Entain commits to scaling down BetMGM financial support once profitability goal reached
Fifty percent joint venture owner to continue operational support going forward further fueling speculation surrounding MGM buyout
BetMGM joint venture owner Entain has reiterated its commitment to end its financial contributions to the brand once it reaches EBITDA profitability, a target it could reach in the second half of 2023.
Speaking as part of Entain’s Q4 2022 financial earnings call, Entain CEO Jette Nygaard-Andersen lauded the firm’s performance in the US as going from “strength to strength”, suggesting it will soon reach this goal.
“We retained our leadership position in igaming and have cemented our position as a top-three operator of sports betting and igaming accross the US with a 19% market share.
“While this GGR [gross gaming revenue] share is slightly down on previous periods, our NGR [net gaming revenue] share, which of course has a greater correlation with profitability, continues to be our focus as we concentrate on bonus optimizations.
“While the US market is still in relatively early stages of growth, we are pleased with our position today and all key metrics are trending as we had hoped,” she added.
The Entain CEO also referenced the recent announcement of Entain’s additional $150m investment into the BetMGM joint venture business, suggesting it would continue profitability of the business.
However, Nygaard-Andersen suggested these investments would soon end, with only operational and technological support being provided.
“Assuming no major changes to our environment and target markets, we expect financial support for BetMGM to come to an end as we move into profitability in the US, but our ongoing operational support from technology to product, to data analytics, training, and people is vital to BetMGM’s success,” she explained.
To date, Entain and its joint venture partner MGM, have invested $1.25bn in the business, which is live in 25 jurisdictions and has access to roughly 45% of the adult US population.
The move by Entain to end its financial support will no doubt fuel speculation that MGM Resorts will look to buy out its joint venture partner, rumors which have grown over the last two years.
This speculation, which grew after MGM Resorts tabled an audacious £8.09bn bid to acquire Entain in January 2021, is seen by many as a move to secure full control of BetMGM, while also adding to MGM’s global ambitions.
With Entain facing a significant hit from regulatory changes in its key market of the UK, the business may decide it’s time to cash in on its biggest US asset.