MGM Resorts CEO Bill Hornbuckle has conceded that parts of the BetMGM product “is not where we want it to be” but hopes that Entain’s acquisition of Angstrom can help to improve the standards.
Addressing investors at the company’s Q2 earnings conference, Hornbuckle explained that BetMGM’s declining online casino share is down to the platform not being as strong as it should be and that fewer sports betting customers are migrating to online casino.
He explained: “Candidly, our product is not where we want it to be. I think the moves that we’re now making though, with Entain, and with the moves we’re gonna make with Angstrom, as an onboarded partner for BetMGM will get us to a place where we’ll be back in that game in a meaningful way. Ultimately we will begin to gain some shared backing on the casino side.”
Entain confirmed the acquisition of Angstrom Sports, a predictive AI and modeling firm, for around $266m in a bid to improve the pricing and risk management of its sportsbook platform.
This in turn will improve BetMGM in the US as it attempts to maintain third-place market share and catch up to market leaders FanDuel and DraftKings.
Hornbuckle elaborated: “The opportunity with Angstrom will drive more product, more parlays, more frequency around bets in-game and otherwise. Those are big-margin businesses. I think gross, we’re a little over 9% margin and there’s a goal to break through 10% once we get Angstrom, fully deployed, which will probably come in a couple of phases, through football, and then post-football.
“So I think if you looked at the businesses, that’s the biggest delta between the two is the product offering and more importantly, the type of products that potentially someone like FanDuel or DraftKings will offer, versus the velocity of things that we offer, we’re simply going to have more high margin bets available for customers as we deploy Angstrom.”
Elsewhere in the call, MGM management provided an update on its application to bring an MGM property to New York, which it anticipates will be approved in early 2024.
Hornbuckle disclosed that MGM asked around 85 questions to the New York Gaming Facility Location Board as part of the process, but that it had not returned any answers yet.
“I’m hopeful in the next month or so that we’re going to hear something from the Commission and ultimately get the process rolling. As you know, we’ve submitted questions, I think we spent 85 questions about the actual bill and the process. The moment they begin to return those questions to us, the 90-days start.
“We’ve not got any specific indication (of when answers return), but we do believe it will happen shortly. So that remains on track for some time in 2024, getting licensed and then pushing on from there.”
MGM published its Q2 financial results ahead of the call, declaring total group revenues of $3.9bn, up 21% year-over-year, with operating income at $371m, down from $2.4bn in the prior year.
The group’s adjusted EBITDAR reached $1.1bn in Q2, owing to improvements made in the regional operations.
Jonathan Halkyard, MGM Resorts CFO, told investors: “If you look at our second quarter, and some of the KPIs that we call out in the earnings presentation we’re very excited about them for the profitability of the business. Lower customer acquisition costs, higher margin on online sports betting, increased play by our loyal known customers, and then all of our pre-2023 markets are now contribution positive. All those things bode very well for improving profitability in the future.”
Finally, MGM recently announced a partnership with Marriott International to become the official hospitality partner. This would see the hotel chain offer its Marriott Bonvoy loyalty program members the chance to earn loyalty points when they play with BetMGM.
Speaking on the Marriott deal, Hornbuckle explained: “This agreement will enhance our profitability by driving lower customer acquisition costs and with a better mix in higher ADRs and on property spend. By 2025, our expectation is at the Marriott customer base, we’re up to a meaningful segment of our hotel mix at premium rates.
“In closing our agreement with Marriott, ongoing investments into our operations, and a fantastic sports entertainment backdrop in Las Vegas position as well to create operating leverage by growing our EBITDAR against our fixed rent escalators.”
