Profitability Comes to Smaller U.S. Digital Gaming Platforms

After years of heavy losses, even some of America’s smaller U.S. online gaming operators are seeing sustained profitability.

The parent companies of Caesars Sportsbook, BetMGM, and BetRivers all reported positive net incomes for their respective online gaming platforms in the third quarter of 2024.

Though they significantly trail the revenue totals (and market share) of U.S. leaders FanDuel and DraftKings, the next group of U.S. sports betting and iCasino providers are seeing gains – and doing so without the extreme investment costs of the top two national brands.

Record-setting quarters

Caesars received particular industry scrutiny for its hundreds of millions spent on acquiring the William Hill U.S. tech platform, high-profile advertising campaigns, and exorbitant free bets, all while never cracking the top three in national market share. Recent results show the investments are starting to return.

For the first nine months of 2024, Caesars Digital has generated $97 million in Adjusted EBITDA. The company generated $9 million in AEBITDA during the first three quarters of 2023.

Caesars Digital generated $303 million in net revenues in Q3 2024, an improvement from $215 million in the same period in 2023. For the first nine months of 2024, Caesars has increased its digital gaming division’s net revenues from $669 million in 2023 to $861 million in 2024.

This represents a 40.9% quarter-over-quarter improvement from Q3 2023 to Q3 2024 and a 28.7% improvement from the first nine months of last year to the first nine months of this year.

These revenue figures have translated to $11 million in net income for the third quarter of 2024 against a net income loss of ($29 million) in Q3 2023.

$MGM reports "accelerating growth" at BetMGM, with record 3Q net revenues increasing nearly 20% year-over-year, more than doubling the revenue growth achieved in 2Q, per company's Q3 earnings release

— Ryan Butler (@ButlerBets) October 30, 2024

Rush Street saw similar revenue gains by percentage growth.

BetRivers and PlaySugarHouse generated $232 million in revenue during Q3 2024, a 37% increase from the same time frame in 2023. Net income was $3.2 million during the third quarter against a loss of $13.4 million in Q3 2023.

Adjusted EBITDA improved from $4.1 million in Q3 2023 to $23.4 million in Q3 2024.

BetMGM was the only one of the online gaming companies that reported a year-over-year decline in third-quarter net revenues, dropping from $12.6 million to $3.2 million. For MGM, which manages BetMGM as part of a 50/50 joint venture with European gaming giant Entain, this is by design; the company is hoping to use 2024 and 2025 as “investment years.”

Even with renewed financial contributions to update and expand the platform, BetMGM is still seeing positive financial quarters.

Larger significance

For companies that also operate brick-and-mortar casinos, online gaming has been another – and increasingly important – revenue stream. For the industry overall, these figures show the importance of new (and more lucrative) online gaming options.

Caesars reported a slight year-over-year decline in revenues from its Las Vegas Strip properties and a more substantial loss during that same time for its regional brands. Strip rival MGM saw minor increases in both its Las Vegas and regional portfolios, but the small gains underscore slowing growth for all gambling companies after significant gains in the years immediately after the COVID-19 pandemic.

Online sports betting and iGaming, conversely, are providing increasing revenues.

This has put pressure on all operators to find new ways to increase returns. With 38 (and potentially 39) states already with legal sports betting and online casino gaming legislation stalled nationwide, this means expanding profits from existing players.

For sports bettors, that has come by offering them more bet types, particularly around single-game parlays. Both FanDuel and DraftKings have attributed much of their success to being the first companies to offer thousands of new bet types.

Online casino play is also important. Though Caesars offers online sports betting in more than two dozen states and iCasino in four, it projects a roughly 50/50 revenue split between the two offerings.

For Caesars, much of its recent online gains have come from the success of its revamped Caesars Palace Online casino. Rush Street attributed a significant portion of its recent improvements to its iGaming platform in Delaware, where it is the only legal online casino operator. BetMGM, which was the nation’s leading iGaming platform just a few years ago, has said much of its pivot toward re-investment is to bolster the online casino product.

As operators hope more states will legalize sports betting and, even more so, iGaming, pressure will build to squeeze more profit from existing players. These companies have shown a building ability to do so – and a developing reliance on online gambling to their financial bottom lines.

Pages related to this topic