BetMGM on pace for positive contribution by second half of 2023, per report

BetMGM is on pace to be contribution positive in the second half of 2023, a key milestone for a company that has lost hundreds of millions in recent years.

BetMGM will be EBITDA positive in the second half of this calendar year, joint venture operators MGM Resorts and Entain announced Thursday, which would bring one of the leading US online gaming operators into the black after hundreds of millions in annual losses since 2018.

Like other major US sports betting operators, BetMGM has spent lavishly on marketing, advertising, free bets and other promos as part of broader player acquisition costs. BetMGM posted ($440m) in EBITDA losses in just 2022. That’s in addition to the $1.25bn the companies have committed to developing the platform itself.

Now, BetMGM’s two partner operators have a publicly announced timeline to see a return on this massive investment.

US market overview

Thursday’s announcement comes as BetMGM – and all other American digital gaming operators – are under increasing scrutiny from shareholders to turn profitability after years of massive losses. Like the broader market overall, digital gaming operators have seen steep declines in share prices since a high point in 2021.

BetMGM has a nation-leading 30% market share in online casino gaming options such as slots and table games. These games have significantly higher margins than sports betting offerings, but only four states (Pennsylvania, New Jersey, Michigan and West Virginia) that have competitive iGaming markets.

BetMGM projects to have 13% sports betting market share nationwide, behind FanDuel and DraftKings. That number bumps up to 20% in states where BetMGM launched on the first day of legal mobile sports betting.

FanDuel, the US sports betting market share leader by gross gaming revenue, in Q3 2022 became the first major US sportsbook to post a profitable quarter. FanDuel parent Flutter Entertainment expects FanDuel to be EBITDA positive for calendar year 2023.

DraftKings, the No. 2 sports betting operator by handle market share, has lost more than $3.5bn since it launched its first mobile sportsbook in 2018, but expects to post a positive Q4 2023.

Caesars, the No. 4 sports betting operator by handle market share, announced a contribution-positive month for October 2022 and expects to report only a few million in adjusted EBITDA losses for the full Q4, a drastic improvement from the ($360m) in losses it incurred in Q4 2021.

More BetMGM highlights

BetMGM reported net revenue from operations of $1.44bn for fiscal year 2022, ahead of prior guidance of around $1.3bn, according to Thursday’s announcement. The platform saw a 51% growth in same-state growth in net revenue from digital operations during that time.

The company expects to see net revenue of between $1.8bn and $2bn in fiscal year 2023.

BetMGM attributed its financial performance in large part due to higher gross gaming margins resulting “from improved customer experience and other product improvements.” That includes the expansion of BetMGM’s single-game parlay options, which have higher margins than traditional spread or totals bets and are even more profitable than standard multi-game parlays.

Same-state CPAs reduced by 21% year-over-year due to data-focused marketing strategy and increased scale, according to the report. This was further accentuated by an “improved approach to player bonusing” provided by BetMGM’s data science team.

BetMGM is live in 25 US jurisdictions, covering 45% of the nation’s adult population, as well as Ontario. The company launched in New York, Louisiana, Illinois, Kansas and Maryland last year. It went live in Ohio earlier this month and expects to start taking online bets in Massachusetts in March.