MGM CEO: BetMGM product is “not where we want it to be”

MGM Resorts International CEO Bill Hornbuckle has suggested BetMGM joint venture partner Entain’s $266m acquisition of sports pricing specialist Angstrom Sports can give a boost to BetMGM’s online sports betting product.

Speaking as part of MGM Resorts’ Q2 2023 financial earnings call, Hornbuckle said the transaction was a “positive step” which would enable product improvements and a refinement of BetMGM’s pricing tools, both of which would increase its customer base and sportsbook margins.

“I think the opportunity with Angstrom will drive more product enhancements, more parlay betting, greater frequency and recency around in-game bets, the big margin business,” Hornbuckle said.

“I think gross [margin] was a little over 9%. I know there’s a goal to break through 10% once we get Angstrom fully deployed, which will probably come in a couple of phases through football and then post-football.

“I think if you look at the businesses, the biggest delta between the two is the product offering and, more importantly, the type of products that potentially someone like a DraftKings will offer versus the number of things that we offer.

“We’re simply going to have more high-margin bets available for customers as we deploy Angstrom,” Hornbuckle said.

In its most recent trading update, BetMGM confirmed it is on track to achieve a positive EBITDA contribution from sports betting and igaming in the second half of 2023, after reaching that milestone during Q2.

However, BetMGM’s US market share of both sports betting and igaming has dipped slightly, falling from 30% for igaming and 13% for sports betting in its full-year 2022 trading update to 27% and 11% respectively for H1 2023.

Addressing the BetMGM drive to profitability and its role in potentially reducing market share, Hornbuckle said: “We see player cohorts maturing in 24 to 36 months, particularly in sports, hopefully, they are maturing a little sooner than igaming.

“We’ve seen our CPAs come down from $400s down below $300s and, so, there’s active maturity there in the context of how we’re marketing into whom and we’re more disciplined about all of that,” he added.

However, he attributed the decline in market share to product-related deficiencies, something the business is now in a position to rectify. “Our product is not where we want it to be,” Hornbuckle said.

“I think the moves that we’re now making though with Entain with the moves we’re going to make with Angstrom as an onboarded partner for BetMGM will get us to a place where we’ll be back in that game in a meaningful way and hopefully begin to gain some share back.

“Of our sports bettors, only about 30% of them migrate over to the casino. If you take that out of the equation that’s part of the reason igaming come down a couple of points, but we continue to dominate.”

The MGMC CEO also highlighted the presence of increase competition in igaming, traditionally BetMGM’s strongest performing vertical.

Hornbuckle continued: “We’re not naïve enough to think that they’re not coming after us in that forum, but we continue to innovate.

“We’re continuing to figure out ways to tie both products together to promote both ends of the spectrum,” he concluded.

The MGM CEO was bullish about the group’s progress towards a single account, single wallet interface that could be used across not only the BetMGM brand, but in the group’s land-based empire, with Hornbuckle citing the inflection between the two verticals as crucial.

“All of our resort guests are exposed to BetMGM marketing throughout their stay. And on average, BetMGM acquires 30,000 customers monthly who’ve originated or had a product relationship with MGM Resorts, with half of those coming from Nevada.

“As we roll out single account, single wallet across the country, BetMGM will be able to truly activate our unparalleled footprint in Las Vegas is part of our omnichannel strategy.

“We expect acquisition and engagement metrics to grow as players get to enjoy a seamless experience using the BetMGM app across state borders,” he remarked.

At a group level, MGM Resorts reported Q2 2023 consolidated net revenue of $3.9bn, up 21% year on year, an increase attributed to the removal of Covid-19 restrictions in Macau.

MGM’s consolidated EBITDAR came in at $1.1bn during the period, with operating income sinking to $371m versus $2.4bn in the prior year period with the higher figure impacted by the sale of the MGM Growth Properties business to VICI Properties Inc.

Net income was also similarly impacted, falling to $201m from a prior Q2 2022 high of $1.8bn.