BetMGM CEO: "Pressure is immense" in the ultra-competitive US arena

It’s the top of the seventh inning in a clash between the Philadelphia Phillies and the San Diego Padres one evening in late April and Phillies catcher JT Realmuto has just stepped up to the plate. Left-handed Padres pitcher Tom Cosgrove contorts his body before unleashing a fastball from the mound.

The small white orb reaches a top speed of 89mph and, less than half a second after exiting Cosgrove’s grip, collides flush with Realmuto’s swinging bat. TV cameras momentarily lose track of the airborne ball under the glare of the floodlights before capturing its crash landing in the stands for what was a 359ft home run.

The Phillies went on to register a comfortable 9-3 victory at Petco Park in downtown San Diego that night, yet more importantly for one BetMGM customer 2,400 miles away in New Jersey, Realmuto’s moonshot completed a winning four-leg same game parlay (SGP). A $50 wager on a quartet of Phillies players hitting home runs against the Padres netted a tidy $32,900 payout.

“The same game parlay products that our players are able to build now are extremely customisable,” explains Adam Greenblatt, CEO of BetMGM, the 50/50 joint venture (JV) between Entain and MGM Resorts International. “So, you can build the same game parlay that resonates with things that you have opinions about, which elevates the degree of engagement and entertainment.”

This baseball season, the operator has elevated its SGP offering by integrating betting markets powered by Angstrom Sports, which uses prediction-based modelling to price US sports. NBA markets are due soon, followed by the NFL in time for the new season in September.

Established six years ago, the London-headquartered supplier was acquired in 2023 by Entain in a deal worth up to £203m, a transaction fuelled by the need for BetMGM to differentiate and better compete with leading rivals when it comes to player props, live betting and especially SGPs.

“What it does for BetMGM is fuel the expansion of our betting options with a broader and more exciting product for our players – both parlays and, in due course, live options,” Greenblatt says.

Boasting what BetMGM claims to be the most extensive home run markets in the industry, the firm saw a 209% year-on-year (YoY) rise in home run bets placed during the first month of the baseball season.

Bet small, win big

Broadly speaking, SGPs (or bet builders as they are known in the UK) continue to capture the betting public’s imagination, so much so that anecdotal evidence on social media would appear to indicate that for many young, recreational bettors, these products are all they wager on.

It seems that sweating the outcome of a five-leg SGP for a 10/1 payout can be a more exhilarating experience than coin-flip straight bets on the traditional bread-and-butter markets such as sides and totals.

In the BetMGM app, customers can build an SGP and an SGP+ (combine two SGPs into one bet) from the dedicated SGP tab or by clicking through to an event page and adding selections to the betslip.

To come up with odds for all manner of derivative markets and related contingency outcomes, Angstrom Sports’ proprietary prediction models crunch granular-level data on teams and players. The firm then factors in variables such as the weather, if the team is on the road or the impact a player coming off the bench is likely to have on the game. Virtually all potential outcomes are simulated – and the same with in-play, too, allowing customers to construct live SGPs.

“So, it’s all the permutations of an outcome and they will simulate a price based on this, [but] it’s driven by who is on the field or court,” BetMGM’s South Africa-born CEO explains.

“The thinking is if LeBron [James] is on the court [for the LA Lakers], the team plays differently than if he is not. That is the level of sophistication.

“What it means is players are able to combine all sorts of things in an almost unconstrained way. So, we put the power in the hands of the player and make that parlay-building, editing and tracking experience as intuitive as possible.”

This explosion in SGP betting is boosting margin, or hold percentage, among the leading operators. It seems winning about 10%, or even more in some cases, on sports betting is becoming the long-term norm on both sides of the Atlantic judging by quarterly and full-year earnings presentation slides.

In March, when touching on the benefits of the upcoming Angstrom Sports integration while speaking at a JP Morgan-organised forum, MGM CEO Bill Hornbuckle highlighted how FanDuel’s and DraftKings’ parlay products were principally why their margin was “maybe 200 or 300 basis points” above BetMGM’s hold rate.

While New Jersey bookmakers’ win percentage was just 3.4% on basketball in 2023, it was 18.3% across all sports for parlay wagers, inflating the overall win percentage to 8.3% from almost $12bn in handle. Hence why apps feature a carousel of curated parlays and SGPs prominently on their homepages.

Greenblatt says the “razor thin” margins on moneylines, spreads and totals means US operators would struggle to turn a profit if it wasn’t for US bettors’ appetite for parlays and SGPs.

“The ability to generate margin more than covers what are very significant gaming taxes, very high compliance and licensing costs – before you’ve even taken a bet. The cost of participation in the US market is very high.

“I would go as far to say the fact that players love parlays and same game parlay products here in the US is a lifeline to the digital sports betting industry. Otherwise, margins are extremely tough to make a highly profitable business out of. Same game parlays with margins of 15% or more, you can build a business around that.”

But with the explosion in SGPs – and now SGP+ – meaning casual customers lose at a faster clip than ever before – is the company witnessing increased churn rates? “We have no data to support that at all,” Greenblatt replies. “In fact, it’s the contrary; we see that the same game parlay product is actually quite sticky.” 

In Illinois, a state where the regulator breaks down parlay revenue when reporting monthly numbers, BetMGM accounted for just 3.1% of the $15.1m in online gross gaming revenue (GGR) the industry generated from parlays in February.

The integration of Angstrom Sports pricing is expected to boost this percentage, and it could prove to be an important factor in reversing the JV’s market share decline over recent quarters.

Although BetMGM puts its combined slice of sports betting and igaming at 14% in the markets where it operates, igaming is doing a lot of the heavy lifting here as its share is north of 20%.

Focusing on online sports betting, boutique analyst firm Eilers & Krejcik Gaming (EKG) estimates that the operator’s market share was 6.4% in Q1 2024, down from 7.2% the previous quarter and 8.8% throughout the whole of last year. BetMGM also finished ninth of 12 operators in EKG’s inaugural SGP product analysis report conducted among volunteer testers across 13 states in November and December 2023.

However, the analyst company wrote in a note, at the end of April, how the “Angstrom-powered SGP looks an immediate product upgrade to our eye” and that the MLB product appears “closer to parity with the top two [operators]”.

Feeling the squeeze

Headquartered in Jersey City, overlooking the Hudson River and Manhattan skyline, BetMGM is live in 27 US jurisdictions, plus Ontario, Canada, with the most recent launch being North Carolina, in March. Yet despite having the power of the MGM brand and two heavyweight parent companies behind it, the business faces mounting pressure from both sides.

There is the persistent battle to take market share from the leaders, FanDuel and DraftKings, while simultaneously fighting off competition from tier-two brands with deep pockets and aspirations of reaching the top table: the likes of PENN Entertainment with ESPN Bet, Fanatics Betting and Gaming, and bet365.

“Pressure is immense, there is no doubt,” admits Greenblatt, who is very on-brand with his black hoodie embossed with the BetMGM logo. “In the 20-plus years I’ve been in and around this sector, this is by some margin the most competitive market environment I have witnessed.”

He is sanguine, though, highlighting the opportunity in the US and the runway for growth: “It’s also the largest and fastest growing [market] in raw dollars. There is more potential here than anywhere else I have seen, and our challenge is to win because the spoils for the winners are measured in billions.

“Then it becomes a capability question, a resource question, a commitment question. I’m very fortunate to have shareholders who have the means, capabilities and a desire to support our growth. That leaves me optimistic about our potential to win over time.” 

MGM and Entain pumped a combined $150m into BetMGM last year, bringing the total invested since the JV’s creation in 2018 to roughly $1.25bn. Both parent companies and BetMGM management have previously spoken about 2024 being a “year of investment”, including marketing dollars being spent and improvements made to the user experience.

The product itself – built on Entain’s tech stack – has already undergone notable upgrades, particularly when it comes to launch speed and how fast markets load. During Entain’s full-year 2023 results presentation in March, chief product and technology officer Satty Bhens took to the stage to hail BetMGM as one of the fastest sports betting apps in the US.

“Every few weeks I put myself in the shoes of our customers and I record key journeys,” Bhens said as he pointed to a slide showing how the app on his phone took 2.39 seconds to load in February. That was a 74% improvement on the 12 months prior.

Greenblatt says: “When it comes to app speed, we aren’t just competing against other sportsbooks. We’re competing against other apps. The expectation of how fast they should be is set. Any time waiting or transitioning is too much. Live betting has exploded, so has the real-time nature and immediacy of engagement with the product, [so] it’s imperative for the app to be fast and responsive.”

By-products of a zippier and improved overall user experience is, Greenblatt notes, greater product engagement, higher bet volume and longer session times in the app.

“It all leads to more loyal customers and improved monetisation. This is critical stuff. We have made tremendous strides towards our vision of sports product leadership with improvements to the front and backend. But there’s more to do. We are today not the fastest app in the market, and that is our aspiration. Until then, the pursuit will continue to be relentless – we don’t stop.”

A smooth journey

As part of the product upgrade, BetMGM dismantled a frustrating roadblock in the user journey with last year’s introduction of ‘single account, single wallet’ in 21 US jurisdictions ahead of the 2023 NFL season. Therefore, users avoid the rigmarole of having to set up accounts in different states. On this “critical release”, Greenblatt says: “It allows our players to seamlessly travel across state lines with their account credentials, wallets and funds consistently available. It’s not like travelling from France to Italy where everything changes. Players can cross state lines on a daily basis here in the US.

“We are in a world now where the bar of expectation among customers, not only in our sector, is so high. Your experience of any Apple app needs to be friction-free. So, when we were previously requiring our players to log out and deposit funds in the next state, it was a degree of friction that doesn’t fit with how consumers enjoy digital experiences these days.”

The benefits of this feature are tangible and reflected in the KPIs: BetMGM discovered that multistate bettors are 1.5x more valuable than those who only wager with the company in one US jurisdiction. Moreover, multistate bettors account for a quarter of net gaming revenue (NGR).

The single account, single wallet feature is soon coming to Nevada, a state where the operator rolled out the full version of the BetMGM app in January ahead of Super Bowl LVIII, held in Las Vegas. In fact, BetMGM said two-thirds of fans in the Allegiant Stadium on that day, 11 February, fired up the new app on their phones. The new functionality, including improved prop and parlay options, live streaming and digital deposits and withdrawals, is a “significant step up” on its predecessor, says Greenblatt.

“It’s already been touted by Eilers [& Krejcik Gaming] as the best in the market. We’ve seen a 35% increase in total bets [in Nevada] since the launch of the newly designed app, weekly actives are up 15% YoY and our digital NGR has improved by over 50% YoY since launch,” he adds.

With Las Vegas being a magnet for gamblers and attracting about 40 million visitors a year, the thinking is that having the best app means US bettors are more likely to gamble with BetMGM if it is available on their return to their home state. This includes igaming, with the operator benefitting from the omnichannel gains from MGM’s properties lining the Las Vegas Strip.

“When our players leave Las Vegas and Nevada, they take BetMGM home in their pockets. The app in their home state, if it’s a multi-product state, will also have our casino tab enabled,” Greenblatt remarks.

Live in four states with online casino (New Jersey, Pennsylvania, Michigan and West Virginia), BetMGM was previously the igaming market leader, but now faces mounting competition in this vertical due to rivals upping their game through a combination of product enhancements, leadership hires and even M&A.

BetMGM boasts a library of 3,600 games, some of which are exclusives created by Entain’s in-house studio, generating close to 300 million spins a week. Last year, a deal was struck with Atlantic Digital that saw the London-based studio supply BetMGM with its portfolio of proprietary games based on film and TV intellectual property. The most recent slot to debut with the operator was Cheers, based on the hit US TV sitcom.

As well as being the only place you’ll find NBA-, NHL- and MLB-endorsed slots, BetMGM also runs jackpots that include stays in MGM properties. Later this year, subject to regulatory approval, ‘omni-jackpots’ will launch across BetMGM and MGM’s casinos. Greenblatt says: “These are the ways we distinguish ourselves with reasons to come to BetMGM.”

With this being an operator that leans more towards igaming, along with its supporting cast of brands – Borgata Online, PartyCasino and partypoker – than sports-centric rivals, how much is the fact that regulated online casino is live in just seven states, of which a few are monopoly or restricted markets, shackling BetMGM’s potential?

“It would certainly make a difference [if there were more icasino states],” Greenblatt replies. “But BetMGM isn’t going anywhere. MGM Resorts isn’t going anywhere, right?” He leans forward to emphasise the point: “We can be as patient as we need to be because when it comes, we will be present, relevant and ready.”

Play the long game

It’s now approaching six years since Greenblatt relocated from the UK to the US with his wife and then three-year-old twins to head up BetMGM, or Roar Digital as the JV was called at the time, in the wake of PASPA’s repeal. Back then, the product, which was known as PlayMGM (it switched to BetMGM in September 2019), got off to a slow start.

Analysts on Entain (then GVC) earnings calls would quiz management on why the JV seemed to be adopting a patient and circumspect strategy when others were going full steam ahead on the colossal, untapped US opportunity. But it turned out to be a marathon rather than a sprint and first-mover advantage was overhyped.

“I believed in this US market and the TAM and I believed we could win [but] in 2018 or 2019 I don’t think, quite frankly, we were taken seriously,” Greenblatt reflects. “But month by month, year by year, we have delivered on our commitment and, more recently, have been focusing on optimisation.”

Last year, NGR came in at $1.96bn, a figure at the top end of previous guidance, while BetMGM was EBITDA-positive for the final six months. Longer-term targets include delivering $500m in positive EBITDA and taking market share of between 20% and 25%, both in 2026.

In the meantime, management will be ramping up the marketing and continue to roll out product improvements to achieve organic growth.

“This year, we are going bigger in marketing, bigger in player acquisition, and that comes with the benefit of enhanced player retention – we can demonstrate that through data,” the CEO confidently states. “So, with an enhanced player experience and an exciting pipeline ahead, including the Angstrom-powered offerings, I think we are well-positioned for future growth.”