MGM Resorts International (MGM) and Entain share prices dropped sharply this week after BetMGM reported an H1 loss of $123 million and said it expects similar results in the second half of 2024. The 50/50 MGM/Entain joint venture also adjusted its $500 million 2026 EBITDA target to “the coming years.”
BetMGM’s stated goal of achieving a 25% market share received a similar adjustment. Currently, the company commands only 13% of gross gaming revenue (GGR) across iGaming and sports betting in the US and Ontario. However, that market share jumps to 22% when consideration only BetMGM’s online casino business, which is much closer to the target. The US online casino market is a close three-horse race between BetMGM, DraftKings, and FanDuel. However, the former daily fantasy sports companies are more dominant when it comes to sports betting.
Investors registered their displeasure with the results by dumping stocks. On Thursday morning, MGM’s share price was down 12% despite other areas of the company reporting solid fiscal growth. Entain’s stock value also fell by 8% at the close of trading on Monday.
The MGM dip took longer to manifest, as investors may have been waiting for an update on the company’s retail performance. Its drop was likely exacerbated by CEO Bill Hornbuckle suggesting this year’s Las Vegas Grand Prix might be a struggle for the Strip’s larger properties during Wednesday’s earnings call.
Laying Groundwork for Future Growth
During the company’s July 29 trading update, BetMGM’s chief executive, Adam Greenblatt, said the losses would pave the way for future growth.
The first half of this year has been very important in laying the groundwork for BetMGM’s future. 2024 is a year of investment. We’re focusing on improving our customer experience and stepping up our level of investment in players.
The company also reported $1 billion in net revenue over the first half of 2024, amounting to a 6% increase year over year. In Q2, revenues were up 9% over last year. Those gains indicate light could be around the corner, even with the EBITDA loss.
Said, Greenblatt:
We are encouraged to see this strategy delivering accelerating momentum. We have exceeded our goals for both acquisition and retention, which should lead to higher year-over-year revenue growth for the second half of this year into 2025.
State Markets Bring New Challenges
Once the undisputed leader in the US iGaming market, BetMGM now faces tough competition. Its main competitors, FanDuel (owned by Flutter Entertainment) and DraftKings, have 2024 US revenue forecasts of $6 billion and $4.9 billion, respectively.
FanDuel slipped into the top spot in Michigan’s online casino market in March and April of this year. Those were the only two months BetMGM hasn’t come out on top in Michigan since the market launch in January 2021. By May, BetMGM had barely regained first place. And in June, FanDuel remains hot on BetMGM’s tail despite the latter eeking out a little more padding.
In New Jersey, DraftKings has the lead after bumping its market share up to 25%, if one includes Golden Nugget, which it acquired in 2022. Meanwhile, BetMGM and FanDuel are battling for second place with about 22%.
BetMGM’s core brand only accounts for half of its market share in New Jersey, while its sub-brands, Borgata, Wheel of Fortune, and Party Casino, make up the rest. This is largely due to the presence of the Borgata retail property in Atlantic City. Although BetMGM also offers Borgata Online in Pennsylvania, the other two brands are currently in New Jersey only.
Greenblatt Confident in BetMGM’s Long-Term Goals
Soon, BetMGM will leverage new strengths, including Angstrom, a sports analytics specialist acquired by Entain last year.
With new sports markets for MLB and NBA already in play, Greenblatt said those capabilities will roll out across BetMGM’s sports product ahead of the NFL season.
Our online sportsbook players have been enjoying Angstrom-enabled product capabilities since the start of the baseball season. [We] look forward to players enjoying this across our wider sports offering leading into the NFL season.
Greenblatt also touted the rollout of the brand’s Single Account Single Wallet in Nevada. The innovation will allow customers to sign up at BetMGM’s retail sportsbooks and later use those wallets from home.
We are also very excited to bring our unique omnichannel opportunities to players by fully leveraging MGM Resorts’ presence in Las Vegas. Single Account Single Wallet will be an important driver of the customer experience, with Nevada marking its completion ahead of the NFL season.
With support from BetMGM’s new marketing partnerships, including deals to provide sports betting odds to X and the Associated Press and a tie-in with Marriot Bonvoy, Greenblatt is confident BetMGM is on track to hit its long-term goals.
Our execution roadmap, building momentum, and prospects ahead all support our confidence in BetMGM’s strong future.
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