It’s been a good month for MGM International. After a second quarter that saw the company’s revenue drop 91 percent, MGM is in recovery mode thanks to a recent series of deals.
The latest came Aug. 11, when technology giant InterActive Corp purchased 12 percent of MGM’s stock in a $1 billion sale. Before that, news about MGM’s Macau property, a deal with the PGA and one with NASCAR helped drive up stock prices. Throughout the recovery, there’s been one focal point driving growth. While BetMGM may currently be a small piece of the company’s revenue stream, many see it as a key to the future.
“What initially attracted us to MGM was an area that currently comprises a tiny portion of its revenue-online gaming,” said Barry Diller, IAC’s chairman and senior executive. “There is a digital first opportunity within MGM Resorts’ already impressive offline businesses, and with our experience we hope we can strongly contribute to the growth of online gaming.”
Diller made the comments in a letter filed with the U.S. Securities Exchange Commission on Monday. He added that acquiring a piece of BetMGM was worth the cost.
“We believe MGM presented a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a preeminent brand in a large category, with great potential to move online,” Diller said. “If ever there was a time, this moment is unique.”
NASCAR, PGA Also Weigh In
NASCAR and PGA officials echoed those ideas, when asked why they signed a deal with MGM. The NASCAR agreement, which became official on Aug. 11, specifically centered around BetMGM. Over the first seven months of this year, MGM reported their NASCAR turnover grew by an estimated 1,300 percent over 2019. That was just with limited options. Right now, you can bet on top-finishing drivers, driver matchups, stage winners and the number of the winning car from the app. But there’s one key part missing: live, in-race analysis and betting. As part of the deal with NASCAR, that’ll change for BetMGM in the 2021 season. Also, NASCAR officials will be working with MGM to develop a free-to-play game, although they didn’t provide any further details on that part.
“Partnering with a best-in-class operator like BetMGM positions NASCAR to build on the positive energy and momentum we’re seeing around gaming and in particular the live in-race experience,” said Scott Warfield, NASCAR’s managing editor for gaming.
NASCAR isn’t the only sports league looking to BetMGM to build momentum. If you looked at a Top Five list of BetMGM’s most popular offerings, the traditional ones like baseball and football would be on there. But so would the PGA Tour. In fact, the PGA finished the first seven months of the year as one of the company’s top draws. Just like NASCAR, this was despite limited offerings. Both companies hope this week’s deal causes those numbers to grow even higher. MGM became an official betting operator for the PGA on Monday. They can now market themselves within all PGA media and on all the PGA partner platforms. The company can also now create official pre-match and post-match betting programming, as well as provide PGA highlight videos to any users who placed bets.
What is BetMGM Becoming?
A premium brand. That’s what everyone referred to BetMGM as this week. You saw it in the documents IAC filed when they bought part of the company. You heard it from NASCAR and PGA officials and even on IAC’s own quarterly earnings call Monday. The message was clear. Sports betting might be a small part of MGM’s revenue now, but that’s expected to quickly grow. During his quarterly earnings call, IAC’s CEO Joey Levin said that he believes the current $450 billion global revenue is barely scratching the surface of what sports betting can become.
“[Gaming is] less than 10 percent penetrated online,” Levin said. “That 10 percent penetration is definitely getting bigger, it’s definitely getting meaningfully bigger. There is no question that the 10 percent gets bigger over time and you benefit from those natural tailwinds.”
Levin didn’t ignore COVID-19 or the challenges it created. But while MGM’s physical operations are limited, the situation also provided an opportunity to grow BetMGM’s traffic and brand recognition. People who can’t travel to an MGM sportsbook in person can just pull up the app if they live in Colorado, as well as Indiana, Michigan, Mississippi, New Jersey, Nevada or West Virginia. Plans are also in place to add four other states to that list by the end of 2020. These plans, Levin said, made BetMGM and the overall company a very attractive investment.
“We do believe that, when it comes back to normal, this business is incredibly well-positioned to benefit,” Levin said.