BetMGM Lays Claim To Second-Place US Market Share At Investor Day

Posted on April 22, 2021
BetMGM

Following an initial slow rollout, executives from BetMGM believe they are on course for sustained top-tier nationwide market share, and will be profitable by 2023.

During the company’s 2021 Investor Day presentation on Wednesday, CEO Adam Greenblatt detailed BetMGM’s aggressive expansion in both US sports betting and iGaming over the past six months.

In a little more than 12 months, BetMGM went from three states to 12. It secured market access in 24 states and is in “advanced stages of negotiation” in more.

“There is no path to leadership without participation in all states that matter,” Greenblatt said. “BetMGM is able to win in the heavyweight world of online sports and are asserting our dominance in iGaming.”

BetMGM co-owners MGM Resorts and Entain will invest an additional $450 million into the company this year as it continues to expand. How that relationship emerges from MGM’s failed takeover bid of Entain clearly will prove key to future US plans.

BetMGM overcoming slow start in US

The recent push is an improvement compared to BetMGM’s position in January 2020, when analysts were skeptical of the company’s claims of “good progress.”

BetMGM underwhelmed in the eyes of some in the early days of US sports betting. Despite signing numerous deals with US pro leagues, the company languished behind FanDuel and DraftKings in state revenue reports.

Clunky technology featuring European odds stymied bettors in early states. BetMGM did not begin a major marketing push beyond its own customer database until unveiling an ad campaign featuring actor Jamie Foxx in the past year.

Quick surge to sports betting leadership

BetMGM launched 10 states from January 2020 to January 2021. Those launches helped boost net revenue in the 2021 first quarter to $163 million.

That figure is a 430% increase year-over-year and represents 90% of full-year 2020 revenue. Now with a broader portfolio of states, BetMGM secured 22% of market share in its active states.

“Based on total gross gaming revenue, we estimate BetMGM has overtaken second overall position in February,” Greenblatt said. “We have more than doubled market share since October.”

That would represent a significant move past previously stated goals that included 10-15% market share in New Jersey. The company projects it will be live in 20 states within a year, hitting 40% of the US population.

Updated forecast from BetMGM

The financials resulted in BetMGM adjusting some of its longer-term outlooks.

With an expected eventual total addressable market (TAM) of $32 billion in North America, executives expect BetMGM to secure between 20% and 25% of market share.

  • US iGaming: $13.4 billion
  • US online sports betting: $14.1 billion
  • Canada: $4.4 billion

Its long-term expected EBITDA margin is 30% to 35%.

BetMGM expects $1 billion in revenue

The presentation also included a forecast of $1 billion in 2022 revenue.

Significant market growth between September 2020 and March 2021 resulted in a gross gaming revenue increase of 400%.

“More than 80% will be delivered from states we are live today,” Greenblatt said. “A number of states we launched in the second part of 2020 or early 2021. What we’re seeing is a full-year effect of maturation of those states becoming meaningful contributors next year.”

A majority of revenue is from iGaming, but executives believe online sports betting could eventually pass it.

What about profits?

At a state level, CFO Gary Deutsch said BetMGM expects a three-year process to profitability:

  • First three months: Acquisition costs
  • Ten months to two years: Contribution breakeven
  • Two-three years: Cumulative payback
  • Year three and beyond: Growing annuity

New Jersey is expected to reach payback in the third quarter this year. Michigan is expected to payback in two years.

During analyst Q&A, Deutsch said this year the company is spending heavily on licenses and retail build-outs. By 2023, he said, the company will be in the black.

That projection comes after an MGM investor presentation that outlined marketing cost increases for the joint venture with Entain.

Day 1 state launches critical moving forward

As Greenblatt detailed recent launches, a focus was on the success of Michigan.

Since its launch of online gaming in late January, BetMGM has secured 37% of total online gross gaming revenue in the state. The company internally estimates it holds the No. 1 spot in Colorado.

“As we look to the future, we expect new states to look like Michigan and Colorado,” he said. “BetMGM has demonstrated the ability to launch on Day 1 effectively.”

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Pat Evans

Pat Evans is a Las Vegas-based reporter covering sports business. Evans previously worked at Front Office Sports and the Grand Rapids Business Journal. He has authored two books: Grand Rapids Beer and Nevada Beer.

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