Lion’s share: Can BetMGM dethrone DraftKings and FanDuel as market leaders?

Back in the summer of 2020, the industry rolled its eyes at Entain’s former CEO Kenny Alexander as he boldly insisted BetMGM – Entain’s JV with MGM Resorts – had the capacity to go “toe-to-toe” with rivals, and that there would be “no excuses” in the coming years if the company wasn’t top of the pile. Many shrugged these comments off as slightly arrogant and grandiose at this point in the US market’s maturity, especially when DraftKings and FanDuel had comfortably cemented over 75% of the New Jersey market and were showing no signs of giving up their positions at the top. But Alexander was bullish as ever. Those that know him have learned to trust his instincts, particularly considering the handful of complex M&A integrations he had led throughout his career in gaming and the fact he took GVC (now Entain) from a £26m operator to a £6bn powerhouse before his exit last summer.  

Perhaps earlier than Alexander had anticipated, BetMGM swiftly started gaining momentum in newer states in December, boasting 31% and 34% of the Colorado and Tennessee betting markets respectively. The latest market share estimates by Eilers and Krejcik Gaming (EKG) place FanDuel and DraftKings in equal second place in Tennessee (as of February 10), making up 62% of the market collectively. Regional brand Action 24/7 maintains the final 5%.

Chris Krafcik, EKG managing director for sports and emerging verticals, put BetMGM’s frontrunning position down to particularly strong revenue in December. Krafcik estimates that in December the operator achieved an overall GGR share of 11% across both sports and igaming in New Jersey, up 57% from its previous 12-month average. The JV topped the New Jersey igaming rankings for 2020, securing 20.2% of the market. 

Speaking on the operator’s Q4 2020 results in February, BetMGM CEO Adam Greenblatt appeared particularly proud of the brand’s Tennessee performance, noting that it had recorded $13m in handle in January alone. “For me, Tennessee is the poster child for our ability to compete against the early leaders in a sports-only market,” he said. 

“We were there on day one and all of the components of our operating model were in place from the start, and we are partners with the NFL’s Tennessee Titans. Combine all those things and we’re demonstrating that we can fight and win toe-to-toe with the best.”

Elsewhere, MGM Resorts group CEO Bill Hornbuckle reported that BetMGM’s overall market share across the States was 17%, or 19% excluding Pennsylvania, which it entered in late December. This will have grown further in January and February as the operator stormed Michigan and took the igaming lead with a whopping 38% market share in the first 10 days of action. Hornbuckle said the operator took $13m in GGR during that initial launch period and was now experiencing higher daily igaming GGR in the Wolverine State than in New Jersey. A total of 138,000 new users registered on the BetMGM app in December and January, across all states it operates in. 

When probed by analysts on the joint venture’s sudden success, Greenblatt cited a couple of interesting details, including the operator’s efforts to offer pre-launch registration for sports betting in Michigan to grow its database ahead of going live. Greenblatt said that having both igaming and sports live in Michigan had significantly boosted its position, with 30% of its users playing both casino and sports. 

He said: “Michigan is a great example of BetMGM’s strategy coming to life. The Entain technology allows for tremendous opportunity to provide multi-product play.” Greenblatt also added that the brand’s most popular online casino game was built in-house, further proving the value of the Entain technology stack. It is no secret that product will ultimately reign in the fight for online gambling market share in the US, and BetMGM is already ahead of others in being fully integrated into the Entain platform. Greenblatt believes this is also allowing the operator to be quicker to market in new states. 

BetMGM’s rapid geographical expansion has certainly played a part in its growth story. It entered an additional five states in recent months, doubling its presence to 10. It also gained early entry advantage in Tennessee, Colorado, and Michigan, being among the first few operators to go live. According to Greenblatt, low CPAs have also aided revenue growth, as these acquisition costs tend to be low in markets where competition is relatively slim. 

“What we are seeing is in the early few weeks of a market CPAs are very low, then competition grows and CPA rates rise. We do expect that as the market matures, the leaders will cement their positions and CPAs will come down again,” Greenblatt told analysts. The operator has experienced CPAs of less than $200 in Michigan.

BetMGM CEO Adam Greenblatt

You don’t earn loyalty in a day

The MGM and BetMGM combined M life Rewards loyalty program is also starting to reap returns across multiple states, accounting for 17% of all new sign-ups on the app. Conversely, 39% of new reward scheme sign-ups are coming from BetMGM app users. 

“BetMGM’s key competitive advantage is its ability to leverage MGM destinations, broad-based experiential offerings and our loyalty program as efficient and effective customer acquisition tools,” Greenblatt told analysts. “We know that omni-channel customers have vastly greater value to our company than single-channel customers.” 

Ahead of Michigan’s launch in January, Entain’s CEO at the time, Shay Segev, said the loyalty program had accounted for less than 10% of overall customer acquisitions. But, thanks to the hugely popular MGM Grand Detroit venue and widespread brand recognition in the Wolverine State, many more MGM casino patrons are drawn to BetMGM via the M life scheme. Greenblatt was quick to highlight the operator’s main focus for customer acquisition was via MGM, either through the loyalty program or omni-channel conversions. 

However, he did say its affiliate-style partnership with Yahoo Sports was providing another significant source of traffic. “They have been licensed in Michigan and we have already seen the positive impact on player recruitment from that,” he said. “Behind that there is a range of sources. We’re investing in brand, in outdoor, TV, digital. The biggest single source of traffic, rather than being attributed to one partner, is organic. It’s the combination of work we are doing with the brand and people are actually typing BetMGM into their browsers,” Greenblatt added. 

The operator’s recent traction has not gone unnoticed and in January prompted MGM Resorts to present Entain with a takeover bid. The European online giant politely declined MGM’s offer, insisting the price was too low, but MGM remains adamant that it will secure access to the European markets. 

MGM’s Hornbuckle told analysts: “It is MGM’s intent to play in this space on a substantive and significant level on a global basis. And so, whether this is the avenue or the route to do it or not, I think time will tell. But we do want to diversify our revenue. We think this is where the industry is.” He said the company was in a quiet period for now, but MGM had a “very good partner in Entain.”

Matt Davey, CEO of the industry SPAC Tekkorp Digital Acquisition Corp, told EGR NA in January he expected BetMGM and Barstool Sportsbook to rise through the ranks this year, as he anticipated that both were “increasingly matching reach and underwriting an argument for potential leadership contention.” 

“Momentum is building, the trend towards digitization is only accelerating, and some innovative disruptors are also beginning to show their hands,” Davey warned. The Entain/MGM JV is likely to continue to grow its market share and present a real threat to the industry’s reigning champs, but whether it can dethrone FanDuel and DraftKings is yet to be determined.