BetMGM released preliminary figures for 2022, including net revenue that exceeded company expectations. The company was forecasting $1.3 billion in revenues but ended up bringing in $1.44 billion instead.
While revenues were higher than expected, EBITDA remained within guidance, as the company reported $440 million in losses on the year.
The company holds 30% of the online casino market and ranks third in the nation for online sports betting with 13%. However, BetMGM did note that the market share is closer to 20% in states where they were available at launch.
The company attributed the improved net revenue numbers on strong online casino performance, a 21% reduction in cost per acquisition, and a more efficient bonusing program.
BetMGM was notoriously late to the sports betting game, waiting roughly two years before rolling out a product with an aggressive ad campaign featuring Jamie Foxx.
In its forecasting for 2023, the company still does not expect to be profitable on the year but does expect profitability for the back half of the year.
The group added they expect BetMGM to generate up to $2 billion in net revenue this year.
BetMGM CFO Gary Deutsch said some of the revenue for this year will come from new states, but the impact on bottom line is going to be fairly small.
“The percentage of revenue that comes from existing states in ’23 is over 90%,” Deutsch said. He pointed out that, with the addition of only Ohio and Massachusetts, there isn’t going to be a massive influx of revenue from new markets, particularly when you consider the money the company spends to establish itself in new markets.
Instead, he said, revenue growth will continue to come from improved bonus optimization and engaging existing customers.
BetMGM CEO Adam Greenblatt echoed Deutsch’s thoughts about better bonusing practices and addressed it during a public call.
“One of the key initiatives is the work that we’re doing through our data science team in the area of bonus optimization. In simple terms, making sure that we’re rewarding and retaining valuable players and being much more discerning in relation to marginal plays. Now, this initiative has had exactly the impact that we had anticipated. And frankly, we had a conversation with our board earlier in the year to basically prepare them for the expected impact. And one of those impacts is advancing [net gaming revenue (NGR)] margin percentage, advancing NGR dollars, reducing our effective tax rate, improving contribution, and ultimately the flow through to EBITDA. All of that has happened,” Greenblatt observed.
He did note that with this approach, there would be some impact on other key numbers of the business as well though.
“The other side of the impact is that, with a reduction in promotional dollars in the system in our BetMGM ecosystem, it leads to the expected reduction in market share, there are fewer dollars being recycled into GGR, fewer dollars recycled into handle.”
Nonetheless, Greenblatt credited this move with more than doubling the NGR margin for the company in 2022.