BetMGM Forecasts 2022 Net Revenue North of $1.3B, Expects Profitability in 2023

Posted on: January 19, 2022, 10:02h. 

Last updated on: January 19, 2022, 10:43h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

BetMGM is revealing bullish financial guidance, including a forecast calling for a more than 50 percent revenue increase this year. The expectation is that the online gaming company will be profitable on the basis of earnings before interest, taxes, depreciation and amortization (EBITDA) in 2023.

BetMGM
A BetMGM ad featuring actor Jamie Foxx. The company is forecasting a big sales increase this year and EBITDA profitability in 2023. (Image: PYMNTS.com)

The iGaming and sportsbook operator controlled by MGM Resorts International (NYSE:MGM) and Entain Plc (OTC:GMVHY) says 2022 net revenue from operations is expected to be over $1.3 billion, up from the approximately $850 million the company is forecasting for 2021. The 2021 estimate tops management expectations and is nearly five times ahead of the revenue notched in 2020.

Same-state growth in net revenue from operations up 140 percent from prior year,” said BetMGM of its 2021 results. “Fiscal year (FY) 2021 EBITDA loss expected to be in the range of $420 — $440 million, in line with expectations.”

In 2021, acquisition costs were in line with management forecasts, as BetMGM continues pushing toward a long-term cost per customer acquisition of $250. The operator also reiterated a “long-term total addressable market opportunity in North America of approximately $32 billion.”

Profitability a Plus. So Is Market Share

Now live in 19 jurisdictions — four for iGaming and 19 for sports wagering — BetMGM is achieving market share of 20 percent to 25 percent in the states in which it operates.

For the three months ending November 2021, it’s the second-largest operator for sports betting and online casinos, with a 24 percent market share. Strip out sports wagering, and BetMGM is the dominant internet casino operator, with a 30 percent market share. Following upcoming additions to the roster of states in which it does business, BetMGM estimates it will be in front of 40 percent of the US adult population.

The operator is “expecting to launch online sportsbooks in Illinois and Louisiana in the first quarter, as well as retail sportsbooks in Puerto Rico and both online sportsbook and iGaming in Ontario (Canada) later this year,” it said in a statement.

Combine the market share ascent and the 2023 EBITDA profitability forecast, and BetMGM is serving notice to rivals that are spending heavily on customer acquisition while providing limited visibility on when losses will cease.

MGM/Entain Relationship

For now, it appears the relationship between MGM and Entain is on solid ground. The companies will invest approximately $450 million in BetMGM this year, bringing the total to $1.1 billion since the online gaming unit launched in 2018.

That was after an eventful 2021 for the casino giant and the Ladbrokes operator. In January 2021, MGM offered $11.06 billion for its BetMGM partner. Entain ultimately dismissed that offer as too low and MGM didn’t return to the bargaining table.

Last September, DraftKings (NASDAQ:DKNG) entered the fray, shaking the gaming world by offering more than $20 billion in cash and equity for Entain. A $22.4 billion bid was later floated. But the talks were ultimately scrapped, with Entain later saying the BetMGM relationship stood in the way of executing a transaction with DraftKings.

While DraftKings was courting Entain, MGM made clear it’d like to get full control of BetMGM. The casino operator hasn’t recently commented on how such an effort would take shape, or if it’s even on its 2022 agenda.