Greenblatt: 2024 the year BetMGM unlocks Las Vegas

BetMGM will “unlock” Las Vegas in 2024, according to CEO Adam Greenblatt.

Speaking at the Morgan Stanley Global Consumer and Retail Conference on Wednesday (6 December), Greenblatt says BetMGM will look to capitalise on the influx of sports events in Las Vegas.

Sports and Las Vegas licence to be key

The recent Formula One race in the city attracted 300,000 fans and was a record-breaking weekend for BetMGM. The operator took three times the number of bets than any other F1 race in its history.

“[20]24 is the year we unlock Las Vegas,” Greenblatt stated. “Why that’s important, is because recruiting a player in Vegas costs 27% of the cost of acquiring that player in the open market. They’re also more than 130% as valuable.

“The role of Vegas in player acquisition and retention is really important. Those players we acquire in Vegas, invariably don’t live in Vegas.

“BetMGM is the sports betting choice in Vegas, where frankly some of our other competitors are not represented for a number of complex regulatory reasons. In terms of reactivation of players, acquiring and retaining players, they take BetMGM home with them.

“The chief executive of MGM [Bill Hornbuckle] talked about the golden triangle. The [Oakland] A’s are building a new baseball stadium, you’ve got T-Mobile [Arena], you’ve got Allegiant [Stadium] where the [Las Vegas] Raiders play, the golden triangle of sports which are frankly on the doorstep of MGM properties.

“Going to Vegas as the destination to watch your team play is always an exciting and attractive proposition. I fully expect in time, we’ll have an NBA team, the NHL, we’ve got baseball coming.

“All of the pro sports will be represented in Vegas and it’s getting stronger and stronger. That’s great for BetMGM.”

BetMGM Performance

BetMGM recently announced it was expecting to deliver $500.0million (£396.1m/€462.2m) in positive EBITDA by 2026, while also aiming to reach 25% market share in the US.

BetMGM set the 2026 target, having revealed that it is planning to be at the higher end of its 2023 guidance. Greenblatt says in the current financial year, revenue should be between $1.80billion and $2.00bn.

2024 will be an investment year and Greenblatt is confident BetMGM will see the rewards of that outlay from 2026 onwards.

“[20]23 was the year we delivered on our commitments,” Greenblatt explained. “EBITDA positive in the second half was a choice.

“If we get to $500m of EBITDA on a hardcore investment profile, implicitly within that number is incredible momentum. All of the players that we acquired in that, all of their value accrues the following year.

“This is the beauty of this business model. Having achieved $500m of EBITDA, your fixed costs are covered. This is a winners-take-most market. This is an industry where you need to be big to overcome the costs and marketing.”

BetMGM CFO Gary Deutsch added: “We put our gas down on getting new players. We’re setting ourselves up for the next year, and the year after that.

“The company is built on the stacking of cohorts on players we bring in each month. We’re sorting out who is going to be a long-term player and stick around.

“We look at player metrics in terms of retention and value and cost of acquisition. Obviously the more we win and the more we retain the faster we get there.

“We believe in our ability to acquire the customers and we’re excited about the things Adam has been doing. The real benefits of scale will come next year.”

BetMGM 2024: A year of investment

BetMGM is a joint-venture by Entain and MGM Resorts International. Heavily invested in so far, the operator is expecting to be self-funding from 2024 onwards.

“Our focus is maximising value for shareholders,” Greenblatt declared. “We understand how to acquire players, how to nurture players, how to retain players and understand the value of our cohorts.

“We’re investing for growth. We’ve also made a commitment not to take more capital, unless something new that we don’t see today comes up.

“We’re not going to take more capital from our shareholders. We’re going to make the absolute most of the resources that we have.

“Having two billion dollars of revenue to reinvest in the business, I think gives us the ability to separate from the trailing pack.”

Stagnation a problem

While Greenblatt was optimistic over BetMGM’s Q3 results, Goldman Sachs highlighted the stagnation the operator is currently experiencing.

In its Q3 update, Entain revealed BetMGM held an 18% market share in the US. That is level with Q2, and only marginally ahead of the 17% recorded in Q1.

Despite the sluggish progress, Greenblatt remains upbeat over the operator’s capabilities to deal with any issues, citing the potential opening of numerous US states as a reason to be assured.

“We have North Carolina coming,” Greenblatt said. “There’s positive news about Georgia, Minnesota, Missouri. We think there will be more addressable markets to offset potential headwinds.”