BetMGM Hits Revenue Targets Despite Market Share Loss, Sticks To US Plan

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BetMGM lost sports betting and iGaming market share in 2023, but still hit the top end of its revenue target, MGM Resorts and Entain announced Thursday.

In a trading update, both companies said that BetMGM finished the 2023 fiscal year with $1.96 billion in net revenue, a 36% increase from last year and in line with its $1.8 billion to $2 billion guidance range. That comes despite BetMGM finishing the year with a 14% share of the US sports betting and iGaming market, down from the 19% it had in 2022.

Entain, which runs the digital gaming app alongside MGM Resorts, previously said it wants between 20% and 25% of the market by 2026.

Stock market reacts to strong Q4

Entain shares were up 1.35% to £985.56 on the London Stock Exchange after market close Thursday. MGM was up 2.67% to $45.92 a share as of 2:30 p.m. ET.

BetMGM’s $558 million revenue in Q4 was a 29% increase year-over-year. The business posted $24 million EBITDA for the quarter, beating Street estimates by $11 million. It was BetMGM’s third straight quarter of profitable EBITDA. It is committed to $500 million of positive EBITDA by 2026, which would be its first full year of profitability.

“Our performance in 2023 demonstrates our commitment to delivering on our promises. We were able to achieve strong organic growth, while executing against key strategic initiatives that lay the foundation for 2024 and beyond,” BetMGM CEO Adam Greenblatt said in a statement. “The attainment of EBITDA profitability over the last three quarters of 2023 validates the effectiveness of our business model and provides the basis from which to invest further in expanding our sports offering through the integration of Angstrom and leveraging our largely untapped Las Vegas omni-channel advantages.

With this comprehensive roadmap in place, we can focus on driving accelerated player acquisition and retention and strengthening our current market position. This clear strategic direction underpins our confidence in achieving our targets and building long-term, sustainable value for shareholders.” 

Greenblatt did not address the market share loss. However, the emergence of Bet365, ESPN Bet and Fanatics likely ate into mid-level operator share during the back half of the year.

How did BetMGM grow revenue?

Last year saw BetMGM add three new states, with Ohio, Massachusetts and Kentucky launching. Meanwhile, same-state net revenue grew 14%.

BetMGM said key metrics were up for monthly active users, first-time depositors, hold percentages, bonus levels, net revenue per active player and cost per acquisition. However, it did not disclose specific amounts.

It further attributed revenue growth to adding a single-wallet feature to 21 markets ahead of the 2023 football season, increasing product speed and leveraging new technology from recently acquired Angstrom to offer more markets and improve same-game parlays and live same-game parlays.

Entain purchased the sports data analytics company for $265 million last year. It described the move, at the time, as a gateway to unlocking “a full in-house suite of end-to-end analytics, risk, and pricing capabilities” for BetMGM.

BetMGM lowers promotional spending

BetMGM lowered promotions as a percent of gross gaming revenue by more than 10 percentage points over the past year. Those savings could empower BetMGM to invest more in sales, marketing and product development, as highlighted in a December business update.

That included plans to further leverage Angstrom tech, using its modeling to support more products and to grow offerings, and investing in more player acquisition resources.

On Friday, BetMGM announced one of those investments, a first-of-its-kind odds integration deal with X, the platform formerly known as Twitter. It grants BetMGM access to Twitter’s 55 million US monthly active users, roughly five times the number of active online gaming users across the total market.

Analyst compares BetMGM to DraftKings in 2022-23

Jordan Bender, a senior equity research analyst at Citizens JMP Securities, described the BetMGM strategy as “taking one step back, to take two steps forward” and compared it to the strategy DraftKings used in 2022 and 2023.

DraftKings stock plummeted to its lowest price at the end of 2022, dropping 84% from its all-time high of $71.98. It came amid widespread concerns over a path to profitability, as the company lost users despite significant expenditures on transitioning to proprietary technology and recovering from a period of high promotional activity.

The following year played out much differently for the stock, as DraftKings revealed its user base is growing much larger and faster than expected and narrowed losses, as it reduced promotional and marketing expenses, and laid off a number of employees.

“We view the playbook similar to the actions DraftKings took in 2022/2023, and as the underlying product is set in place, we expect expenses will decline and profitability will inflect,” Bender said in a financial note.