BetMGM Profitability Jumps In Q3 As Operator Chases Premium Bettors
The MGM Resorts and Entain joint venture posted a 112% rise in adjusted EBITDA as it trims marketing spend and leans on higher-spending customers rather than new sign-ups.
BetMGM's third-quarter adjusted EBITDA reached $86 million, more than double the figure from the same period last year, as the sportsbook and casino operator continued prioritising customer value over customer acquisition, Legal Sports Report reported.
Revenue climbed 7% to $710 million for the quarter, according to the company's Q3 business update cited by Legal Sports Report.
BetMGM left its full-year guidance untouched. Revenue is still expected to land between $2.9 billion and $3.1 billion. Adjusted EBITDA guidance remains at $300 million to $350 million, though the company said results are likely to come in near the bottom of both ranges.
Chief executive Adam Greenblatt told investors on Tuesday's call that customer-acquisition costs have dropped significantly since the World Cup, pushing projected payback periods to their best levels since late last year. Much of that improvement stems from a pullback in sportsbook marketing this year, concentrated in states that lack legal online casino play.
Shares in Entain rose 4.7% in London trading on Tuesday, while MGM Resorts' stock barely moved during the afternoon session.
Fewer players, more revenue each
The strategy has produced a smaller but more lucrative customer base. Average monthly active players across sports betting and online casino dropped 3% year-over-year, yet handle per active online sports bettor rose 13% and net gaming revenue per active player jumped 18%.
Greenblatt said the company is channelling spending toward keeping its premium players while hunting for acquisition channels that face less pressure from prediction-market rivals. BetMGM estimates it holds an 8% share of sports betting and 20% of iGaming across the states where it operates.
Management indicated marketing budgets are now set according to how fast acquisition costs are expected to be recovered, with executives saying they would raise spending again once projected returns support it. Chief financial officer Gary Deutsch pointed to years of accumulated experience as part of the reason outlays have come down, telling investors the company has spent seven to eight years refining which marketing tools and methods work best, so some of the savings simply reflect that accumulated know-how.
Hold rate lifts sportsbook contribution
Total contribution, a measure of revenue after certain operating costs and acquisition marketing, rose 32% to $175 million. The online sportsbook turned a positive contribution, and iGaming contributed more than $135 million.
Sports betting revenue grew 7% to $216 million, outstripping handle growth of 3%. Gross sportsbook hold rose to 10.7% from 10.1% a year earlier, a gain Legal Sports Report attributed partly to a greater proportion of parlay and same-game parlay bets. Greenblatt said handle has ticked up modestly in the early weeks of the NFL season, even as strong results for the house have left bettors with smaller bankrolls to wager again.
Online casino revenue increased 6% to $483 million, making up roughly two-thirds of the quarter's total. Despite an overall decline in active players, iGaming monthly active players grew 2% and net gaming revenue per active player rose 4%. Greenblatt said between 55% and 60% of BetMGM's sportsbook customers also play online casino games in a typical week.