BetMGM said 2024 would be an “investment year,” and numbers reported by the online sports betting and iGaming operator confirm that it is spending plenty to regain market share and win back customers.
The first half of 2024 saw BetMGM’s net revenue rise 6% compared to the previous year, to approximately $1 billion, the operator reported on Monday.
Yet BetMGM also reported that it burned through $123 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first six months of this year, after achieving profitability on an EBITDA basis in the back half of 2023.
The operator had warned the market that 2024 would involve digging deeper into its wallet to acquire customers. It now expects to lose the same amount of EBITDA in the second half of this year as it did in the first, or approximately $250 million total in negative earnings.
“The first half of this year has been very important in laying the groundwork for BetMGM’s future,” CEO Adam Greenblatt said in a press release. “2024 is a year of investment, focusing on improving our customer experience and stepping up our level of investment in players. 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.”
That said, BetMGM has also tweaked its profitability forecast. It previously said it was aiming for approximately $500 million of EBITDA in 2026, but has now changed that target date to "in the coming years."
The operator added that it expects “greater than planned” marketing spend on iGaming in the second half of this year, which it plans to fund using bank debt.
“Our iGaming business continues to perform strongly with attractive returns, and to maximize this strength and momentum, we plan to deploy additional marketing in the back half of this year,” Greenblatt said.
BetMGM said 2024 would be an "investment year" as it tries to regain market share, including in online sports betting. H1 results show the operator lost $123M in EBITDA, after notching a profit in H2 2023. That's "consistent" with investment-year expectations, BetMGM said. pic.twitter.com/N5YGAXANoK
— Geoff Zochodne (@GeoffZochodne) July 29, 2024
More market share, please
BetMGM’s expensive start to 2024 comes as it remains on the podium of online gambling operators in the U.S. but a distant third to DraftKings and FanDuel in sports betting.
While the gap narrows when online slots and table games are included, BetMGM (co-owned by MGM Resorts International and Entain PLC) is clearly not happy with its overall position in the market.
A note from investment banking firm Jefferies to clients last week said that BetMGM's market share in 18 online sports betting states was 7% in the second quarter, while DraftKings accounted for 33% of gross gaming revenue and FanDuel another 46%. In iGaming, BetMGM was third with 20.8% of GGR during the second quarter, trailing DraftKings and its Golden Nugget brand at 23.8% market share and then FanDuel with 24.2%.
BetMGM reported on Monday a combined online sports betting and iGaming market share of 13% in the U.S. and Ontario. For iGaming alone, BetMGM said its market share was approximately 22% of GGR.
An update from Jefferies on Monday noted that the second quarter was the first in two years wherein BetMGM avoided losing market share.
BetMGM's share of GGR for online sports betting and iGaming fell to 6% and 21%, respectively, in the first quarter of this year compared to 13% and 28% two years ago, Jefferies said in a note to clients. However, the firm said BetMGM saw growth of 0.3 and 0.1 percentage points in OSB and iGaming market share in the second quarter of 2024, snapping its losing streak.
“Looking ahead, while there is currently no active legislation, we expect future movement in [Texas], [Georgia], and [Missouri],” Jefferies analyst David Katz wrote. “We believe further state legalization could present an opportunity for BetMGM to gain significant market share as the company is focused on investing in marketing, player acquisition and player retention.”
Looking within
In the meantime, BetMGM has been upgrading its online sportsbook with the help of its acquisition of Angstrom Sports last year.
With Angstrom’s pricing technology, BetMGM said it was able to add new markets and features for this MLB season and the end of the NBA campaign, via “fully in-house” same-game parlay and SGP+ products.
The volume of weekly MLB SGPs doubled year-over-year in the first half, BetMGM said, adding that it is on track for those same capabilities to be fully integrated for the NFL in time for the coming season.
BetMGM also expects to complete the rollout of its "Single Account Single Wallet" technology before the start of the 2024 NFL season once it puts the finishing touches on its Nevada operations.
“Enabling BetMGM customers in MGM Resorts properties, representing 13 million room nights annually, to sign up at one of BetMGM’s eight retail sportsbooks and return to their home state with the same wallet,” the operator said.
