MGM Resorts Express Satisfaction with BetMGM's Route Towards financial Success
While BetMGM Recently Reported a Profitable Quarter, CEO Remains Hush on Potential Renewed Bid for Entain or Acquisition of Its Stake
A week ago, BetMGM, the first-ever profitable quarter for the mobile operator, has sparked lots of curiosity but has not ignited any words from MGM Resorts CEO Bill Hornbuckle regarding the possibility of a renewed bid to buy co-owner Entain or the acquisition of its 50% stake in BetMGM.
During MGM Resorts' 2023 second-quarter earnings call, Hornbuckle focused on the progress of the partnership with LeoVegas, a European online gaming subsidiary, and working alongside Entain with the goal to maximize the growth and profitability of MGM and LeoVegas[3]. He remained tight-lipped about any future plans regarding BetMGM's ownership structure.
In 2021, MGM made an $11 billion bid to acquire Entain, which the latter rejected, stating that MGM significantly undervalued the company and its prospects[4]. As of now, there's no information suggesting a change in Entain's stake in BetMGM. MGM Resorts pegged its 50% equity value in the online gambling operator at approximately $2.78 billion, leading to an implied valuation of $5.56 billion for BetMGM based on nine equity analysts' models[4].
Lloyd Danzig, founder and CEO of Sharp Alpha Advisors, pointed out in a February interview with Sports Handle that it's unlikely Entain will retain its ownership stake in BetMGM for long[5]. He added that full ownership would provide MGM with product development capabilities and agility currently restricted by the existing relationship.
Ahead for BetMGM
Q2 Earnings
Wednesday's call showed a positive note for MGM, with consolidated net revenues of $3.94 billion, representing a record quarter and an increase of 21% year over year[3]. MGM topped analyst consensus estimates of $3.82 billion, and the company also reported adjusted diluted earnings per share of $0.59, up from $0.04 in the prior year quarter[3].
For the three-month period ended June 30, MGM also reported an adjusted EBITDAR of $1.1 billion, and BetMGM's first quarter of EBITDAR profitability sets a positive tone for the second half of 2023[3]. However, MGM Resorts did not provide a detailed guidance for the venture's profitability over the second half of the year.
Customer Acquisition Costs
Customer acquisition costs once exceeding $400 per new customer have declined to below the low $300s at BetMGM, thanks to a more active maturity in how the venture markets to customers and which customers it targets with marketing materials[3].
Future Licenses
MGM Resorts anticipates receiving a New York license in the first half of 2024. Its recently announced partnership with Marriott was also discussed on the call, with potential future integrations between the two brands, which could be a key driver for customer acquisition at BetMGM[3].
Product Enhancements
Hornbuckle sounded optimistic about upcoming product enhancements for BetMGM, such as the integration of Angstrom Sports, which he expects to improve BetMGM’s parlay and in-game offerings[4]. Across the industry, operators are preparing for the shift to in-game betting, with BetMGM's plans to leverage Angstrom’s technology receiving high marks from analysts.
BetMGM currently ranks third among operators in national market share, while online sports betting market share has gradually decreased for the third party[3]. However, Hornbuckle hopes to regain some lost ground by focusing on the cross-sell between sports betting and iCasino[3].
For a more detailed analysis of BetMGM's trajectory, you can check out Sports Handle's interview with Lloyd Danzig or Alfonso Straffon's evaluation on BetMGM's path to profitability.
Matt Rybaltowski contributed to this report.
References
- Entain makes latest US play with Angstrom Sports takeover
- Adam Greenblatt outlines BetMGM's path to profitability
- MGM Resorts Q2 2023 Earnings Call Transcript
- Consortium News: Casinos and Gambling - Latest News
- Sports Handle: Lloyd Danzig on Entain's stake in BetMGM
- The profitability of BetMGM's first ever profitable quarter has not prompted MGM Resorts CEO Bill Hornbuckle to discuss potential renewed bids for Entain or the acquisition of its stake.
- During the earnings call, Hornbuckle focused on the partnership with LeoVegas and their goal to maximize the growth and profitability of MGM and LeoVegas, without touching on the subject of BetMGM's ownership structure.
- Lloyd Danzig, CEO of Sharp Alpha Advisors, suggested that it's unlikely Entain will retain its ownership stake in BetMGM for much longer, as full ownership would give MGM greater product development capabilities and agility.
- In the call, Hornbuckle expressed optimism about upcoming product enhancements for BetMGM, including the integration of Angstrom Sports' technology to improve parlay and in-game offerings.
- MGM currently ranks third among operators in national market share, and the CEO hopes to regain lost ground by focusing on the cross-sell between sports betting and iCasino.
- The potential integration between MGM Resorts and Marriott, along with the Angstrom Sports technology, could be key drivers for customer acquisition at BetMGM.
