BetMGM Hits Targets Ahead Of Schedule, Delivering Profits In Q2

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Ahead of this week’s 2023 first-half business update, BetMGM guided toward profitability for the final six months of the calendar year.

The subject of profitability is a sensitive one for major sportsbooks as Wall Street pressures leading operators to turn a profit in the fifth year since the U.S. Supreme Court’s historic PASPA ruling. On Wednesday, BetMGM demonstrated to investors that it is ahead of schedule.

Amid robust same-state growth and bonus optimization efforts, BetMGM achieved positive EBITDA (earnings before interest, taxes, depreciation, and amortization) during its second quarter of 2023, a three-month period ending June 30. The busy period includes the NBA Finals, the NHL’s Stanley Cup Finals, and the NFL Draft among annual events on the sports calendar.

At the same time, BetMGM reiterated revenue guidance for full-year 2023 in the range of $1.8 billion to $2 billion. BetMGM is now guiding toward the high end of the range, the venture said Wednesday. BetMGM is a 50-50 joint venture between MGM Resorts and Entain, one of the top European gambling operators. BetMGM still intends to turn a profit in the second half of the year.

“I am pleased with the significant progress we have made during the first half of 2023 as we continue our strong growth and remain on our path to profitability,” BetMGM CEO Adam Greenblatt said in a statement. “Our focus remains on building a sustainable, scalable, and returns-focused business with leading products that our players enjoy responsibly.”

Financial highlights

BetMGM finished the first half with net revenue from operations of $944 million, a figure that implies revenue of $468 million over the last three months. The operator credited a new bonus optimization system and an enriched player account management platform for improved margins over the first half.

During the period, BetMGM increased its sports net gaming revenue margins by 300 basis points while generating a 65% increase in revenue per customer for players acquired before 2022. At the start of the year, BetMGM refined its analytics framework by using its data science capabilities to hone its approach to player bonusing.

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On the state level, BetMGM improved same-state player acquisition costs by 8% over the same period from 2022. The metric is closely watched across the industry as operators look to rein in marketing expenses after years of spending heavily on promotions. BetMGM offers sports betting in 21 North American markets, including Ontario. It also offers iGaming in five U.S. states. On the digital side, BetMGM reported same-state net revenue growth of 25%.

Delving further into the metrics, BetMGM indicated that each of its annual digital sportsbook cohorts launched from 2019 through 2022 delivered “positive contribution profit” in the second quarter. BetMGM defines contribution profit as net gaming revenue minus direct costs (excluding depreciation, amortization, and staffing expenses) in a given state.

Since the results underscore BetMGM’s ability to generate faster returns from more recently acquired customers, the metrics represent the “most notable takeaway” from the venture’s mid-year update, according to JMP Securities analyst Jordan Bender.

Last year, FanDuel became the first U.S. sportsbook in the post-PASPA era to generate profitability in a single quarter. Although FanDuel is guiding to full-year profitability in 2023, no operator has reported positive EBITDA for a full 12-month period since the high court’s ruling.

Declining market share

While BetMGM continues to post impressive figures on the iGaming side, its market share from online sports betting has tailed off relative to its competitors. It maintained a market share of 11% in the first half of the year, with a higher figure of 13% in states where the operator went live on day one. Its comparable market share was 13% and 20%, respectively, at the end of 2022, according to Truist Securities analyst Barry Jonas.

MGM Resorts posted fractional gains on Wednesday to close at $50.17 a share. After a challenging year in 2022, MGM is up 35% year-to-date. On the London Stock Exchange, Entain jumped 4.7% to 1,360 pence.

BetMGM issued the update ahead of MGM Resorts’ second-quarter earnings call next Wednesday after the bell. Besides MGM, two other leading operators — DraftKings and Caesars Entertainment — are scheduled to report quarterly earnings next week.


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