BetMGM Hits Profit In Q3, Partners Prepare For More Investment

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BetMGM had an operating income of $25.3 million in the third quarter, the first profitable quarter for the joint venture.

MGM Resorts broke its half of the profit out in its third quarter results posted Wednesday evening. Entain, the other half of BetMGM, gave a bit more detail and unveiled growth plans for the brand during its earnings last week.

MGM’s US retail casino business and its larger focus on margins will be “supplemented” by BetMGM’s turn into profitability, CEO Bill Hornbuckle told investors.

MGM saw a 3.8% pop after Wednesday’s close but gave that back by 1 pm Eastern Thursday, sitting at $38.42.

Three-year growth plan for BetMGM

Entain is including BetMGM US market share growth as part of its three-year plan to grow shareholder value. The company’s management team unveiled the three-year plan during its third quarter earnings call on Nov. 2.

Entain wants to see US market share between 20% and 25% for BetMGM by 2026.

It is also targeting 7% organic online net revenue growth over 2025 and a 28% online margin by 2026, neither of which include BetMGM’s impact.

MGM Resorts ready to invest more

MGM did not mention more BetMGM investment in its results, but Robin Farley of UBS asked about comments from Entain’s call that said investment would happen if needed to grow market share and presence.

As 50/50 partners, that means 50/50 investors, too, Hornbuckle confirmed. He added the brand has a “very big position” to protect:

“I’d love them to invest more than us, but that’s not the way it’s going to work. So yeah, we’ll invest side by side. … But when you talk about a quantum of dollars and you think about the overall scheme of what’s been accomplished, it won’t be large.

“It’s not like where we’ve been. But if somebody said you need to invest another $50 million to make sure your long-term value is there. I’m shooting for end of ’25 as a goal. Where are we going to be? Has this thing really begun to do the kinds of things I think we all think and expect and hope it to do?

“And so we’ll continue to invest accordingly and appropriately and purposefully with these guys.”

BetMGM was expected to be ‘self-sustaining’

Recall that the BetMGM first half update called out “no additional equity investment expected” beyond the $75 million each company previously committed for 2023.

The business updated noted there was the “expectation that BetMGM will become self-sustaining in 2H 2023.”

According to the MGM 10-Q, MGM contributed $50 million of that $75 million as of the end of September.

New improvements and what will come

Entain touted a few “proof points” of its investments and to what that will lead. Now that the company is leading in iGaming, the focus is on growing sports betting share.

For example, Entain purchased Angstrom for up to $265.4 million over the summer. That will allow BetMGM to launch in house-generated, same-game parlays for the MLB season next spring.

BetMGM is also now faster compared to DraftKings and FanDuel, according to metrics from Google. The app’s loading time has been reduced by about 65% over two years.

It also boasts uptime that is in-line with market leaders, Entain said, quoting Bettormetrics data.

BetMGM third quarter details

Net revenue was $458 million in the quarter, which is up 15% over the prior year.

From June through August, BetMGM held an 18% of gross revenue share in its US markets, excluding New York. Online casino market share was 26%.

The operator remains on target for an EBITDA-positive second half of 2023.