For years now, all mobile sportsbook operators have expanded rapidly, but their expenses and customer acquisition costs have always been high, which negates a good portion of the potential profitability. BetMGM is a great example of this, however the company recently indicated that it expects to be headed towards positive cash flow before the end of 2023.
On the company’s recent fourth-quarter earnings call, company officials reported that it had finished last year with a total of $1.44 billion in revenues, but also with $440 million in taxes and other expenses.
However, their projections for the year ahead include as much as $2 billion in revenues and profitability by summertime. BetMGM CEO Adam Greenblatt said during the call that the company is “executing with purpose, passion and discipline.”
With sports betting expanding like never before, BetMGM is now live in 25 states, including a flurry of market rollouts that took place at the end of 2022 and beginning of 2023.
Ohio and Massachusetts are among the most notable recent expansions, and the company has made it known that it will continue to push hard for legalization in California, Florida and Texas, easily the three biggest non-legal markets still left.
Promotional spend has been a sore spot for investors and regulators alike, and Greenblatt did note that BetMGM will scale back its promotional efforts for new launches moving forward.
Jordan Bender, a gaming analyst for JMP Securities, said in a note to investors that the Massachusetts launch will be especially key in driving the company’s projected jump in revenue.
Bender said that JMP expects “strong results” from the launch “given the MGM land-based casino database.” The company just launched a retail sportsbook inside of its MGM Springfield property.
Aside from performance and expansion, one of the biggest questions surrounding BetMGM is its ownership situation—the company has been a joint venture between MGM Resorts and Entain Plc. since its inception in 2018, but there is growing speculation that MGM could make a move soon to buy out Entain’s 50 percent stake.
Officials for BetMGM indicated on the call that both companies would infuse a total of $150 million in combined funding into the bookmaker before the end of this year, which would grow the total amount invested to about $1.25 billion.
MGM already made an $11 billion buyout offer in 2021, which Entain declined at the time, saying it was too little. However, a number of U.K.-based financial media have posited that MGM could make another offer once U.K. regulators finally publish the long-awaited white paper outlining the new regulations for the market.
Truist Securities analyst Barry Jonas said in a note to investors that he and others “would still be more positive (on BetMGM) if MGM owned 100 percent, though not at any price.”
