MGM Digital narrows quarterly loss as revenue growth cools to 6%
MGM Resorts' international online arm moved closer to break-even in the third quarter, but growth slowed sharply from the previous period as UK and European tax pressures mount.
MGM Digital, the LeoVegas-led international online business within MGM Resorts, posted third-quarter revenue of $184m, up from $174m a year earlier.
The segment's adjusted EBITDAR loss narrowed to $4m from $23m over the same period, moving the unit closer to profitability even as its revenue growth rate slowed markedly from the second quarter.
MGM Digital combines LeoVegas with the group's other consolidated interactive gaming subsidiaries and excludes the BetMGM North America joint venture. LeoVegas has been consolidated into MGM's accounts since the acquisition completed on 7 September 2022.
Over the first nine months of the year, segment revenue is up 21%, a pace driven in part by a strong second quarter that was recorded despite the UK's higher online casino tax already being in effect. The duty increase forms part of a package the UK government says will raise more than £1bn a year.
Management told analysts on the earnings call, according to a transcript published by The Motley Fool, that business-to-consumer revenue at MGM Digital rose 8% on the back of the BetMGM brand, with gains concentrated in Spain, the Netherlands and the UK.
In August, MGM moved its UK sports betting operation onto a platform it runs itself. That platform now accounts for more than 80% of the company's UK online sports revenue.
Group adjusted EBITDA fell to $403m from $506m, with most of the decline coming from an 8% drop at Regional Operations. The Las Vegas Strip resorts saw revenue fall 2% and EBITDAR drop 12% to $531m.
Las Vegas pricing softened across the board. The average daily room rate fell 8% to $218, and revenue per available room dropped by the same margin to $193. Occupancy held steady at 89%.
Macau provided a counterpoint. MGM China reported record revenue of $1.1bn, up 5%, and a record 17.1% market share. Segment adjusted EBITDAR there nonetheless fell 7% to $264m from $284m, partly reflecting a $22m year-on-year rise in intercompany branding licence fee expense.
The net loss attributable to MGM shrank year on year, falling from $285.3m to $17.1m, though adjusted earnings per share still missed expectations, underlining the pressure facing large land-based operators.
In North America, the BetMGM joint venture with Entain reported third-quarter net revenue of $710m, up 7% from $667m, and generated $34m in payments to MGM during the quarter.
BetMGM said it now expects to finish 2026 near the bottom of both its guidance ranges: net revenue of $2.9bn to $3.1bn and adjusted EBITDA of $300m to $350m.
UK operators face a further tax change from April 2027, when a new 25% remote betting rate takes effect within General Betting Duty, according to HM Revenue & Customs.