Legal sports betting is on track to be live in 28 states by end of the year. It seems like there are that many sports betting operators seeking a piece of the growing market.
BetMGM made its case to the investment community last week that the three-year-old company is the solid No. 2 player in the growing U.S. igaming segment – sports betting and icasino – with continued expansion opportunities.
The company, a 50-50 joint venture between U.S. casino giant MGM Resorts International and United Kingdom gaming operator Entain plc, believes it will be operating in 20 states by the end of the year and will produce $1 billion in net revenues by the end of 2022.
BetMGM CEO Adam Greenblatt
BetMGM CEO Adam Greenblatt sweetened the pot even further.
During a virtual investors day seminar, he predicted North America’s igaming market – the U.S. with a potential boost from Canada – could be worth $32 billion in revenue at some point.
“There was no timeline associated with this market size assumption,” J.P. Morgan gaming analyst Joe Greff told investors following the presentation. “But we estimate their thinking is 2030, plus or minus.”
Deutsche Bank gaming analyst Carlo Santarelli said BetMGM used the event, which included four presentations by the company’s management team, and detailed outlook at all facets of sports betting and casino, and spelling out where the company stands in an evolving business.
BetMGM screen shot
“BetMGM put forth aggressive, in our view, market share targets as the entity looks to position itself as a clear top two player in the U.S. igaming ecosystem,” Santarelli said.
BetMGM, which is operated by New Jersey-based Roar Digital, is currently live for online sports betting in 12 states, including four with retail operations. The company said it has market access agreements secured or are anticipated in 24 states where sports betting has been legalized or there is a legislative movement underway to approve the activity.
If BetMGM meets its goal of 20 states by the end of the year, it will have access to customers in states that comprise 40% of the U.S. population.
As of February, BetMGM officials said it had 22% of the business where it currently operates, and it expects to increase that figure to 25% as it adds new markets. BetMGM told investors it is No. 1 in Michigan’s online sports betting/icasino/retail sports betting business, No. 1 in Colorado’s online sports betting market, and is New Jersey’s market leader for icasino.
Macquarie Securities gaming analyst Chad Beynon noted that DraftKings has a 26% market share and FanDuel has a 33% market share in the states where they operate. He said BetMGM presented a “compelling case” on why it should be considered as legal sports betting evolves.
“Bottom line, we continue to believe the BetMGM asset is undervalued,” Beynon said.
MGM Resorts and Entain (then known as GVC Holdings) each invested $100 million to launch Roar Digital in July 2018. Last year, the owners invested a combined $450 million in the operation.
BetMGM launched a marketing effort fueled in 2020 with an advertising campaign featuring award-winning actor Jamie Foxx as the “King of Sportsbooks.” The company also signed more than a dozen partnership and market deals with teams in all the major sports leagues and announced plans to build a retail sportsbook at Nationals Park in Washington D.C., home of Major League Baseball’s Washington Nationals.
The company has other partnership deals as well to improve its profile, including with Yahoo Sports, restaurant chain Buffalo Wild Wings, and Top Golf.
Analysts pointed toward the company’s customer acquisition and retention efforts, utilizing MGM Resorts’ player database and casino properties in sports betting states, including Nevada, Mississippi, New Jersey, Michigan, and Maryland.
“BetMGM outlined a credible and multi-faceted omni-channel approach to customer acquisition, which represents one competitive advantage,” Greff said. “Specifically, MGM-sourced players (those who registered at an MGM physical location) bet 50% more on average, versus non-MGM-sourced players.”
Greff noted BetMGM doesn’t have to pay MGM Resorts any license or marketing fees.
One of the 20 states targeted by BetMGM is New York, where a plan for adding online sports betting through two platforms with a maximum of four operators has been roundly criticized. MGM Resorts operates Empire City Casino and Yonkers Raceway near New York City.
In California, another one of the targeted states, BetMGM said it has market access, although a sports betting referendum proposed by a tribal gaming coalition does not include mobile wagering.
“New York online sports betting in the total available market, does BetMGM garner access?” Santarelli asked. “How about if California is retail only in tribal and (race)track locations. How does BetMGM participate? If the answer is no to either of these questions, or other similar vagaries, how much higher does the BetMGM share need to be in their active markets to achieve an aggregate 20%-to-25% market share of the $32 billion total available market?”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
