BetMGM looks to player premiumisation for growth
In the evolving landscape of the gambling industry, Entain and MGM Resorts’ joint venture, BetMGM, is strategically pivoting its focus towards fostering a more premium player base that engages in higher-value betting. As detailed in their fiscal year 2024 (FY24) results released on February 4, the company is entering a transformative phase aimed at enhancing player value and expanding active users within its platform.
Despite reporting a decline in EBITDA, BetMGM’s leadership emphasized that the past year was characterized by substantial investments aimed at bolstering its iGaming capabilities and optimizing marketing, customer relationship management (CRM), and segmentation strategies.
During the earnings call, CEO Adam Greenblatt detailed that these strategic initiatives contributed to stronger performance metrics in the latter part of the fiscal year.
Anticipated Deceleration in Monthly User Growth
In the fourth quarter, BetMGM experienced a remarkable 55% year-on-year growth in active users, reaching a total of 946,000, reflecting a 14% increase over the year despite the absence of new state launches. However, Greenblatt clarified that the company does not anticipate sustaining these accelerated rates of player acquisition in the coming periods.
Instead, BetMGM aims to cultivate a player base characterized by ‘premiumization’, wherein players exhibit increased value through more frequent and higher-value bets. Greenblatt explained, “Our average player is making more bets, each with a slightly higher value, and is engaging more frequently with our app.”
He underscored the intent to establish BetMGM as the premier destination for the premium mass segment, stating, “While we don’t expect to attract players at previously observed rates, the quality of our player base is expected to improve significantly.”
The Value of Sports Bettors
A key driver for the increase in player value is a significant rise in cross-selling between sports betting and gaming segments. Greenblatt highlighted, “Since the onset of the football season, we’ve enhanced our cross-sell metrics by 11.5 percentage points, indicating a notable increase in online sports players also participating in iGaming.”
BetMGM reported a remarkable betting handle of $13.1 billion, a 20% increase compared to the previous year, coupled with an improved hold percentage of 8.6%. Greenblatt noted that this hold percentage has been influenced by customer attributes and betting mixes, stating, “Our premium customer segment shows a higher propensity for larger bet sizes, which enhances our cash margin, despite a lower GGR percentage margin.”
Engaging State Legislators on Tax Risks
In light of ongoing legislative developments across various states, Greenblatt revealed that BetMGM is actively engaging with lawmakers to highlight the potential risks associated with punitive tax measures while simultaneously promoting the value of iGaming. The company posits that legislative efforts should focus on generating tax revenue while safeguarding consumer interests.
He warned, “Excessive taxation can inadvertently jeopardize the very goal of promoting legal play, making it challenging for smaller operators to compete effectively with larger entities, and can render the online gambling market less enticing compared to offshore options.”
Collaborative Legislative Action
Greenblatt outlined that BetMGM, in conjunction with industry associations, is collaborating with legislators to advocate for regulations that would enhance tax income derived from iGaming activities. He asserted that the opportunities within iGaming are considerably greater in states offering a comprehensive array of gambling products.
On querying the effectiveness of their outreach efforts with U.S. lawmakers, Greenblatt depicted the landscape as varied: “Some lawmakers are receptive, while others remain polarized. The degree of progress often hinges on individual state dynamics, though our commitment to advocacy remains unwavering.”
In its year-end report as of December 31, BetMGM disclosed total revenues of $2.1 billion (£1.69 billion/€2.03 billion), reflecting a year-on-year growth of 7%. However, the company did note a significant increase in EBITDA losses, which totaled $244 million, compared to a $62 million dip the previous year.
