While other major sportbooks either keep their options open or move full-throttle into offering event contracts, BetMGM has taken a backseat approach so far, preaching patience. And it sounds like if the CEO of MGM Resorts International had his way, they’d steer clear entirely.
Speaking at the Bank of America Gaming, Lodging & Leisure Conference on Sept. 4, Bill Hornbuckle remarked that there is a lot at play in the industry right now that could confuse or sidetrack a gaming operator from their core business, suggesting that “other deviation is not smart.”
Asked whether he was referring to prediction markets, Hornbuckle distanced himself from any interest in stepping into the world of sports trading.
“MGM Resorts’ view is it invites the federal government into a space it’s never been, and it’s not a place we’d like to see this marketplace go, full stop,” he said on Thursday.
BetMGM CEO Adam Greenblatt has been asked about prediction markets many times on recent earnings calls for the joint venture between MGM Resorts and Entain. In late July, he said BetMGM has no intent to be a first mover, even though he believes it has the capacity to step into that world, as he is not convinced that there is a great benefit to doing so for a typical sportsbook.
Since he made those comments, FanDuel has announced a partnership with leading derivatives marketplace CME Group to offer non-sporting (for now, at least) event contracts, and Underdog has jumped in with both feet via a deal with Crypto.com.
On Thursday, Hornbuckle acknowledged that while he is reluctant to move in that direction, the issue may end up being forced for MGM.
“We’re going to watch,” he added. “We’d be foolish not to. It’s out, it’s real. We have to contend with it and understand it, we’ve got to be ready for it if it becomes even realer. But officially, it is not something we endorse.”
Lack of limiting ability a drawback, says DraftKings CEO
While FanDuel and Underdogs have made the first moves, others including DraftKings and Fanatics appear to be moving the chess pieces, filing for registration with the National Futures Association (NFA).
DraftKings CEO Jason Robins has said repeatedly that prediction markets offer great opportunity for sportsbooks in states with no legal sports betting, like the potentially lucrative California and Texas.
Robins reiterated that stance in his own Q&A session on Thursday at the B of A conference. But he opined that while prediction markets’ geographic ability may exceed sportsbooks’, their product opportunity does not. In particular, he suggested that not being able to limit sharp bettors and mitigate losses would be a huge drawback.
“When you are putting a market up on an exchange, you have to be comfortable with anyone taking that liquidity,” Robins ventured. “Anyone can fill that order, versus we are able to place limits on sharps and other people. And that is the only reason we’re able to offer the variety of bets that we can. If we offered all the different bets that we offered and we weren’t able to do that, we’d get picked off and destroyed.
“I just think it’s virtually impossible under that type of regulatory framework to ever have something that could be as rich and varied as what you see in an online sportsbook. Where you have both, it’s going to be challenging for that product to compete. But where you don’t have anything else, it’s pretty good.”
For now, DraftKings monitors, like everyone else. There’s no doubt it will be keenly interested in how Underdog’s and particularly FanDuel’s respective ventures progress.
“There’s a lot of cards being turned over in real time, and it continues to appear that at least at the federal level, this is going to be here to stay,” Robins added. “I don’t think we feel like we have to announce what our plans are until, if the time came, we were ready to actually act on those plans. That doesn’t mean internally we can’t be preparing. We have to make sure we have the right thing and we are prepared to do it. And when that happens, if that happens, we’ll announce something.”
