MGM Boss Backs Digital To Deliver, Despite BetMGM Regret

September 15, 2021
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The CEO of MGM Resorts International has said the future of the casino giant is digital, even if the company does not buy BetMGM partner Entain and struggles to turn a profit on online sports betting in New York.

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The CEO of MGM Resorts International has said the future of the casino giant is digital, even if the company does not buy BetMGM partner Entain and struggles to turn a profit on online sports betting in New York.

BetMGM made headlines by bidding in a consortium alongside rival operators FanDuel, DraftKings and Bally’s for one of New York’s online sports-betting licenses and MGM Resorts CEO Bill Hornbuckle told an investment forum on Monday the company “presumes” it will be selected based on “the heft of our partners.”

Currently, the New York State Gaming Commission is expected to award licenses around December 6 with a potential launch in time for the Super Bowl on February 13.

“The regulators have committed to that,” Hornbuckle told the JP Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum. “Now having said that, time will tell. Obviously, I think they have to decide whether they want one or two consortiums.”

The joint bid from BetMGM, FanDuel, DraftKings, and Bally’s includes a projection of $1.3bn in gross gaming revenue in year three of operations if they are the only operators selected, with the four paying a 50 percent tax rate and a combined $100m in upfront license fees.

The other multi-company application includes Kambi, Caesars Entertainment, Rush Street Interactive, PointsBet, WynnBet and Genting Group’s Resorts World. A separate Kambi-led bid would also see the company act as platform provider for Penn National Gaming’s Barstool Sportsbook and Fanatics, the sports apparel giant.

Hornbuckle said New York would be a long haul and an expensive proposition given the high tax rate and the cost of the media market.

“It’s a place we have to be,” Hornbuckle said. “It’s the world’s leading media market [and] one of sports leading sports marketplace.”

“And so the question there will be, ultimately, can you make any real money? I think that’s yet to be determined.”

JP Morgan analyst Joe Greff asked Hornbuckle if lawmakers would eventually legalize internet gaming in New York.

“Once you have brick-and-mortar [casinos] and sports betting, iGaming comes along at least for the discussion,” he responded. “Let’s get sports betting up and running first.”

BetMGM claims to be the number one operator in the U.S. iGaming market based on its strength in New Jersey and Michigan, with Hornbuckle citing MGM’s unique ability to link online gaming to its core casino customer base.

Internet casino gaming is critical to the “long-term economics” of online gambling in general, according to the MGM boss.

“Sports betting is compelling at scale,” Hornbuckle said. “It’s brand driven. We’re competing like hell to get share, and that’s all fine and good, but where the money ultimately will be … where the money even is today with only five iGaming states is in iGaming.”

In terms of additional land-based opportunities in the U.S., Hornbuckle said he does not expect MGM will ever get into Florida because the market is dominated by the Seminole Tribe and its Hard Rock brand.

He admitted an ongoing interest in the still untapped Texas and Georgia markets, but “beyond that there’s not a lot of them left, if you will.”

Hornbuckle called the ongoing bid process around a new downtown Chicago casino-resort “complicated.”

MGM along with rivals Caesars and Wynn Resorts have made it clear they have no plans to get involved in a Chicago casino project that could require a $1bn investment plus a high tax rate.

“I don’t know that you can win in Chicago based on the set of rules that we understand today,” he said.

Hornbuckle also stressed to analysts that the future of the company is digital.

“How do we expand? How do we grow? How do we expand the database? How do we make it more omnichannel? It’s through digital,” Hornbuckle said. “And [we are] keenly focused on that, both domestically and ultimately, globally for that very reason.”

Earlier this year, MGM walked away from an effort to acquire Entain’s 50 percent stake in the BetMGM joint venture after the UK-based company rejected an $11bn takeover offer.

Hornbuckle declined to discuss the possibility of another bid for the London-listed owner of Ladbrokes, Coral, bwin and PartyPoker, among a host of other brands.

But he admitted that “we do critique ourselves for giving up 50 percent of the business,” even though Entain’s technology and operational expertise has been critical in enabling BetMGM to become the number two operator in the U.S. online market overall.

“When you add it all up, we are [number two], because we got there so quickly,” he said. “And so as much as we bang ourselves in the head, why we gave away half of our business, the reason we did is so that we could be in these markets.”

Hornbuckle also stressed the partnership with Entain was a fruitful one.

“We’re working on all kinds of unique things around single wallet and some obvious things you want to see in this space over time. So that piece is working well, and it has opened our eyes to a more global thought.”

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