888 hands out special dividend as earnings surge

LONDON, March 24 (Reuters) - Online gambling company 888 Holdings, which ended talks on a takeover by larger rival William Hill (Other OTC: WIMHF - news) last month, said it would hand a special dividend to shareholders after full-year earnings increased by a third.

888, which offers casino, poker and bingo games and is expanding its sports betting business, said on Tuesday 2014 core earnings rose 33 percent to $101 million, ahead of an average forecast of $91.9 million, according to Reuters data.

The performance was driven by a 14 percent rise in revenue, with trade at its core casino business particularly strong.

888 said it would pay a final dividend of 4.5 cents per share, and recommended an additional one-off dividend of 7.0 cents per share, bringing the total for the year to 15.0 cents.

Like rivals, the firm's future profits are expected to be hurt by a new UK tax on profits from bets made by its British-based customers, which was introduced in December.

The company said average daily revenue in the first quarter so far was 6 percent lower than a year ago, in line with its expectations.

It remained upbeat on its prospects, however, as it said new regulations would marginalise smaller competitors, while the underlying trend of more people going online and using mobiles to play and bet would underpin trade.

"Whilst the business faces external challenges in the form of Point of Consumption Tax in the UK, VAT in certain jurisdictions and adverse foreign exchange movement from a strong US Dollar, I am confident that the group is well placed to take advantage of opportunities that regulatory change opens up," CEO Brian Mattingley said. (Reporting by Neil Maidment, Editing by Paul Sandle)