Last week, BetMGM disclosed that it handled 70 million transactions in Ontario in May alone, continuing its stellar start in Canada.
With Ontario established as a key market for the venture, BetMGM has set its sights on becoming North America’s top online gaming operator in a crowded field. As of February, BetMGM ranked first in the U.S. in online sports betting and iGaming market share in its active jurisdictions. It also ranked second across all U.S. jurisdictions, the company announced last month, even though it is only live in 23 markets, including Ontario.
Launched in July 2018, shortly after the Supreme Court’s repeal of PASPA, BetMGM is a 50-50 joint venture between MGM Resorts and Entain, a major European gambling conglomerate. MGM gave the venture a recognizable brand, while Entain delivered one of the industry’s most trusted back-end platforms.
BetMGM 1Q22 net revenue was ~$271M, along with a loss of ~$184M, attributed largely to initial rollout in New York… if not mistaken the LTM tally at the JV is ~$959M in net revenue and ~$488M in losses.
More color on BetMGM to come next week via Investor Day on May 12. pic.twitter.com/kTmc9eB0pj
— Alfonso Straffon 🇨🇷🇺🇸🇲🇽 (@astraffon) May 3, 2022
Entain CEO Jette Nygaard-Andersen is pleased with BetMGM’s progress in the U.S., where the venture is near its targeted goals of 20-25% market share in active online sports betting and iGaming jurisdictions. Nygaard-Andersen was appointed CEO of the global gaming conglomerate last January after her predecessor Shay Segev took a leadership position with DAZN Group.
“I am very, very pleased with where we are today,” Nygaard-Andersen told Sports Handle on the final day of May. “The team here is doing a magnificent job in really understanding the markets.”
Market consolidation appears inevitable
During an hourlong interview, Nygaard-Andersen, a former executive with Stockholm-based digital entertainment company Modern Times Group AB, addressed a litany of topical industry issues, including initiatives to combat problem gambling, sponsorship limitations in Europe, and market consolidation in the U.S.
While Penn National Gaming made a strategic move with the acquisition of theScore and DraftKings bolstered its iGaming offerings with the purchase of Golden Nugget Online Gaming, M&A activity since the PASPA decision has been fairly sparse. Among non-casino companies, ESPN has indicated that it could license its brand for sports betting, but the closely watched move doesn’t appear imminent. Other multi-billion dollar corporations — such as Facebook, Amazon, and Apple — have ramped up efforts to stream top professional sports, but have been reticent to take on risk as a standalone sportsbook.
BREAKING: Apple and Major League Soccer have agreed to a historic 10-year broadcasting deal.
The Apple TV app will become the new home of all MLS matches beginning 2023 without any local blackouts or restrictions. pic.twitter.com/NUBkvmVhML
— Front Office Sports (@FOS) June 14, 2022
One prominent company, though, is poised to disrupt the industry upon its sports betting debut. Unlike BetMGM’s top competitors, Fanatics has deep interests outside of gambling, with divisions in licensed team merchandise and sports collectibles. Last month, Fanatics took a major step in furthering its ambitions to launch a sportsbook when the company filed a trademark for its sports betting brand with the U.S. Patent and Trademark Office.
Fanatics has the scale and diversity to become a one-stop shop for in-game betting, NFTs, and jerseys inside a stadium. Eventually, Fanatics CEO Michael Rubin believes the company can become one of the largest sportsbooks in the nation.
Asked whether Fanatics’ entry into the U.S. sports betting market will be a game-changer for the industry, Nygaard-Andersen demurred. Instead, she took a broader view of the U.S. market without mentioning Fanatics by name. At present, the top five sportsbooks in the U.K. account for about 80% of that market’s revenue, she noted.
There are parallels in the U.S., where BetMGM, FanDuel, and DraftKings account for at least 70% of the nation’s overall market share, according to various estimates. The topic generated considerable debate during numerous first-quarter earnings calls last month, as rumors swirled that Fanatics would pursue a massive market access deal by acquiring a top sports betting company. Large-scale consolidation may squeeze out some of the mid-level operators, which currently maintain single-digit market share in the U.S.
“I think when you look at the broader recreational market, you will see quite some consolidation in the top,” said Nygaard-Andersen. “I think if you look years ahead, the struggle will probably be in the mid-market.”
In some respects, BetMGM has taken a prudent approach with its customer acquisition model across the U.S. For instance, the venture has spent judiciously in high-tax jurisdictions such as New York, where operators may face an uphill climb in attaining profitability.
Nygaard-Andersen credits BetMGM’s team for developing a model that quickly grasped U.S. player behavior. The platform, which runs on Entain’s Customer Relationship Management (CRM) system, has enabled BetMGM to develop a state-by-state strategy for areas such as customer acquisition, marketing, and promotional activity.
Other M&A activity
In terms of M&A activity, MGM Resorts signaled its intent to expand from an iGaming perspective last month, when it made a $607 million bid to acquire Swedish-based online gaming operator LeoVegas.
The deal, which is expected to close in the second half of 2022, was unanimously approved by LeoVegas’ board. Since BetMGM has exclusivity in the U.S. for the venture’s product sets, the LeoVegas deal will have little impact on the operator, Nygaard-Andersen indicated.
On Tuesday, Entain announced the acquisition of the Netherlands-based online sports betting and iGaming operator BetCity, a deal worth up to €850 million. Entain, which owns top European gambling brands such as bwin, Ladbrokes, and Coral, has made a pledge as a company to not operate in unregulated markets. The Netherlands launched a regulated online gaming market last October.
Entain, the gambling operator behind the Ladbrokes and Bwin brands, is acquiring BetEnt, the owner of BetCity, amid delays securing regulatory approval from the KSA, the Dutch gaming and gambling authorityhttps://t.co/GK1cZCuVzU
— BTG Advisory (@BTG_Advisory) June 15, 2022
“We are happy to be joining forces with a world-class group in Entain. Together, we will be well-placed to maintain a strong market position in the Dutch market for the coming years,” said Melvin Bostelaar, CEO of BetCity, in a statement. “Entain’s market-leading platform, technology, established brands, and global scale provide a fantastic opportunity to expand and enrich our customer offering.”
500th day as Entain CEO
Nygaard-Andersen recently celebrated her 500th day as Entain’s CEO. She holds the distinction of being one of the only female CEOs on the FTSE 1000, a list of the top public companies in the U.K., and has conversed several times with FanDuel CEO Amy Howe, another top female executive who replaced Matt King last year.
“I don’t wake up in the morning and think about myself as a female leader,” Nygaard-Andersen said. “I hope we’ll reach a point also in this industry where it’s not about gender, it’s just about great leaders.”