Speaking at Morgan Stanley’s Global Consumer and Retail Conference, BetMGM’s CEO said 2024 will be the year to unlock America’s gaming capital.
BetMGM will “unlock” Las Vegas in 2024, according to CEO Adam Greenblatt.
Speaking at the Morgan Stanley Global Consumer and Retail Conference on Wednesday (Dec. 6), Greenblatt said BetMGM will look to capitalize on the influx of sporting events in Las Vegas.
Sports and Las Vegas license are key
The city’s recent Formula 1 race attracted 300,000 fans and was a record weekend for BetMGM. The organizer took three times more bets than any other F1 race in its history.
“24 is the year we unlock Las Vegas,” Greenblatt said. “This is important because recruiting a player in Vegas costs 27% of the cost of acquiring that player on the open market. Plus, they are more than 130% just as valuable.
“Vegas’ role in player acquisition and retention is really important. Without exception, the players we acquire in Vegas do not live in Vegas.
“BetMGM is the sports betting choice in Vegas, where some of our other competitors are frankly absent for complex regulatory reasons. When it comes to player reactivation, player acquisition and retention, they take home BetMGM.
“The CEO of MGM [Bill Hornbuckle] talked about the Golden Triangle. The [Oakland] A’s are building a new ballpark, you have T-Mobile [Arena]You have Allegiant [Stadium] where the [Las Vegas] Raiders play, the golden triangle of sports that is, frankly, on the doorstep of the MGM properties.
“Visiting Vegas as a destination to watch your team play is always an exciting and attractive proposition. I expect that in time we will have an NBA team, the NHL and baseball.
“All professional sports will be in Vegas and it’s only going to get stronger. This is great for BetMGM.”
BetMGM recently announced that it expects to generate positive EBITDA of $500.0 million (£396.1 million/€462.2 million) by 2026 while maintaining a 25% market share in the US to reach.
BetMGM has set its 2026 target and revealed that the company plans to be at the high end of its 2023 guidance. According to Greenblatt, sales in the current fiscal year are expected to be between $1.80 and $2.00 billion.
2024 will be a year of investment and Greenblatt is confident that BetMGM will see the fruits of that investment starting in 2026.
““23 was the year we kept our commitments,” Greenblatt said. “The positive EBITDA in the second half of the year was a decision.
“If we reach $500 million in EBITDA on a hardcore investment profile, there is incredible momentum implicit in that number. The value of all the players we acquired grows the following year.
“That’s the beauty of this business model. With an EBITDA of $500 million, your fixed costs are covered. This is a winner-take-most market. This is an industry where you have to be big to handle the costs and marketing.”
Gary Deutsch, CFO of BetMGM, added: “We have done our best to attract new players. We are preparing for next year and the year after that.
“The company is based on assembling cohorts of players that we sign every month. We consider who will be and remain a long-term player.
“We look at player metrics in terms of retention, value and acquisition cost. Obviously, the more we win and the more we keep, the faster we get there.
“We believe in our ability to attract customers and we are excited about the things Adam has done. The real economies of scale will come next year.”
BetMGM 2024: A year of investments
BetMGM is a joint venture between Entain and MGM Resorts International. The operator has invested a lot so far and assumes that it will be able to finance itself from 2024.
“Our focus is on maximizing value for shareholders,” Greenblatt said. “We know how to acquire players, how to develop players, how to retain players and how to understand the value of our cohorts.
“We invest in growth. We are also committed not to raise additional capital unless something new comes along that we are not seeing today.
“We will not withdraw any further capital from our shareholders. We will make the most of the resources available to us.
“Because we have $2 billion in revenue that we can reinvest into the company, I think we are positioned to differentiate ourselves from the laggards.”
Stagnation is a problem
While Greenblatt was optimistic about BetMGM’s Q3 results, Goldman Sachs highlighted the stagnation the operator is currently experiencing.
In its Q3 update, Entain revealed that BetMGM has an 18% market share in the US. This corresponds to the level of the second quarter and is only slightly higher than the 17% in the first quarter.
Despite the slow progress, Greenblatt remains optimistic about the operator’s ability to deal with any problems, citing the possible opening of many US states as a reason for optimism.
“We have North Carolina ahead of us,” Greenblatt said. “There is positive news about Georgia, Minnesota, Missouri. We believe there will be more addressable markets to offset potential headwinds.”