As Caesars Entertainment neared completion of its $4 billion acquisition of sports betting front.
During a highly anticipated webinar Wednesday morning attended by top global stock analysts, BetMGM projected net revenue of $1 billion for Fiscal Year 2022, while increasing its guidance for long-term U.S. market share. BetMGM, a t venture between MGM Resorts and Entain plc, now targets U.S. market share for online sports betting and iGaming of 20-25%, up from previous estimates around 15-20%. BetMGM executives cited significant progress in newly legalized states, continued customer loyalty, and Entain’s proprietary technology platform for the optimistic long-term view.
“The unique partnership of MGM Resorts’ leading brand and loyal customer base and Entain’s proprietary technology platform gives us the best resources to win in this market,” CEO Adam Greenblatt said at BetMGM’s annual Investor Day presentation.
The market share debate 1e6w6b
Though FanDuel are widely viewed as the presumptive leaders in U.S. online sports betting market share, there are signals that BetMGM is catching up.
In February, BetMGM maintained a total market share of 22% in all U.S. jurisdictions where the company is currently active. While BetMGM has sports betting offerings in 12 states, the company expects to be live in eight additional jurisdictions over the next year. The figures are based on the company’s total market share by gross gaming revenue (GGR) for retail, online sports betting (OSB) and iGaming, BetMGM said in the presentation.
BetMGM ( $DKNG competitor) held an investor day this week and expects $1 billion in net revenue in 2022 from $178MM in revenue last year. Growth expectations astounding. 1Q21 net revenue will be almost equal to total revenue last year! $MGM
See slide from investor day yesterday pic.twitter.com/4JBKw1OTZX
— Special Situations 🌐 Newsletter (Jay Singh III) (@SpecialSitsNews) April 22, 2021
BetMGM also provided color on a metric known as “contribution breakeven,” which the company determines through factors such as state tax rates, market access revenue shares, and market-specific player values. In business parlance, contribution margin is determined when a company subtracts variable costs from the total price of a product. In 10 operators went live across the state.
Days later, BetMGM rolled out a mobile sports betting app in Virginia, another state that went live with online sports wagering in January. Having notched a partnership agreement with the MLB’s Washington Nationals, BetMGM plans to open a retail sportsbook at Nationals Park this season – the company’s first in-venue sportsbook. In March, Virginia ranked first in a category known as net gaming revenue (NGR) per player among all digital-only states the company operates in.
Across the U.S. market, BetMGM noted that its average time for contribution breakeven as it relates to online sports betting ranges between 12 and 24 months per state.
Other highlights from BetMGM Investor Day: 4f2i56
- The investment by MGM Resorts and Entain this year is expected to be approximately $450 million, incremental to the $210 million already invested until the end of 2020.
- The total long-term addressable market (TAM) for online sports betting and iGaming in North America is now $32 billion, according to BetMGM projections, up from previous estimates of $25 billion. Of that amount, the U.S. online sports betting market s for about 44% of the total at $14.1 billion annually.
- BetMGM expects to be a participant in the New York online sports betting market and participate actively farther north into Canada. The long-term TAM in Canada is $4.4 billion, according to company projections. The comments were made one day before the Canadian House of Commons ed C-218, a bill that seeks to legalize single-event sports betting in Canada. The bill now heads to the Senate.
- Entain’s global platforms handle in excess of 2 million bets per day. In of BetMGM’s overall handle, approximately 43% comes from in-play wagers. Across the pond, in-game betting s for about two-thirds of sportsbook handle in European markets, Truist Securities analyst Barry Jonas wrote in a research note.
- During the first quarter of 2021, BetMGM experienced quarterly growth in parlay bets of 116% in comparison with the fourth quarter of 2020. Seasonality appeared to play a role, as the NBA and NHL opened their respective regular seasons later than usual.
- On a long-term basis, BetMGM projects a Cost Per Acquisition (A) target of $250 per player. Over the first quarter, BetMGM’s digital sports A in New Jersey, BetMGM said during the presentation.
- Although the company unveiled a BetMGM horse racing mobile app Wednesday, it did not set a firm timeframe for when the app will go live. Greenblatt indicated that the launch is not imminent.
- Due to continued state-by-state expansion, BetMGM anticipates that it could see the highest annual cash usage and losses to date this year, Jonas indicated. While BetMGM does not intend to turn a reasonable profit until 2023, it should be noted that Wall Street consensus estimates also forecast a long road to profitability for DraftKings, perhaps not until the same year.
BetMGM is also turning to personalization as a tool for retaining customers, Chief Revenue Officer Matt Prevost outlined in a presentation. A customer with a demonstrated history for betting on MLB in-game parlays featuring the New York Yankees may receive an alert prior to the first pitch with a pre-built parlay. Then, throughout the game the customer would receive key stats and trends that could help the player develop an in-game strategy.
When asked if BetMGM will offer pitch-by-pitch betting for MLB offerings, the company did not indicate if it would offer the bet type at some point this season. The company does not have any tech limitation in its way if it does want to launch the bet type this year, said BetMGM Chief Operating Officer Ryan Spoon.
Stock movement 1k2w4w
On Wall Street, pure-play sports betting companies, as well as gaming companies overall, have rebounded considerably from the height of the COVID-19 pandemic when several companies saw their stock price dip into the single digits. MGM Resorts traded around $41 on Friday, slightly below its 52-week high of $42.74 a share. MGM opened Wednesday’s session at $39.34, hours before the Investor Day presentation began.
Caesars Entertainment rose moderately on Friday, trading above $96 a share, one day after completing its acquisition of William Hill. Upon the announcement of that finalization, longtime William Hill US CEO Joe Asher stepped down from his position.
While DraftKings is up about 40% from November lows of $35, the Boston-headquartered company is down somewhat in recent weeks after approaching $75 at the start of March Madness. Flutter Entertainment, which is mulling the spinoff of FanDuel for a potential IPO, is currently up about 46% from its 52-week low.
MGM Stock Rises As Massive Growth Seen From DraftKings Rival BetMGM | Investor's Business Daily https://t.co/hpQiUiaPwA
— Gary Greenberg (@GAGreenberg) April 21, 2021
MGM did not address whether it plans a renewed acquisition attempt of Entain later this year. Entain, formerly known as GVC Holdings, rejected MGM Resorts’ $11 billion takeover attempt in January.
Australian gaming company Tabcorp subsequently turned down Entain’s $2.3 billion takeover bid last month.
Under U.K. takeover law, MGM Resorts is prohibited from making another acquisition approach at Entain before July, sources told Sports Handle.
