BetMGM: 53% Projected Growth in 2022 Not Enough for Profit

MGM Resorts International and Entain Plc released today a joint trading update on the performance of their jointly owned sports betting and gaming brand BetMGM in 2021, informing investors the joint venture is not expected to become profitable in 2022.

FY 2021 Performance

BetMGM is expected to end FY 2021 with approximately $850 million of net revenue to surpass the company’s management expectations and dwarf FY 2020, beating it by almost five times, while same-state growth in net revenue is up approximately 140% year-over-year.

The sports betting and gaming brand has firmly established itself as the market leader in online casinos across the markets it operates, holding an average of 30% market share for the three months to November 2021. BetMGM is live in four markets with online casino operations.

In sports betting, MGM’s and Entain’s joint venture is affirming its number two ranking across all 19 jurisdictions it is operational, holding 24% market share for the same three-month period.

The company outlined average player value was in line with management expectations, as was the cost per player acquisition forecasted at $250, supporting the long-term strategy of achieving a sports betting market share in the US of between 20% and 25%. The total addressable market in North America is projected at $32 billion.

Also in line with expectations, BetMGM expects EBITDA in FY 2021 to be negative in the range of $420 million to $440 million. The company’s expectations are not much different in terms of FY 2022 EBITDA either, despite expecting to surpass $1.3 billion in net revenue.

FY 2022 Outlook

Looking into the near future, BetMGM said its continued growth would be supported by investments in additional markets, including Illinois, Louisiana, Puerto Rico, and Ontario in Canada, as well as product deployments.

BetMGM said its online sportsbook would go live with operations in Illinois and Louisiana in the first quarter, while its retail sportsbook would launch in Puerto Rico. The company is anticipating the launch of its online sports betting and casino gaming operations in Ontario, Canada, to take place later this year.

BetMGM is betting on expanding its first-to-market Bingo product and the BetMGM Racing app into additional states while also continuing to enhance its products in existing markets. The brand would continue to rely heavily on its returns-driven marketing strategy built around the MGM Resorts loyalty program while maintaining its levels of customer service and emphasis on responsible gaming.

To achieve these objectives, BetMGM would need a further $450 million investment from its parent companies in 2022 that would bring their total investment in the joint venture since its launch in 2018 to approximately $1.1 billion.

In terms of profitability, BetMGM outlined based on its current assumptions of future live markets, FY 2023 could see positive EBITDA, meaning FY 2022 is unlikely to be profitable for the business.