LSR Q+A: Less Than 10% Market Share ‘Not Success,’ Says Roar Digital CEO

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Roar Digital

The coronavirus pandemic changed a lot in the sports and sports betting world this year, but it hasn’t slowed down Roar Digital‘s US expansion ambitions.

Proving the concept and launch abilities of the joint venture between MGM Resorts and GVC Holdings is still crucially important, CEO Adam Greenblatt said.

Greenblatt proved the company’s theory by being one of the first four to launch sports betting in Colorado when the market opened May 1.

LSR: It seemed like Roar Digital really came into 2020 with the plan to be aggressive this year and get the BetMGM platform expanded in the US. How has the coronavirus pandemic impacted those plans?

Greenblatt: 2020 is our year of actually spreading the tentacles. Really getting into a greater number of states and increasing our addressable market. The basic reality is unless we’re in-market and talking to existing and future players, it doesn’t matter how good you are.

The question is really important because I’ve been asked why go live in Colorado now, why is that important? The reality is [the pandemic] hasn’t changed our plans.

I don’t expect there to be massive business in the first few weeks with minimal sports content. But what [the Colorado launch] does do is demonstrate to other regulators and stakeholders that notwithstanding the shutdown for COVID, we’re able to deliver product and get live in the market.

We, Roar, want to be live in-market on day one. What Colorado is demonstrating is we can do all of those things.

The next digital markets we’re excited for are Michigan, Pennsylvania and Tennessee. We’ve also got retail agreements with some tribal partners in Oregon and New Mexico. So as soon as we can come out of this coronavirus period, we can go live there.

LSR: You mention Michigan, and it’s such a shame to launch right before sports shut down –

Greenblatt: Well, yes and no actually. What would have been worse was five days later.

What we’ve demonstrated again is readiness to accept bets on property. We’ve taken 80% of [sports betting revenue] in the first few days, not that it means anything, the sample size is too small. But what it does show us is the strength of appetite for the product in the state. It’s an indicator.

So when we can reopen the property, terrific, we know that the product is strong and good, where we’ve put the sportsbook and kiosks are the right places and intuitive for customers, the interface is working.

It also gives us a tiny snapshot for the potential for digital sports in the state. And that’s so, so exciting. So we’ll get there.

LSR: Could New Jersey be primed for a restart or does it feel like market share is established?

Greenblatt: This is like a Formula 1 race where you’ve got the pace car that has come back on, right? Everyone is bunched up again. But frankly, if you’ve got the Mercedes that’s lapping a second and a half faster than everybody else, when the pace car moves off the lap times will be what they were just prior to the shutdown.

Of course, there’s new opportunity because it’s a fresh-ish start with competitors closer together. But I don’t see it as a “forget everything that’s come before and it’s a clean slate” type of thing. Particularly in New Jersey, it’s been such a consumer-friendly environment in our market, sports particularly, up to now.

I don’t think there are going to be any easy rides for any operators. I think competition will be as fierce as before. To win customers and market share over time, it’s spending money well and product excellence [that matter.]

LSR: Is the idea still that BetMGM could have 15% market share of the mature US sports betting market?

Greenblatt: Kenny [Alexander, CEO of GVC] and Bill [Hornbuckle, acting CEO of MGM] seem not to be able to contain giving guidance on these things (laughter.) But I will be very disappointed if we are not a leading operator.

That means if we are on a nationwide basis less than my number, 10%, that’s not success. Do I want it to be 20% or 25%? Absolutely. Am I going to fight tooth and nail to get to that level? Absolutely.

But have I spent half a billion dollars on marketing a product and a brand for the last five years that ultimately won’t make money? No. Some of our competitors have spent half a billion dollars on building a customer base and a brand over the last five years uneconomically. And are using that investment to serve as a platform to build a sports betting business, which makes perfect sense.

But is there some work to do for me to compete on level footing? Yes, for sure.

LSR: At the same time, MGM is such a well-known brand throughout the US that it has to weigh for something in US sports betting?

Greenblatt: It absolutely does. And frankly, that’s one of the cornerstones of our long-term differentiation strategy. What we are integrating with the Mlife program.

It starts at the top of the acquisition channel. Me and my buddies go to Vegas for a long weekend and want to bet on sports. BetMGM is now in every MGM property in Nevada; the brand was rolled out alongside our technology migration. So that customer will fly into Vegas, and we’ll communicate with them before they’re even at the property to let them know about this terrific digital sports solution available.

So it becomes part of the Nevada holiday experience, but also what we then do is continue the relationship as the customer returns to West Virginia, Indiana, Colorado. Why is that good for us? It means we can acquire customers at very, very low cost that already have a brand relationship with MGM Resorts. It also means we can work hard at retaining that customer and they can continue to play with BetMGM in their home state.

The closeness to MGM and MGM Resorts is a huge strength and will be a source of value over time.

LSR: Are there any states that Roar looks at as a potential gamechanger?

Greenblatt: My answer won’t surprise you. The wild card really is New York. They’ve got a bit of sports betting in retail only in the upstate casinos, and frankly there’s almost no activity. So the game-changer would be New York adopting digital sports regulation with off-property signup.

We’re seeing the impact of those border travelers at the Meadowlands; that’s been one of the beneficiaries of this dynamic.

MGM Resorts owns Empire City, which is the closest drive to Manhattan. They would obviously have quite exciting plans for the development of that property subject to being licensed to do so. So market access we would hope to secure through that property. Mobile sports betting would really be amazing.

LSR: How was the action on the NFL Draft?

Greenblatt: It was multiples ahead of last year but not significant enough. We took quite a lot of action compared to a normal day without the Draft but compared to football Sunday, it’s talking cheese. Combined with the fact there were no wildcards, there weren’t many surprises in the picks. When the favorites win, that’s a customer-friendly result, so in terms of cash margin, it wasn’t a particularly favorable event either.

But would we rather have it because it drives engagement? Absolutely right, any day of the week. More like that please.