BetMGM CEO Adam Greenblatt noted that the operator’s strong 2023 EBITDA second-half profitability has put the company “in a position to be self-funded from here on”.
CFO Gary Deutsch added that the operator’s positive adjusted EBITDA projection for 2026 – $500m – means it is “done taking cash” from parent companies Entain and MGM Resorts International for now.
BetMGM in position to be ‘self-funded’
Speaking on an investors call as part of BetMGM’s Business Update, Greenblatt stated that the operator’s net revenue for 2023 is expected to reach the top end of its guidance between $1.8bn and $2bn.
This has resulted in “half a billion dollars of top-line growth in each of the past three years, with strong organic growth in the current year, particularly in igaming given no new markets were added in 2023”.
In addition, the CEO noted that BetMGM’s EBITDA has grown by “well over $300m” and that EBITDA profitability will be achieved in the second half of the year, which means the company is “in a position to be self-funded from here on”.
Factors that were highlighted as positive contributions for the operator heading into 2024 include a ‘gaming offering with differentiated content and omnichannel experiences’ alongside the single account single wallet platform assisting seamless gaming between land-based and online, as well as the integration of Angstrom to enhance its sports betting pricing strategy and product portfolio.
2024 = investment year
Greenblatt also mentioned that 2024 will be an “investment year” for the operator with a negative EBITDA contribution as it seeks to expand upon its current market share in both igaming and sports betting to 20-25 per cent.
The investment strategy next year covers three areas: sports and gaming product; data-driven player acquisition and retention; and activating omnichannel, particularly in Las Vegas by leveraging its relationship with MGM Resorts.
Greenblatt explained: “2024 is about three things. One, continuing our journey to the best product, with all strategic pieces in place in both OSB and igaming. Product Roadmap execution in 2024 is key to investing behind our improving product driving accelerated player acquisition, and aiding player retention.
“Bringing omnichannel to life in a more concerted way through product innovation, and importantly, Vegas. We’ve delivered on our 2023 commitments and are very clear on what’s needed to drive enterprise value and market share. It’s in this context that we are choosing to make 2024 an investment year.”
BetMGM also believes that customers who play in Vegas could also become online players at home thanks to the single wallet solution and omnichannel offering.
Greenblatt noted: “With over four million unique Vegas visitors captured on the MGM customer database, and millions more anonymous players are flowing through its floors.
“This population represents a deep and replenishing pool for new player acquisition, as well as potent retention and reactivation mechanisms as players who might play with a different app at home, rediscover BetMGM in Vegas.
“We’re especially excited about this because of what we know about our omnichannel players. These players are nearly three times more valuable than single channel players, meaning they are contributing outsize net revenue to our business.”
Gaming in focus
Looking at gaming, BetMGM spotlighted four areas that have helped the product offering become even stronger: in-house and exclusive games; omnichannel offering; personalised experiences; and tools to assist engagement and cross-selling.
In particular from across its library of 3,600-plus titles, the operator brought attention to Aristocrat’s Buffalo slot and the new Wheel of Fortune gaming brand as two titles that have helped to expand its reach. The live casino offering of Dual Play Roulette was also praised.
In terms of cross-selling players between igaming and online sports betting, Deutsch stated that BetMGM has seen just north of 60 per cent of sports bettors cross-sold to igaming, and 40 per cent of players in the opposite direction.
Positive 2026
With the 2024 investment, losses are expected to occur next year. However, BetMGM is forecasting producing $500m in positive EBITDA in 2026, with Greenblatt expecting “much more in the years to follow”.
In addition, Deutsch noted that the operator’s positive adjusted EBITDA projection for 2026 means it is “done taking cash” from parent companies Entain and MGM Resorts for now, which has amounted to $1.26bn in total.
When asked further about the losses expected next year and the journey towards being positive in 2026, the CFO explained: “When we think about 2024, we do think of it as an investment year, which will ultimately be a negative year in terms of EBITDA.
“When we look at 2025, that’s where we see it going back to cash flow positive and we’re at a point where we’re comfortable with the investment rationale there to put the extra money funded from what we’re turning out from the operations back in. There’s growth and there’s profit to be had in the market share in the long term.”
Greenblatt added: “We believe in our prospects, we believe in the uniqueness and specialness of BetMGM. We hope to surprise and delight in the years to come.”