BetMGM said it is focusing on investment in 2024 to position itself to grow market share and boost adjusted earnings to $500 million in 2026 as it leverages an omnichannel approach with a big emphasis on Las Vegas and its sports scene.
BetMGM CEO Adam Greenblatt said 2024 is about improving products, driving accelerated player acquisitions, aiding player retention, and bringing omnichannel to life in a more concerted way through product innovation and sports betting improvements in Las Vegas.
“As our sports product and player retention continue to improve, we will invest in player acquisition,” Greenblatt said in a video conference call Monday with Wall Street analysts. “We remain very confident in our data-driven flexible approach to marketing investment and predictive value models as well as our ability to create successful marketing partnerships that drive our business forward, the most recent of which is our partnership with Marriott.”
BetMGM has entered into a loyalty marketing agreement with Marriott that will allow players to earn Marriott Bonvoy points while playing with the operator and convert BetMGM Rewards points into Marriott Bonvoy points. The deal will be live during the first half of 2024.
Greenblatt said 2024 is the year that “Nevada comes to life” for BetMGM, subject to approval by state regulators that will allow its flagship sports app to be used by the millions of visitors who visit MGM properties in Las Vegas every year.
“Once we are able to merge Nevada into our U.S. single-wallet platform, every BetMGM player returning from Vegas to one of our other markets will be able to seamlessly continue playing with their available balance as well as earn rewards points, which can be applied to their next trip to an MGM Resorts property,” Greenblatt said
MGM’s Las Vegas properties have 30 million room nights available per year, with more than four million Las Vegas visitors captured in their database and millions more who are anonymous players flowing through the floors, Greenblatt said.
“This population represents a deep and replenishing pool for new player acquisition as well as potent retention and reactivation mechanisms,” Greenblatt said. “The players who might play with a different app at home rediscover BetMGM in Vegas. We are especially excited about this because of what we know about our omnichannel players. These players are nearly three times more valuable than single-channel players, meaning they are contributing outsized revenue to our business.”
Greenblatt said Las Vegas is “getting stronger and more relevant” to its sports business over time. He cited the Strip’s sports venues of Allegiant Stadium, T-Mobile Arena and plans for a 33,000-seat stadium for the relocation of the Oakland A’s in 2028.
“We can see a path to three major U.S. sports being represented in Vegas,” Greenblatt said. “To illustrate the excitement about sports in Vegas, the [Formula One Las Vegas] Grand Prix was attended by more than 300,000 fans and was the most bet-on F1 event in BetMGM’s history, and it was also the highest-grossing weekend in hotel revenue in [MGM Resorts International’s] history. We’re looking forward to other events on the virtual doorstep of MGM properties, including the Super Bowl in February, which will showcase the power behind our brand and what we can offer our players.”
Greenblatt maintains that BetMGM, which is third in market share nationwide behind FanDuel and DraftKings which have no sports betting in Nevada, is positioned better than any other operator to “take maximum advantage of Vegas becoming the sports destination in America. The economics of this population are also really exciting for BetMGM. These players are cheaper to acquire and more valuable with predictive ROI from MGM-sourced players five times greater than those sources in the open market.”
BetMGM’s Chief Financial Officer Garry Deutsch told analysts that 2023 has been an important and satisfying year for the company. This is the third consecutive year it has added hundreds of millions in revenue to the top line, he said.
“It is a satisfying year because the business is developing as we have long projected, giving us ever greater confidence that we have our hands on the instruments of control for our continued ascension,” Deutsch said. “We are operating in a market that we even envisioned a few years ago.”
BetMGM will end 2023 with $1.8 billion to $2 billion in revenue. It delivered its first EBITDA-positive quarter in the April through June period and is expected to be EBITDA-positive for the second half of 2023, Deutsch said. The EBITDA loss in 2022 was just under $450 million.
“Our bottom-line performance in 2023 will show massive year-over-year improvement delivered by the maturing of our player cohorts and the overall scaling of the business,” Deutsch said.
In June, BetMGM announced it didn’t need any more capital from joint venture partners MGM Resorts and Entain beyond the $150 million committed for 2023. There’s been more than $1.26 billion in capital commitment by both. The current plans are based on self-funding.
Deutsch said 2023 revenue through the third quarter is up 39% year-over-year with same-state digital growth of 18%. Sports betting grew faster than igaming. The margin for digital sports – the percentage of handle that drops to the revenue line net of any promotions – nearly doubled for the first three quarters of the year compared to 2022, he said.
“This is primarily driven by our business optimization efforts, but also from players making higher-margin parlay bets,” Deutsch said. “Through the third quarter, we’ve seen 80% of our players place a parlay bet. The new and enhanced sports products rolling out from Angstrom will expand the breadth and quality of our parlay and live offerings.”
