The British-based online operator 888 reported that despite the revenue growth for the first half of the year, the company marks a significant pre-tax loss of $17.3 million in comparison to its profit for the same period last year, estimated to be $27.8 million. This means that the company’s losses equal half of its profit for the first six months of the year.
The leading online gaming operator 888 issued a financial report, which shows that the company’s losses equal half of its income for the first six months of the year. The reason for the exceptionally high charges of the company is a massive fine together with an amount of money, which the company set aside for a potential value added tax (VAT) charge in Germany for its operations before 2015.
It was the last week, when the UK Gambling Commission imposed a hefty sanction on 888 worth £7.8 million. The financial penalty came after a revelation that the operator failed to effectively protect the vulnerable players, as 888 kept on providing its users with access to their accounts, even after submitting in the self-exclusion platform. The company announced that it will make an initial payment of $5.5 million related to the fine.
Besides the financial penalty, the operator needed to set aside $45.3 million for potential value added tax (VAT) charges in Germany, even though the company still discusses the charges with the German financial authorities. A rough calculation of the operator’s charges reached the amount of $50.8 million. Furthermore, financial experts explained that the two charges resulted in a significant loss for the company even before paying a tax of $17.3 million for the first half of the year.
Company’s Revenue Growth
It is interesting to note that the company’s revenue jumped significantly for the first half of the year. The revenue growth was estimated to be nearly 3% or up to $270 million from the beginning of the year to 30th June. 888’s Chief Executive Itai Frieberger commented that the growth was possible thanks to the good performance of 888’s sports and poker divisions. He added that the mobile division also played an important role. He further added that the company’s board remains optimistic that 888 will manage to find its feet after the major financial hit.
The pre-tax loss of $17.3 million left 888 with a threadbare profit. The reason for the company’s financial hardships are the exceptional charges, which are related to its record penalty of £7.8 million and $45.3 million for potential VAT charge in Germany. After all, there is a light at the end of the tunnel for the British-based 888 as the company can benefit from the constantly thriving market and stabilize its profit again.