BetMGM CEO lauds potential 2023 EBITDA boost from California market

BetMGM CEO Adam Greenblatt has highlighted the potential legalization of sports betting in California as a “great news story” for BetMGM, suggesting it could lift the total addressable market (TAM) in the US to $37bn.

Greenblatt was speaking as part of BetMGM’s annual Investor Day and referenced its multi-operator legislative initiative in the Golden State, which has just qualified for inclusion in a November 2022 ballot, after securing the required number of signatures from Californians.

“We are encouraged that our industry’s ballot initiative has now qualified to be voted on later this year and current polling looks favorable, with over 58% of Californians in support of our proposition,” Greenblatt told investors.

The likelihood of sports betting in California has increased dramatically with the advancement of the initiative, which is set to go toe-to-toe with a rival legislation-based initiative backed by California’s tribal operators, which has also qualified for the November ballot.

Alluding to the impact of a potential win for BetMGM, Greenblatt suggested this would be a significant shot in the arm for BetMGM’s goal of being EBITDA-positive by 2023.

“Our path to profitability next year does not include a launch in California, so if California does get approved, that’s a great news story for our business,” he said.

“We’ve demonstrated the state level economics, the unit economics of a new state, and obviously in California we have a good deal of certainty of what the fiscal and regulatory framework will be.

“If it does get approved in November, there will be investment at the back end of next year, should it have launched in that kind of timetable. It will require a lot of investment but it’s a very positive story for BetMGM,” Greenblatt added.

Estimates released by BetMGM suggest the California market could be worth as much as $2.5bn to $3bn, based on an average gambling spend per head of $90.

“We’re very very excited about California because of its proximity to our MGM Resorts heartland of Las Vegas.

“California over-indexes within our MGM rewards database and clearly there’s a lot of drive-in traffic that we would seek to capitalize on, that reduces the cost of establishing our player base in the state.

“Therefore, our path to state level, contribution positive and payback is therefore shortened, because the cost side of establishing ourselves in that market is reduced because of our advantageous structure,” Greenblatt added.

Elsewhere in BetMGM’s Investor Day update, the igaming and sportsbook operator suggested it had established itself as the market leader in the US market, ahead of direct rival FanDuel.

As evidence for this assertion, BetMGM cited a 25% operational market share in igaming and sports betting combined, rising to 29% for just igaming in isolation.

In addition, the operator reaffirmed its full-year 2022 guidance to reach net revenue of $1.3bn, with the aim of becoming EBITDA positive in 2023.

The firm also restated its longer-term goals of generating a US market share of 20%-25% and an expected EBITDA margin of between 30%-35%.