You pull them in first, then you make them care about the game. Then the third step is education, and this is helping give them reasons to bet. We have a feature that we’re using called ‘One For You’, which is customized user recommendations from SI talent like Pat Forde or Michael Fabiano. They’ll go in and say ‘here’s a really interesting bet for you.’ We don’t come at this with the preconceived notion that everyone already knows how to bet.

The next step is engagement which involves evolved product experiences. So that demographic we’re going after – 40-60-year-old men – what is it that we can do to make this as frictionless as possible. Is it bigger text, large logos or larger buttons? Is it college sports icons, or real-time game visualizations? We’re trying to make this as easy as we can. That means thinking about the app, and trying to engage and retain them and looking at time spent on our platform. We’ve seen evidence that our time spent is up 45% from the start of the NFL season to this point in the NFL. That’s a really exciting thing because it shows users are excited about these products.

So how can we create an end-to-end game betting experience? This can be done through multimedia integrations, articles, videos, images and a wider array of betting options, as well as free-to-play games. It’s what we call the brilliant basics. We have to make everything work as easy as possible – once we do that, we’re getting to the stage where we can layer in casino games. We have several unique casino games we’re launching to the US that are SI-specific and branded. And then, over time, we’ll bring in the 3,000 plus games that our platform has access to globally, which creates a really interesting and winning combination.

What are your plans over the next 18-24 months in the market?

I think we see the introduction of casino on top of sportsbook as an opportunity to solidify our strategy and create a unique point of differentiation, not just in terms of how the brand resonates for consumers, but in how we’re able to create unique experiences and bring new offerings to the US market. From a casino standpoint, you can expect to see us in Michigan in Q1, and then a handful of other rollouts over the next 18-24 months focused on states where there is sportsbook and casino. I think what we’re looking to do is to execute on our strategy, and lean into 888’s core strengths in such a way that allows us to do something a little bit different than anything else we have seen in the US market.

We have an exclusive partnership with the most trusted brand in sports in the US and I think that puts us in an interesting position. And over the next 24 months, I think we’re going to look to create and solidify an established platform for growth, and that will be led by world-class technology, operational expertise and unrivalled trust in the SI brand. You know, if that’s the case, I think we like our odds.