Five things we learned from BetMGM’s 2021 Investor Day

BetMGM revealed a bullish net revenue target of $1bn for 2022 during its Investor Day presentation last week.

The presentation dug deep into the details of the operator’s major growth, including its New Jersey license dethroning Golden Nugget as the leading online casino operator by GGR in March.

The operator seized the number one spot in Michigan for igaming revenue in both February and March and reaped the second highest online sports betting handle in the Wolverine State in March.

Here are some of the key takeaways from the BetMGM 2021 Investor Day Q&A with analysts and investors:

Racing to the top

BetMGM COO Ryan Spoon revealed a suite of new product offerings to come in the next year, including on horseracing.

Betting on racing in the US is largely confined to pari-mutuel operators, although New Jersey is finalizing a bill that will legalize fixed-odds betting on horseracing via odds and technology provided by Australian supplier BetMakers.

Answering analyst questions on the future vertical, Spoon said the product still needed to be refined and a launch date had not yet been set.

“How and when exactly it gets rolled out, there’s still some stuff to be understood and found out as we test our way into a broader launch,” Spoon said.

“This opportunity has a different potential footprint and we’re excited about that,” he added.

When probed on how big a return the executive team expected from the vertical, BetMGM CEO Adam Greenblatt said racing was more of a “top-of-funnel activity” that would help the operator’s cross-sell and retention efforts.

“The current plan is that [racing] is one of the funnels into online sports betting and igaming as it’s a product that some of our customers like and we would rather they do that with us than others,” Greenblatt told analysts.

Changing channel

Omni-channel has played a key role in BetMGM’s success story, particularly in states like Michigan where its MGM Resorts venue is based right in Detroit, the state’s most populous city.

The presentation revealed 18% of first-time-depositors (FTDs) in 2020 had been active at an MGM venue up to 12 months prior to signing-up for the BetMGM app.

Chief revenue officer (CRO) Matt Prevost said the majority of omni-channel conversions came about during major sporting events at MGM casinos, including March Madness, the Super Bowl, and NFL weekends at various regional properties.

Prevost said retail betting experiences had improved over the last 12 months following the implementation of new payment methods and an updated cashier experience.

Prevost said user engagement would be increased in the coming months as the operator considered exciting and unique in-person opportunities for visitors of MGM venues.

“For us, it starts with what we can do at MGM Resorts properties – you’ll see many more of those media investments from us over time as the world returns to normal post-Covid,” he said.

Greenblatt shied away slightly from a question on whether the operator would carry out any more partnerships like the ones it already has in place with Yahoo Sports and Buffalo Wild Wings, both of which have integrated BetMGM’s odds and betting site onto their online offerings.

“I don’t have a list of 20 other Yahoos that I want to commit months of technical resource towards integrating with,” Greenblatt said.

“Our ability to do that is unconstrained, but the opportunity to do that depends on where we see value.

“We’ve got a really exciting product development road map and frankly I’ve got more ideas that there is time.

“The concept of discipline comes up here again and we are very disciplined in how we commit resources.

“Whether it ultimately turns out to be a small handful of partners or a broader group will depend on the value that the broader group can add,” he explained.

Breaking it down

Breaking down the $1bn net revenue target for 2022, Greenblatt said he expected 80% to be delivered by states that are already live.

He expects the likes of Michigan, Tennessee, Colorado, and Virginia to mature by 2022 and become meaningful contributors in following years.

Less that 20% of the $1bn revenue forecast will come from states that are not yet live but will likely launch later this year.

CFO Gary Deutsch said igaming would continue to make up the majority of BetMGM’s revenues until 2023, when he expects a more equal split between igaming and online sports betting.

$450m investment

Both MGM and Entain have pledged to invest an additional $450m into the JV this year.

Breaking down where that capital would likely be spent, Deutsch said it would cover a mixture of day-to-day operating expenses (OpEx) and more long-term capital expenses (CapEx).

“We have CapEx related to licensing and we have CapEx related to some retail builds that we’re doing,” Deutsch said.

He said he expected BetMGM to breakeven by 2023.

Northern lights

Finally, on Canada, Greenblatt is confident that BetMGM can co-exist alongside Entain’s other brands in the soon-to-open North American market.

The country is in the process of legalizing single-event wagering, while its biggest province, Ontario, will launch igaming this year.

“We think the recipe we’re bringing to bear in the US would be relevant and effective in the Canadian market,” Greenblatt told analysts.

In its TAM forecast, BetMGM expects average GGR per adult of ~$65 for online sports betting and ~$115 for igaming once Canada reaches maturity.

The country is expected to reach a TAM of $4.4bn, according to the operator, rising to $32bn for both Canada and the US.

On expanding further afield into markets outside of North America, he said: “It’s not something that we’ve discussed in any depth so far, but we have very sophisticated and rational shareholders and to the extent it makes sense to BetMGM, it’s certainly something we could consider in the future.”