MGM Resorts reported record results from its Las Vegas properties for the fourth quarter of 2022. However, the most surprising news from the casino giant was its decision to abandon an acquisition of Entain — which is a joint partner with legal sports betting brand BetMGM — in favor of developing LeoVegas.
“What we accomplished in 2022 is nothing short of remarkable…” is how MGM Resorts International began its fourth quarter and full year 2022 earnings report. Consolidated net revenue increased by 18% compared to the prior year’s fourth quarter, with diluted earnings per share in the fourth quarter also rising to $0.69 compared to $0.23 in 2021.
While the Las Vegas Strip properties did most of the heavy lifting — posting their fifth consecutive quarter of record-breaking results — Macau and BetMGM will be meaningful contributors in 2023.
Profitability is already returning to Macau less than a month after China lifted its COVID-19 restrictions for the popular casino region. Meanwhile, BetMGM is expected to reach profitability sometime in the second half of 2023.
Entain acquisition is off the table
The biggest surprise of MGM’s earnings conference call was its revised Entain strategy. Entain and MGM jointly own the sports betting site BetMGM.
In early 2021, MGM attempted — and failed — to acquire Entain Plc, the parent company of Ladbrokes, Coral and bwin sportsbooks. MGM wasn’t Entain’s only spurned courter as later that same year, DraftKings also made a play for Entain. But even DraftKings' $22 billion bid wasn’t enough for the British-based gambling company.
However, considering Entain’s 50% stock decline since the DraftKings bid and the continued challenges in the UK market, many thought an acquisition would be more amenable now. Pundits expected another MGM bid sometime in the next few months following the UK government’s release of its long-awaited gambling review.
That rumour was put to rest, however, by MGM CEO Bill Hornbuckle, who said "The simple answer on Entain is no, we've moved on" during the conference call. Shares of Entain traded down more than 10% following the news.
BetMGM looking ahead, LeoVegas expanding
BetMGM’s share of the fourth-quarter loss was $46.66 million compared to a $56.91 million loss in the fourth quarter of 2021. With that said, MGM is starting to see signs of profitability for the sportsbook and iGaming divisions — even from some of its newly-launched regions.
In 2022, BetMGM launched its online service in six new jurisdictions, including New York, Louisiana, Illinois, Ontario, Kansas, and Maryland. It opened four retail locations, including State Farm Stadium — home of the 2023 Super Bowl.
BetMGM also launched in Ohio in January and is expected to launch in roughly six additional US jurisdictions in the coming year. Meanwhile, MGM is looking to LeoVegas — which has an established brand and key gaming licenses throughout Europe — for international expansion after acquiring the Swedish gaming company last year.
During the conference call, Hornbuckle noted, “While we remain highly focused on BetMGM’s business through our partnership with Entain and making sure that business continues to grow, we see great potential in LeoVegas expansion capabilities.”
“We value BetMGM, but as it comes to the rest of the world, we’re going to move forward with a different proposition," he added.
