BetMGM To Receive Another $450 Million To Back ‘Continuing Success’

Written By Matthew Waters on January 19, 2022
BetMGM

BetMGM will receive another big investment from its joint venture partners to support its “continuing success, strong performance and market leadership.”

The approximate $450 million combined investment from Entain and MGM Resorts will bring total investment since 2018 to around $1.1 billion, according to a release.

So far, that investment seems to have paid off:

  • BetMGM says it is the No. 2 sports betting and iGaming operator across its live markets with a 24% market share for August-November 2021.
  • Leading iGaming operator with 30% market share for August-November.
  • 2021 revenue should be $850 million, above management’s expectations. The EBITDA loss of $420 million to $440 million is in-line with expectations.

Net revenue should grow to more than $1.3 billion this year, one which CEO Adam Greenblatt called “critical:”

“2022 is a critical year, where the leading national operators will reach critical mass, paving the way for the next phase of the sector’s financial evolution. With the support of our shareholders, our technology and data platform, brand and omni-channel strategy, we look to the future with confidence.”

BetMGM broke ‘all’ records with NY launch

Greenblatt had plenty of positives to discuss when asked about BetMGM’s launch in New York sports betting on Monday:

“Yes, delighted with how it’s gone. Look, we’ve broken all of our records. It was the best first day of any live launch, we broke records for most registrations, for most first-time depositors, for deposits, for bets, for handle.

“And what I found particularly pleasing was our technology performed flawlessly – in line with our expectations, mind you, notwithstanding the volume – and linked to that our acquisition-funnel KPIs were also very pleasing.”

BetMGM hit new highs in multiple areas:

  • Registration to deposit conversion percentage
  • New player deposit success rate
  • Conversion of registrations to real-money players

The brand joined a market already thriving: the first four mobile NY sportsbooks took $150 million in bets over opening weekend.

EBITDA will turn positive in 2023

There will be months where BetMGM is an EBITDA-positive operation in 2023, Greenblatt said. That does not mean the entire year will be EBITDA-positive, though.

“Let’s not lose sight of our reality. We are not selling toothpaste in a very mature market in a quite stable environment.”

So far, New Jersey was contribution-positive for all of 2021. Michigan was for about half the year as well, he added. Both states feature growing iGaming markets.

Also nearing contribution-positive, according to CFO Gary Deutsch:

BetMGM plans to launch in Illinois and Louisiana within the first quarter of 2022.

Advertising wars heat up

Greenblatt acknowledged the aggressive advertising environment around the US and said it is what BetMGM fully expected. That said, the market is getting smarter and he expects those levels to rationalize in the coming year, though there could be one more cycle of “NFL exuberance,” he added.

BetMGM will also focus a lot on its one-game parlay product this year, Greenblatt said. Those bets typically have margins higher than 30%, which is why BetMGM will expand its offerings and improve the interface through the summer.

The proportion of parlays compared to all other bet types is increasing, Greenblatt noted.

Cross-play helping BetMGM cost per acquisition

One part that helps profitability is lowering cost per acquisition. Those costs were in line with expectations in 2021. BetMGM still expects to hit a long-term acquisition cost of $250.

One area helping with that is iGaming. iGaming customers tend to cost more to acquire than sports betting customers, but that can be offset through cross-selling.

In states with both iGaming and online sports betting, 40% to 50% of users are engaged with both products, Greenblatt said. Cross-selling usually flows from sports betting into iGaming, he added.

Greenblatt expects iGaming acceptance to sweep across states with retail casinos as more legislatures see the performance of states like Michigan and Pennsylvania. Those states prove both retail and online casinos can thrive together, he said, which has not been the expectation.

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Matthew Waters

Matthew Waters is a reporter covering legal sports betting and the gambling industry. Previous stops include Fantini Research and various freelance jobs covering professional and amateur sports in Delaware and the Philadelphia area.

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