Greenblatt expects player acquisition decline as BetMGM aims to be “home of the premium mass player”
Entain and MGM Resorts’ JV, BetMGM, expects player acquisition rates to slow as it looks to benefit from a premium player base placing higher value bets.
While the group posted a falling EBITDA, once again in the negative, in its FY24 results on 4 February, it pointed to a “year of investment” which sought to increase player value and active users of its product.
Speaking to analysts following the group’s full-year earnings call on 4 February, BetMGM CEO Adam Greenblatt said during the year the focus had been on investing in its igaming strengths and refining its marketing, attribution, CRM and segmentation models.
These helped to drive a stronger performance in the latter part of the year.
Monthly user growth expected to slow
Monthly users in the operator’s forth quarter were up 55% year-on-year. Greenblatt said this was achieved without the addition of any new states. Total monthly active users for the year hit 946,000, up 14% year-over-year.
However, while BetMGM touted its player growth, Greenblatt noted that it would not continue to see the same high rates of player acquisition going forward.
Instead, the group’s growth plan is to focus on and benefit from a playerbase that is going through premiumisation, meaning their player value is increasing.
“Our average player is now making more bets, each of which is slightly higher value on average with greater frequency and time spent on our app,” Greenblatt said.
“We expect these trends to continue as we continue to establish ourselves as the home of the premium mass player. We do not expect to acquire players at the same rate as we have in the past but we do expect the average value of each of our players to be of a higher quality than before.”
Sports bettors are most valuable
Also increasing the value of its player base was a notable uptick in cross-sell between sports and gaming in 2024.
“Particularly pleasing is that since the start of the football season we have improved cross-sell by eleven and a half percentage points. So that’s the percentage uptick of online sports players in igaming states who were also active in igaming during the period,” Greenblatt said.
The group reported a betting handle of $13.1 billion (up 20%), with a hold percentage of 8.6% (up 0.9%) in its 2024 results. Greenblatt said the group’s hold percentage had been dependent on two things; pricing and the betting mix.
He told investors that the single biggest factor driving its hold percentage was the “nature” of its customers.
“Not all customers are the same but MGM over indexes, as our premium mass would suggest, it over indexes on a relative basis, higher value, so larger bet size, single players,” Greenblatt said.
“Now these players are very valuable players to BetMGM. So, cash margin is solid and high and attractive but GGR percentage margin is lower. So, when you take a step back and look at the overall basket, our GGR margin is weighted, I think, relatively more at MGM towards those higher, best size, lower margin players.”
Educating state legislators on high tax “risks”
Addressing legislative pushes in new states and those where BetMGM is already live, Greenblatt told investors that the group was working with state legislators to educate them on the “potential risks” of punitive tax measures, while also touting the benefits of igaming.
BetMGM noted that lawmakers’ objectives should be to generate tax and facilitate entertainment products, as well as protect vulnerable users, adding that this protection should include ensuring that all play is done legally.
“The risk with some of these tax bills is that last objective (legal play) becomes challenged,” Greenblatt told analysts.
“So, the more expensive you make it to participate you make the cost of participation on shore, what you’re doing effectively is making it more difficult for, frankly, smaller players to compete with the larger players. And you’re also making it less attractive online for onshore players to offer value that can compete with the offshore market.”
Lawmaker action
One alternative that Greenblatt said BetMGM and industry groups were working on with lawmakers was the regulation of igaming to increase the flow of gambling tax income to states.
Greenblatt said the opportunity for igaming is “far more significant” in states that have multiple products available.
Asked if BetMGM believes that they are making headway with US lawmakers, Greenblatt said the issue was polarising.
“Some yes, some no. It really depends on the individual states,” Greenblatt commented, adding that “some states’ leading lawmakers are more receptive. [For] some, the topic is, can be polarising and so you know to the extent that you have lawmakers who have an entrenched position that that can be more challenging. But that doesn’t mean we give up. You know, we’re a tenacious bunch.”
For the year ended 31 December, BetMGM reported total revenue of $2.1 billion (£1.69 billion/€2.03 billion), up 7% year-on-year. The group posted a negative EBITDA of $244 million, an increased drop on its EBITDA losses of $62 million the previous year.
