MGM Resorts International and Entain are expecting the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of their joint venture, BetMGM, to reach $500 million by 2026. This promising projection is based on a roadmap that has labeled 2024 as an investment year for the operator. Currently active in 28 regulated gambling jurisdictions in the North American region, BetMGM will rely on several key aspects, including marketing, partnerships, expansions, and investments, to ensure that its EBITDA touches the $500 million mark by the end of FY 2026.
In the H1 2022, BetMGM accumulated net revenue of $608 million. In the corresponding period this year, a significant 55 percent increase took the H1 2023 net revenue to $944 million. The operator did not disclose its EBITDA in the half-yearly financial report this year but stated that it had reached a “key milestone” in the second quarter of this year.
Based on the H1 2023 results, BetMGM has projected its annual revenue to grow significantly this year and reach $1.8 to $2 billion. Additionally, in the second half of this year, BetMGM was expected to operate without any equity investment from its parent companies, MGM Resorts and Entain.
However, there is a bit of ambiguity over the definition of self-sufficiency. In the worst-case scenario, BetMGM is expected to be self-sufficient during its investment year in 2024. Sooner or later, the self-sustenance factor will be an extremely positive development for the operator as well as for Entain and MGM Resorts. The two companies have splurged around $1.26 billion on the operator to date, including the $150 million annual allocation for FY 2023. According to Adam Greenblatt, CEO of BetMGM, the operator improved its EBITDA by well over $300 million this year, which is the primary reason behind the self-sustenance of BetMGM.
Greenblatt also confirmed that the investment year would rest on three sturdy pillars: product offering enhancement, capitalizing on omnichannel benefits in Las Vegas, and a robust and technical customer acquisition and retention strategy. Since the investments will require capital, BetMGM’s EBITDA will record a dip throughout the year.
However, it is expected to recover and reclimb to newer heights from FY 2025 before ultimately reaching its target of $500 million at the end of FY 2026. Greenblatt did not disclose the amount earmarked for investments but did state that it was enough to “compete and invest for growth at the highest levels.”
F1 in Las Vegas Makes Big Splash
In Las Vegas, BetMGM has a stronghold in the gambling market. By offering unique redeemable reward credits, the operator aims to attract more players to its platform. The online sports betting segment has been quite active after Formula One’s Las Vegas Grand Prix last month. According to reports, the number of bets placed on BetMGM for the race was three times higher than any other F1 race in history. The betting activity is expected to shoot up again in Feb. 2024 when Allegiant Stadium hosts Super Bowl LVIII. However, until then, regular activity is expected with wagers on NFL and other competitions.
After investing over a billion dollars in the operator, Entain and MGM Resorts should be content with BetMGM’s growth in the North American gambling market. As things stand, the operator is the third biggest gambling operator in the United States, holding a 17 percent market share in the Northern American region.
The two operators ahead of BetMGM at the moment are the popular brands: DraftKings and FanDuel. One of the next milestones for the operator is to take its aggregate market share to a sweet spot between 20 and 25 percent in North America. BetMGM is working tirelessly to improve all its channels to achieve this goal.
Regarding its products, BetMGM will rely on Angstrom Sports to strengthen its sportsbook. Angstrom Sports is a wholly-owned subsidiary of Entain. The company will work on the enhancement of several offerings, focusing primarily on Same Game Parlays.
The other services are set to be upgraded with the help of either in-house or third-party solution providers. BetMGM’s plan is to make its interface more engaging by introducing increased personalization options during play. Online casino upgrades are also in focus because 65 percent of bettors opted for online casino games in the jurisdictions where BetMGM offers all its products.
While the upgraded sportsbook, online casino, and virtual poker segments are expected to retain players, BetMGM has also evolved its customer acquisition strategy and will implement it from the start of the next year. The operator will opt for a flexible, data-driven approach to reach new customers and try to bring them on as regulars on its sports betting and iGaming platforms.
This will also involve marketing investments and predictive value models. Greenblatt is confident that the officials at BetMGM will devise an effective strategy that will help the operator attain its ultimate goal in 2026.
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