Entain has committed to continued investment in BetMGM and has ruled out selling the business as its US joint venture performance helped to navigate a difficult third quarter in other regions.
Updating investors on its Q3 performance, Entain confirmed that its total group revenue including BetMGM was up 7% year-over-year. Excluding the US, Entain’s total revenue increased by 7% but was supported by acquisitions, as organic revenues declined by 5% YoY.
BetMGM helps offset global woes
BetMGM’s revenue has increased by 15% on an annual basis during Q3, reaching around $458m. This is vastly supported by its igaming operations which have seen revenue grow by 22% YoY. Online casino growth has been attributed to “the quality and the range of games that we provide from in-house developed games”.
Chairman of the Board of Entain Barry Gibson told investors at the update live from London that he recently had face-to-face meetings with MGM Chairman Paul Salem in New York, in which both JV parents agreed on a strategy moving forward for BetMGM including continued investment to reach the target of 20-25% market share across sports betting and online casino.
Gibson, who also ruled out selling Entain’s stake in BetMGM, told investors: “If we need to continue to reinvest to grow our market share our presence in that market, we will continue to do that because management teams are laser-focused on delivering operational excellence.
“We’ve been very focused on building technology for BetMGM, sometimes at the expense of our core business, because you’ve got to do so many things with a tech stack. When you’re going through management, we’ll be absolutely laser-focused on delivering operational capability.”
Offering an update on its market share, Entain claims to have an 18% market share of the US sports betting and igaming industry, while it claims to have a 26% market share in online casino.
Yet, the London-listed firm is intent on growing that market share in the next three years to 20-25%. Core to this strategy is product improvements, particularly on the sportsbook side.
Entain promises further product enhancements
A new face addressed investors at the event this morning, the new Chief Product Officer, Satty Bhens. Bhens explained some of the technological improvements that are being made on the sportsbook side of the business to improve operational efficiency.
Entain purchased Angstrom Sports for $250m earlier this year and the integration of the AI-backed statistical modeling platform into the Entain platform is currently ongoing.
Bhens explained that, upon arriving at Entain, he noticed problems under the hood and has spent this year implementing solutions to improve the BetMGM sportsbook product, after criticisms this year from MGM Resorts CEO Bill Hornbuckle.
He remarked: “Since the February Super Bowl in Arizona, we have significantly revamped our sportsbook, and we have delivered our first Angstrom integrations. We’ve made a near 20% improvement in uptime for the NFL, and we’ve introduced the same game parlay. Plus, we’ve improved our sportsbook event navigation. We’re not stopping there.
“For me, we’re just getting started with Angstrom. It builds profiles of how athletes play and perform their sport. Using those profiles, Angstrom creates models that then simulate actual games being played. They perform 1000s of simulations in a second. The results of these simulations are used to assign probabilities to every possible action an athlete can take in a game. It’s a completely different approach to pricing.”
Entain has identified that the US provides it with one of its most important opportunities as it battles regulatory headwinds in other jurisdictions such as the UK and Germany. The firm is facing a $600m settlement with His Majesty’s Revenue and Customs, the UK’s tax office, in a deferred prosecution agreement for historic failures and is enduring drags on pro-forma revenues.
Gunning for 25% market share
Yet, the firm remains committed to using the US opportunity to enhance its overall operating performance, which is why it is so intent on growing to 20-25% market share in the US.
Another way of reaching this goal is through the rollout of a single account wallet, which we have now delivered ahead of internal deadlines
This, the firm stated, enables it to improve the user experience in multi-product states and “particularly Formula One customers visiting and games properties in Las Vegas annually, enabling them to take their wallet from their trip to the strip and back home.”
CEO Jette Nygaard Anderson noted that BetMGM’s performance so far has been impressive, but with committed joint partners, the best is still ahead.
She concluded: “The important thing is that BetMGM has two highly complementary parents completely aligned on the path forward to invest in and grow our position in the US market. So let there be no doubt that we want to win in the US. We’ve been punching above our weight, and dollar for dollar we’ve delivered the strongest market share return on investment in the US thus far.”
Entain and MGM Resorts will host a joint BetMGM Investors Day next month, in which the performance of the business will be put under the spotlight and analyzed separately from the two partners’ other operations across the world.
