BetMGM no longer expects to hit its $500 million annual EBITDA goal next year, due in part to increased competition from prediction markets.
The joint venture of MGM Resorts and Entain reported mixed results Tuesday morning, with BetMGM maintaining its 2026 guidance, but now forecasting toward the lower end of that range. CEO Adam Greenblatt noted that increased pressure is coming from both regulated and unregulated competition, including prediction markets.
BetMGM can get to $500 million in annual EBITDA eventually operating as is, but that mark is no longer expected to be hit next year, Greenblatt said. That is a change from the first quarter call when Greenblatt said the $500 million goal was still the target for 2027.
Predictions is the primary issue
Greenblatt said there is fierce competition right now across both online casino and sports betting, but the biggest driver of the lower revenue expectations is from prediction markets.
“It’s tough out there,” he said. “But I think, certainly on the OSB side, the primary macro impacts are prediction markets. And then, of course, it doesn’t help that gas prices are where they are and consumer discretionary income, but trying to parse out those effects is very, very challenging. I think prediction markets is the primary.”
New competitors, including Hard Rock Bet launching in Michigan and Ontario, have pushed the cost to acquire new customers up around 15% compared to last year.
“As new entrants join the market and, certainly in established markets, their ability to compete and make impact is very challenging,” Greenblatt said. “It’s challenged. And so what we’re seeing is some of the new entrants investing in growth, investing in players in, frankly, less commercially rational ways in order to establish a beachhead. And it’s in that context that actually, we’re delighted with the resilience of our business, the resilience of our player base and the continued momentum of our business notwithstanding.”
World Cup a success for BetMGM
Greenblatt thinks soccer may be a legitimate driver of customers and, eventually, handle, moving forward from the World Cup. BetMGM took three times as much handle this year compared to 2022, with bets on the U.S.-Belgium game surpassing any MLB or NBA playoff game, he added.
“I’m so pleased, really so pleased with how this World Cup has played out,” Greenblatt said. “What we saw was a massive increase in fandom, and as you know for our category that is foundational. That is the core driver to ongoing engagement and betting activity, and obviously over time, handle growth.
“What we’ve seen and what we hoped for in anticipation of the World Cup was really the emergence of a new sport, of a new sport that could over time rival the big three in the US.”
Greenblatt then noted that his American CFO Gary Deutsch was laughing at him for saying that, with Deutsch pointing out that Greenblatt forgot about the NHL.
“I think soccer’s ahead now,” Greenblatt responded. “I think as we look to the future, soccer is a real sports category and growing, and I think that as a feeder to our sector, that’s tremendously exciting.”
MGM relationship helped with Alberta launch
Nearly 10% of the customers that signed up with BetMGM after it launched in Alberta on July 13 have a relationship with MGM Resorts, Greenblatt said.
That speaks to “the power of the brand, the relevance of our omni strategy and the sustainable benefit of our deep collaboration,” he added.
It is still early days but the company is encouraged by the first two weeks. There is “potential” for some upside in the second half, but that is not included in guidance, Greenblatt said.
Pushing into Nevada locals
BetMGM continues to reap the benefits of MGM’s strength in Nevada, with online handling jumping 10% in the first half. The value of players who have signed up in Nevada and continued to use BetMGM when they returned home is into the tens of millions of dollars, Greenblatt said.
There is more juice to squeeze from Nevada, too, as BetMGM has not done much yet with the Nevada locals market.
“One of the other things that we are focusing on now is really penetrating more deeply into the locals market,” Greenblatt said. “So we over-indexed in the visitor market given the reach and the number of hotel rooms that MGM has on the strip, but now really making a concerted effort into the locals market. And actually, that’s one of the areas that we’re very excited about and are making – relative to the aspect of Nevada, we are making most progress in that area. And we believe that that represents an untapped opportunity.”
Retail whales 1, BetMGM $0
BetMGM’s retail business is rarely a talking point on their conference calls, but a goose egg in the revenue column for the second quarter required an explanation.
Retail sports betting is skewing more toward VIPs and higher-end players these days, with lower end customers continuing to migrate online. Several large wagers won in the second quarter which led to $0 in revenue for the quarter compared to $16 million last year.
