BetMGM Claims Title of Largest Sports, iGaming Operator in US

MGM Resorts says net revenues from BetMGM totaled $227 million in Q3 2021; CEO optimistic BetMGM will be picked for NY license.
BetMGM Claims Title of Largest Sports, iGaming Operator in US
By
November 06, 2021

MGM Resorts International said BetMGM, its joint venture (JV) with Entain, became the largest sports betting and iGaming operator in the US during Q3 2021, according to MGM’s quarterly presentation this week.

BetMGM Sportsbook launched mobile sports betting in three states — Arizona, South Dakota and Wyoming — during the third quarter, pushing its number of active jurisdictions to 16. Bill Hornbuckle, CEO of MGM, said the JV was “well on its way” to being deployed in 20 jurisdictions by the end of Q1 2022.

The addition of the three states for sports betting appears to have lifted BetMGM to the title of biggest sports betting and iGaming operator overall. BetMGM now holds a 23% market share in both verticals across all US jurisdictions, including where it is not currently active. BetMGM holds a 26% market share where it is active.

By MGM’s calculations, BetMGM has been the top iGaming operator in the US since January 2021, and it held a 32% share of the iGaming market in August across all jurisdictions, including where the JV wasn’t active. That figure is about double the market share of its nearest competitor, MGM said.

“We’re in the middle of the NFL season and the market remains competitive,” Hornbuckle said during an earnings call Wednesday to discuss Q3 2021. The CEO complimented his team for “performing exceptionally well, focusing on an ROI-positive marketing spend. We are encouraged to see early signs of a more rational environment as the season progresses.”

BetMGM net revenue was $227M in Q3

MGM reported that net revenues associated with BetMGM operations totaled $227 million in Q3 2021, up 17% from the preceding quarter, which was $194 million. The parent company added that its 50% share of BetMGM’s operating loss was $49 million in Q3 2021, up from $46 million in Q2 2021.

CFO Jonathan Halkyard said BetMGM’s net revenue for Q3 2021 “was partially offset by heavier customer acquisition and reactivation spend from BetMGM’s successful Arizona launch and the return of football, resulting in September first-time deposits growing to over five times that of September 2020.”

Halkyard added that 16% of BetMGM’s new players were attributed to MGM, which means they were active with MGM over the last 12 months.

“This percentage has remained in a relatively stable range while BetMGM has significantly broadened its reach, illustrating our ability to continually optimize the conversion of M life Rewards members to BetMGM,” the CFO said, adding that internal research shows that players who come from MGM have lower customer acquisition costs and more than five times the marketing ROI compared to non-MGM-sourced players.

“What’s also encouraging is that in New Jersey, our most mature market, based upon preliminary data, we found that MGM-sourced omni customers are spending more on property at Borgata than they did when they were exclusively land-based.” Forty-two percent of new M life Rewards sign-ups came from BetMGM, Halkyard said. M life Rewards currently has more than 37 million customers in its database.

“Doing well” with Entain

MGM’s earnings presentation was one of the first opportunities for its executives to provide commentary on DraftKings’ unsuccessful $22.5 billion bid for Entain.

Hornbuckle said “there remains a great deal of enthusiasm in the market” despite their competitor’s failed bid—which had caused a stir within the industry and raised questions about the future of BetMGM in particular.

“We all saw—and, obviously, we were an insider to a certain degree—the experience that DraftKings and Entain just went through,” Hornbuckle said. “Time will tell where that all goes, if it goes anywhere.

“We enjoy our partnership [with Entain]. I think we’re doing well by it. They’ve been good partners as it relates to the day-to-day business activity. We’d like to do more domestically. And whether we ultimately do more internationally or not with or without them, I think time will tell as well. But for now, we’re going to wait and see and see what happens to that marketplace for a while.”

CEO: 9-10 operators in NY likely

As the New York State Gaming Commission (NYSGC) moves closer to awarding mobile sports wagering licenses in the state, Hornbuckle was optimistic that BetMGM would be one of the recipients. The regulator has stated that it plans to award licenses to at least two platform providers and four operators.

Operators interested in the Empire State were required to select a tax rate as part of the bidding process. The rates, which were included in a final tax rate matrix issued by the NYSGC, ranged from 35% to 64%. Analysts have questioned how the industry would fare if the rate was at the high end of that range.

“I can assure you we weren’t in the 62% crowd,” Hornbuckle said. “It’s probably going to end up at 50%. Time will tell, but I think that’s what we’re all contemplating. It will be nine or 10 operators, give or take.”

While MGM owns the Empire City Casino in Yonkers, it does not operate a retail sportsbook there. Nevertheless, the CEO said “going into it, I’m happy we have a property there. It’s one of the more expensive media markets in the world, but it’s also the largest market we will launch in to-date with M life database.

“We’ll be there from Day 1. I think we’ll get off to a great start. Time will tell with sports how much money is to be made. For us, it’s an omnichannel play. We’re going to have a huge presence there. And hopefully, someday, we will get to iCasino, but that’s something for well down the road.”

Additional features in the works

During the Q&A portion of the presentation, Hornbuckle was asked if BetMGM was working on features to boost player retention such as same-day parlay and live dealer games.

“We have just launched with Evolution some product out of New Jersey, and we are doing the same in Michigan with live dealer. We think it’s an integral part of the business and something that people are leaning into more. Same with same-day parlay.

“We’ve got a bunch of product work and revisions. We didn’t want to do it in the middle of football season. We tried to do a couple things last year and that got us in a little bit of trouble, so we’ll continue to evolve.”

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