Entain, the co-owner of BetMGM, Monday announced that it anticipates turning a $500 million profit at BetMGM in 2026. Entain also forecast that 2024 would be an “investment year,” which would earn a negative return on the product.
This reverses an anticipated positive return on investment in the second half of this year. J.P. Morgan analyst Joseph Greff reported that the expected 2024 loss would be a “subset” of money already put into BetMGM, meaning that joint-venture partners Entain and MGM Resorts International wouldn’t have to put in any additional capital to cover losses, barring unexpected mergers or acquisitions.
The $500 million figure for 2026 is predicated on BetMGM obtaining between 20 percent and 25 percent of igaming and sports-betting market share. By contrast, Caesars Sportsbook anticipates a $550 million cash flow in 2026, while DraftKings is targeting $1.4 billion for the same period.
Greff wrote that “given its aspirant market-share goals,” BetMGM would be spending more on marketing next year vis-a-vis revenue. “Overall, we don’t find the 2024 comments all that surprising, given MGM’s similar directional commentary,” he added, with a nod to the company’s third-quarter earnings call.
Implying 29 percent revenue growth, BetMGM stuck with its profitability prediction for 2023, as well as its net-revenue target of between $1.8 billion and $2 billion. Greff wrote. “BetMGM’s single-wallet functionality is driving 5x higher acquisition rates of existing players in new states” and MGM-sourced omnichannel players are being obtained at a lower cost and a five-times-higher return on investment.
Deutsche Bank analyst Carlo Santarelli observed that BetMGM’s half-billion-dollar profit projection for 2026 exceeds his own $406 million. He added that return on investment in 2023 was likely to be approximately $350 million better than the 2022 loss.
Santarelli also noted that BetMGM’s targeted 20 percent to 25 percent market share (igaming and sports betting blended) was far higher than that anticipated by Caesars. The latter expects a comparable $500 million in return on investment with lower market share.
Management commentary on next year was restricted to the revenue miss, “though we don’t believe, at this stage, that will come as a surprise to investors,” Santarelli penned. He expects negative return on investment of $100 million to $200 million. Noting the large amount of market share expected to be gained by 2026, Santarelli opined, “It would appear investment is necessary.”