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BetMGM CEO Adam Greenblatt has said that although the business will remain subject to short-term volatility, he does expect the U.S. online gambling operator to have profitable months as early as 2023.
Greenblatt spoke to investors during a conference call in which he and chief financial officer Gary Deutsch provided an update on the joint venture between MGM Resorts International and Entain that is forecasted to make $1.3bn in revenue this year versus $850m in 2021.
BetMGM is expected to report a full-year EBITDA loss of $420m to $440m for last year, but should become profitable as soon as 2023.
“We will reach profitability in 2023 based on what I can see today and our state rollout assumptions for this year and next, so for next year there will be months where we will be EBITDA-positive,” Greenblatt said.
“But let’s not lose sight of our reality,” Greenblatt cautioned. “We are not selling toothpaste in a very mature market in a price stable environment; that’s not this business.
“The market is still in relatively exciting stages, with lots of new states becoming addressable at different and uncertain times.”
Deutsch said some states, including New Jersey and Michigan, where online casino is legal alongside sports betting, had already reached the status of being earnings-positive, while others, including Arizona, Colorado, Pennsylvania and Tennessee, were approaching it.
Greenblatt maintained that he expected the type of heavy capital expenditures, largely spent on marketing and new customer acquisition, to normalize industry-wide, maybe as soon as this year.
“I think ultimately capital is rational and capital in this market is getting smarter,” Greenblatt said.
“I think capital is going to become more demanding, which will drive more selective investment, a more prudent approach to investment in player and promotion, and I think what we will see is a path to rationalization of the promotional environment.
“It may happen through the course of this year. I think maybe we’ve got one more NFL cycle of exuberance ahead of us.”
Greenblatt was also effusive about the very early results from New York, where the company launched its mobile sports-betting platform on Monday, saying BetMGM had broken all of its first-day records for a new state launch.
“[I’m] delighted with how it’s gone,” he said. “What I found particularly pleasing was our tech performed flawlessly notwithstanding the volume.”
Several key metrics Greenblatt cited were high a registration-to-deposit conversion rate, new player deposit success rate, and conversion of registration to real-money players.
In addition, Greenblatt said he was pleased with BetMGM’s customer service, answering all calls and chat requests within 29 seconds, an advantage compared with competitors where complaints were being voiced on social media.
Greenblatt was also bullish on the future expansion for online casino, an area where BetMGM has so far outperformed all competitors in both New Jersey and in Michigan, where MGM operates the top-performing land-based casinos.
“Historically, the opposition has come from incumbent land-based casino operators and that’s going away,” he said.
“What we’re seeing in Michigan is that land-based and iGaming can co-exist and not only co-exist, but both thrive,” Greenblatt said.
“When that reality becomes the accepted position, then what I think we will see, rather than opposition, we will see support from incumbent casinos and we will also see the lawmakers looking at the success and associated tax revenues from Michigan, Pennsylvania, New Jersey, and I think we will see a more substantial trend toward adoption of iGaming, perhaps even beyond the [total addressable market] we have set up.”
