BetMGM Has Hard Spell in Q1, Blasts Prediction Markets

BetMGM has had a difficult quarter, which is bad news, as Q1 is usually packed with some of the most worthwhile sports betting events, whether the Super Bowl, the NBA Playoffs, or March Madness, all of which generate billions in handle across the nation. 

BetMGM Recalibrates Expectations Following a Harder-than-Expected Q1

However, BetMGM has scaled back its EBITDA guidance to the low end of the $300 million – $350 million range it previously set, and its revenue forecast is now set between $2.9 billion and $3.1 billion, down from $3.1 billion and $3.2 billion previously.

Most of this has to do with customer acquisition costs, which have risen exponentially over the past months, and not least because of the rise of the prediction market vertical, which Adam Greenblatt, the company’s boss, has criticized openly. 

He did not hesitate to describe prediction market platforms as “new sports betting companies.” Acknowledging this, Greenblatt also outlined a future where things will continue to improve for the company, even though the Q1 results suggest a temporary recalibration of the business strategy overall. Greenblatt is fairly optimistic about the future.

“We are controlling the controllable. We are not assuming that irrational spending continues to become more rational. Long-term, the market is going to come back to us, and that’s an exciting moment.” 

This particular remark seems to be intended at prediction markets, with Greenblatt remaining confident that users will flock back to traditional sports betting platforms. 

Prediction Markets Much to Blame for the Temporary Setback

The core reason for this return would be the fact that sportsbooks simply provide a better value overall, “unless you are in high school,”  he argued. 

Where the value proposition lies is still subject to speculation, with local gaming regulators pushing back against prediction market platforms, but facing a fierce response from the federal government, which has launched lawsuits against specific states.

Meanwhile, prediction markets such as Kalshi and Polymarket are suing back or preemptively, trying to prevent states from enforcement. The platforms have been moderately successful in places such as Arizona and New Jersey, but have found courts inexorable in Nevada and elsewhere. 

By one estimate, as the field grows more contentious and legally fraught, companies such as BetMGM that choose to sit it out could be the biggest winners, as they possibly secure entries in places such as Texas that are considering the regulation of sports gambling.

DraftKings and FanDuel, for example, chose to exit Nevada over their preference for prediction markets.