BetMGM leadership has asserted that 2024 will be a year of investment and anticipates a negative EBITDA contribution, however, it will take no cash from parents MGM Resorts and Entain.
The operator has also outlined its medium-term ambitions of delivering around $500m in positive EBITDA for the full year 2026 of trading, when it aims to meet its ambitions of 20-25% US market share.
Hosting an investors business update, BetMGM revealed that it sees vast opportunities in 2024 to increase its market share as it embarks on a journey to achieve its long term aims of 20-25% market share across sports betting and online casino.
However, this means that the operator – while on course to post a profitable H2 2023 – is set to make an EBITDA loss in 2024 while it invests in these opportunities.
Looking ahead to 2024, CEO Adam Greenblatt stated: “2024 is about three things. One, continuing our journey to the best product, with all strategic pieces in place in both OSB and igaming. Product Roadmap execution in 2024 is key to investing behind our improving product driving accelerated player acquisition, and aiding player retention.
“Bringing omnichannel to life in a more concerted way through product innovation, and importantly, Vegas. We’ve delivered on our 2023 commitments and are very clear on what’s needed to drive enterprise value and market share. It’s in this context that we are choosing to make 2024 an investment year.”
The investment will come from implementing several improvements to boost the product offering, including the full integration of Angstrom Sports which will allow more options when it comes to parlay bets and personalization.
Moreover, BetMGM noted that 2024 will be the year that Nevada becomes unlocked as it can fully harness the relationship between itself and MGM Resorts. The rollout of Single Account Single Wallet in Nevada will aid this, as Greenblatt explained that players will be able to transfer their funds from their MGM land-based account to their BetMGM online casino app in their home state.
This, alongside the rollout of the MGM/Marriott Bonvoy agreement in H1 2024, is spearheading the growth opportunities for BetMGM next year.
Greenblatt added: “With over four million unique Vegas visitors captured on the MGM customer database, and millions more anonymous players are flowing through its floors.
“This population represents a deep and replenishing pool for new player acquisition, as well as potent retention and reactivation mechanisms as players who might play with a different app at home, rediscover BetMGM in Vegas.
“We’re especially excited about this because of what we know about our omni channel players. These players are nearly three times more valuable than single channel players, meaning they are contributing outsize net revenue to our business.”
But this all means that the investment will result in losses in 2024, albeit much smaller losses than the $400m it lost in 2022.
On the positive side, the operator is investing its own cash into its future, and will cease taking cash from MGM Resorts and Entain. CFO Gary Deutsch added that BetMGM is “done taking cash” after receiving $1.26bn in capital from the parents.
Analysts were eager to know what the losses would be for 2024 and what 2025 would look like. Deutsch noted that while 2024 would see losses, it would set the business up well for the future and end in a cash flow positive 2025.
He stated: “When we think about 2024, we do think of it as an investment year, which will ultimately be a negative year in terms of EBITDA. When we look at 2025, that’s where we see it going back to cash flow positive and we’re at a point where we’re comfortable with the investment rationale there to put the extra money funded from what we’re turning out from the operations back in. There’s growth and there’s profit to be had in the market share in the long term.”
This all builds up to BetMGM’s ultimate three-year goal of achieving $500m in positive EBITDA by the end of 2026 through reaping the benefits of the 2024 opportunities and making the product enhancements on both sports betting and online casino.
Greenblatt noted: “These strategic foundations underpin the achievement of our long-term aggregate market share target of approximately 20 to 25% of the online sports betting and gaming market in North America, hitting our EBITDA targets and delivering superior shareholder value.”
