During BetMGM’s earnings call Q&A on Tuesday, Truist Analyst Barry Jonas was the one to finally ask about the sportsbook’s position on prediction betting markets.
BetMGM CEO Adam Greenblatt was not caught off guard, acknowledging the recent spate of headlines on the topic. To paraphrase Greenblatt’s response: It’s complicated.
The Double-Edged Sword of Prediction Betting
Prediction markets are not particularly new. They allow participants to buy contracts based on a predicted outcome of a specific event, such as an election.
Greenblatt was quick to point out that BetMGM offered election betting in Ontario, where it is explicitly allowed.
Entain, one of BetMGM’s parent companies, also offers prediction betting in Europe.
The recent headlines, however, are being driven by two companies that are now offering prediction contracts based on the outcome of sporting events. Crypto.com announced its “sports event trading” in December. Kashi launched its sports event contracts on Jan. 23.
And this is where things get complicated. Up until now, prediction markets have operated as financial markets, overseen by federal financial regulators. In the U.S., prediction markets are overseen by the Commodity Futures Trading Commission (CFTC). Sports betting, however, is regulated, and significantly taxed, at the state level.
While Greenblatt believes BetMGM has the skillset to excel in the prediction market arena, he’s concerned about the current unlevel regulatory playing field. For now, BetMGM is viewing it as a potential opportunity. And BetMGM isn’t the only online sports betting company eying the predicting betting markets. Late last year, DraftKings also expressed interest in the space.
BetMGM’s Core Business Expectations
While some may be excited about the prospect of prediction markets, BetMGM is mostly excited about its core business. BetMGM, the joint venture between MGM Resorts and Entain Plc, built momentum throughout 2024. As a result, it likes its odds going into 2025.
Greenblatt said, "With BetMGM’s renewed acceleration across both iGaming and Online Sports we expect to achieve positive EBITDA (earnings before interest, taxes, depreciation, and amortization) in 2025, and our scaled podium position in the world’s largest gaming market underpins our confidence in our pathway to $500 million EBITDA in the coming years.”
In 2024, BetMGM grew total net revenue by 7% over 2023, hampered only by the unusually customer-friendly NFL season, which hit all the major sportsbooks. BetMGM estimates the anomalous NFL results cost them roughly $50 million.
Without the NFL anomaly, BetMGM’s adjusted revenue growth was 13%.
Active bettors were up 14% on the year. Greenblatt noted that the Las Vegas-based Super Bowl helped the company attract new customers at its resorts. And that many of those new customers continued to be active on the platform after returning home.
Meanwhile, BetMGM successfully secured $150 million in a revolving credit facility. This will eliminate the need to tap its parent companies for capital in the future.
BetMGM will be reducing its marketing spend.
It doesn’t expect many new market launches, apart from Missouri and Alberta. It is also looking to reduce spending in underperforming markets, where its ROI exceeds five years. Instead, it will focus most of its marketing resources on its existing high-quality players. Greenblatt explained, it will be a year of quality over quantity.
