MGM Digital holds profitability course despite Brazil market curbs

MGM Resorts International executives have said the disruption facing its Brazilian betting operation will not derail the wider digital business, as the group reported a sharply reduced net loss for the latest quarter.

The company posted revenue of $4.2bn (£3.1bn), with the net loss narrowing year-on-year to $17m from a figure $268m higher, while consolidated adjusted EBITDA came in at $403m, according to SBC News.

Much of the attention on the investor call centred on BetMGM Brasil, the joint venture between MGM and Brazilian media group Globo, which has been hit by a government crackdown on the market.

"MGM Digital will continue on its path to profitability regardless of the outcome in Brazil," Bill Hornbuckle, President and Chief Executive Officer of MGM Resorts, told the call.

Gary Fritz, who holds the titles of Chief Commercial Officer and President at MGM Digital, acknowledged the scale of the shock caused by the Brazilian government's intervention. "Certainly, the election result caught us by surprise – I think it caught everybody by surprise," he said.

Fritz said the company had activated contingency planning once a provisional measure was introduced in Brazil last month, allowing it to reduce fixed costs in the market. He thanked the company's team in Sao Paulo for "their perseverance during what is a challenging set of circumstances."

BetMGM Brasil had been the 36th-largest operator in the country according to the Blask Index before President Luiz Inácio Lula da Silva's administration curtailed the market last month.

Fritz pointed to Globo's regional expertise as an asset as the regulatory picture evolves. "We feel blessed to have our partner down there who can help navigate through some of the noise perhaps better than anybody else in the country can," he said, adding that the business is "planning for a variety of different scenarios" as Brazil's Congress and courts weigh the market's future.

Growth in Europe, caution in the US

Away from Brazil, MGM Digital reported what it called strong momentum in Europe during the third quarter, with the BetMGM brand driving 8% top-line B2C growth on the back of particularly robust performances in Spain, the Netherlands and the UK.

Across MGM Digital's full operations, revenue rose 6% year-on-year, from $174m to $184m, while the segment's adjusted EBITDAR loss narrowed to $4m from $23m.

In the United States, Hornbuckle used the call to reiterate the group's opposition to prediction markets operating outside state-regulated sports betting frameworks. He referenced a recent Ninth Circuit Court ruling against Kalshi, under which sports event contracts were found to be sports bets and not swaps subject to federal regulation.

"They are sports bets. The judge's opinion is that it is disingenuous to deny that the contracts are sports bets under a reasonable person's understanding and that everyone knows a sports bet when they see it," Hornbuckle said, adding that MGM is "hopeful that the Supreme Court will review the case sooner rather than later."