Global gaming giant Entain reported on Thursday what it described as "robust" Q3 2022 earnings, with Group net gaming revenue (NGR) up a modest 2% year-over-year for the quarter, buoyed by a record level of active online customers, up 6.6% yearly.
According to Entain CEO Jette Nygaard-Andersen, the UK-based operator is now expected to reach "sustainable profitability during 2023," a statement she later qualified by suggesting that the group would go into profit during the latter part of next year, reflecting "the first milestone" for the company.
Group figures were led by the impressive performance of its American legal sports betting division — BetMGM, in which it has 50% ownership with MGM Resorts.
BetMGM reported a year-on-year Q3 NGR of $400 million, a 90% gain that was fueled by launches in several new states. Same-state YoY revenue growth hardly disappointed, however, as BetMGM recorded a 50% increase in Q3 2022 as compared to the same period last year.
"We continue to power ahead in the U.S. We are the clear No. 2 in our markets with a share of 25%, excluding New York," said Nygaard-Andersen, referring to BetMGM's slice of the sports betting market.
Excluding the Empire State, the sportsbook accounts for 23% of the market overall, while it is the "clear leader in the iGaming sector" where it commands 31% of the action.
Entain 2022 earnings guidance remains steady
Bolstered by the BetMGM results, Nygaard-Andersen confirmed Entain's previous full-year earnings guidance of $1.3 billion.
"In the US, BetMGM continues to be the clear leader in the iGaming market, and the successful start to the NFL season also highlights the strength of our growing US sports betting offer," said Nygaard-Andersen. "Our business continues to perform well with good underlying momentum across the group, including in BetMGM. This illustrates the effectiveness of our growth strategy, the unique capabilities of the Entain platform, and the underlying strength of our diversified global business."
Nygaard-Andersen noted that Bet MGM had strong performances over the seasonally quiet July and August months, which "reiterates the long-term profitability of our business model, which is seasonally quiet on the marketing front."
Upgraded app, NFL launch adds to optimism
During her opening statement, the Entain CEO touted the success of BetMGM's revamped online sports betting app, which she said "landed really well."
The upgraded mobile platform gave customers a new design, improved navigation, and a more personalized user experience that "optimizes the end-to-end" wagering experience. BetMGM also intends to launch a "single app, single wallet" prior to the end of 2022.
She also touted the importance of what she described as the "strong opening" of the NFL season.
"Volumes have been fantastic with strong performance across all metrics — actives, handle, bet count, reactivations, margins — all really positive," said Nygaard-Andersen. "Of course, the start of the fall season sports kicked off with its usual flurry of promotional and bonusing excitement, however, so far, the market has been relatively rational and in-line with our expectations."
Nygaard-Andersen also added that the Group saw "fantastic" development in Q3, which delivered a "record number" of actives while retail gaming delivered another strong quarter of growth, increasing by 10% YoY.
She also touched briefly on how PartyPoker launched its "first Ontario Poker series," in addition to a new tournament that saw it partner with McLaren Racing.
Entain has not abandoned California dream
Later in the course of today's conference call, Nygaard-Andersen was also asked to comment on the looming defeat of sportsbook-sponsored online betting legislation in California.
Similar to the sentiments expressed by FanDuel CEO Amy Howe and DraftKings CEO Jason Robins at Tuesday's G2E gaming conference in Las Vegas, the Entain boss was determined to take another shot at California in 2024.
"The [bill] is still on for the ballot on 8th November, but...recent polling suggests that neither proposition 27 or 26 will get sufficient votes to pass. And, while that is... disappointing in itself, we still have another go at it potentially in two years' time," said Nygaard-Andersen. "I think it's difficult to imagine that a state like California, with more than 21 major professional sports franchises and a population that loves their teams, will not, at some point, legislate around sports betting.
"But, if it doesn't happen in November this year, then we remain excited about it, and we'll look at it again next year."
California loss is Entain's gain
She also told industry analysts on the conference call that the projected failure to legalize online sports betting in California this year would actually improve the company's balance sheet.
"Of course, when it comes to what we would otherwise have invested next year, had California came online, while that is, of course, disappointing that we'll not go online, that will, of course, be a positive overall for EBITDA and on our journey for profitability," said Nygaard-Andersen. "Otherwise, if California did come online, we — and everyone else — would have invested significantly into growing that market."
Increasing returns to scale of winter World Cup
Rob Wood, Chief Financial Officer and Deputy CEO for Entain, who was also on the conference call, spoke enthusiastically about the upcoming FIFA World Cup that runs from November 20 to December 18.
"We like the fact that there will be less Europeans on holiday during a Winter tournament," said Wood. "The time of day is pretty favorable and past World Cups have been unhelpful from that perspective and this time around we've got a more congested fixture list on either side of the tournament as well."
Wood noted that there typically is a gap between the World Cup Final and then the start of the new club league seasons, and it seems like operators lose momentum.
"You've built up this new active space, you've signed up a load of customers, you've reactivated a load of customers and then there's a gap before top-flight football resumes," said Wood. "That's not the case this time around — we are excited about the prospects of the World Cup and we can't wait for it to start."
