Tucked away in a three-sided, less-than-soundproof booth at the back of the media lounge at G2E, BetMGM CEO Adam Greenblatt sits down with EGR in one of the many burrows that make up the Venetian hotel’s sprawling warren on the Las Vegas Strip.
The South African, who is due to present BetMGM’s Q3 trading update later this week, is upbeat – and he has reason to be. After marking 2024 an investment year, BetMGM recorded positive EBITDA in Q1. That was followed up by $86m in EBITDA for H1, with full-year guidance set at $150m. An effort to target “premium players”, an igaming-first stance and what Greenblatt describes as “refinements” all played a part.
One of the leaders behind FanDuel and DraftKings, BetMGM’s market share as of H1 was 22% for igaming and 8% for sports betting. And while the challenge from Fanatics Betting and Gaming is evident, Greenblatt remains confident. A target of $500m in EBITDA is on track, while he talks up the relationship between the 50/50 JV’s parents, MGM Resorts International and Entain.
Quite what the US online sports betting landscape will look like by next year’s G2E is uncertain. Prediction markets were the talk of the conference floor, and legal clarity will surely muddy the waters further. Here, Greenblatt gives his view on the hot topic at G2E, as well as learnings from the Netherlands on tax hikes.
EGR: How are you feeling ahead of BetMGM’s Q3 trading update on 15 October?
Adam Greenblatt (AG): As I said at the H1 results, the business has moved into a level of positivity and sustainable profitability. Last year, I felt that there were hanging questions about BetMGM’s relevance, competitive standing and outlook. I think we have allayed all those fears and questions – internally and externally.
EGR: It can be a fickle environment; one minute you can be the darling and the next, not so popular.
AG: I feel that speaks to the nature of the industry, on top of the nature of individual companies. It’s fickle because the things that impact outlook change all the time and could, in theory, be pretty impactful. Specific things like the Illinois surcharge and all the questions that flow from it: financial impact, player response, movement to the black market. Then it’s, ‘What number should I put in for my tax assumption in my valuation model?’ in the analyst community. It’s fickle because it’s dynamic.
EGR: How has the start of the NFL season gone so far?
AG: We had three challenging, player-friendly weeks. I think the perspective gets clearer when you zoom out, because we get lost in the minutiae. What’s great for our sector is that when the season starts, our players have a good experience. Having a winning experience is part of that good experience.
You want people who perhaps haven’t been playing in the offseason to come back and have a great first experience. You want them to say, ‘The product looks awesome’. It’s much faster, it’s got a dark mode, it’s sleeker. They can build parlays all the way through into live [betting].
I’ve read what’s in the public domain about some of our competitors, and we weren’t affected to nearly the same extent. September as a whole, including the last week, which was much more favourable for operators, actually turned out fine.
EGR: How have the product upgrades helped? And are you happy with the pace of development?
AG: The first observation is that it’s never perfectly smooth. There’s a degree of complexity in our market, with states doing different things. The process of improving our product at pace is like a ‘permanent triple Lindy’, but we’ve delivered a lot. I will recognise Entain [responsible for tech] for the progress it has made in improving quality and velocity [of product development].
Now, there’s some things that I wanted to get delivered ahead of the launch of the football season that have been pushed into the season. But again, perspective is a beautiful thing. Is it having the player impact that we were hoping for? Players are responding positively, and we’re measuring that. Can it go faster? Yes. Would I like it to be going faster? That’s always a yes answer, and I have great respect for our competitors, who are sprinting right alongside us. Everyone’s sprinting, so now it’s about how fast can you go.
EGR: Is it fair to call BetMGM a casino-first operator? And do you think the wider industry can become obsessed with sports betting and not understand the casino opportunity?
AG: I agree with your observation about how igaming is relatively underappreciated, under-recognised and undervalued. We are very well placed as we look to the future, because our brand resonates, and we’ve done all the research around this. Our brand resonates incredibly highly with gamers in the US and Canada. If you leave Las Vegas not knowing that MGM is a heavyweight and superpower in this market, you’ve been wearing blinkers.
BetMGM is now the market leader in Ontario, led by a gaming, because that brand is meaningful. All the brand qualities and the brand halo that we enjoy, we maximise. Casino is about two-thirds of our revenue. While two-thirds might be casino from five jurisdictions, one-third is revenue from sports betting. That’s now a big number – hundreds of millions of dollars with 7% to 8% market share. While I’m so excited about the future of igaming, I feel incredibly confident about the potential for growing and making money in sports.
EGR: Can you talk me through the “premium mass” approach and how this is paying off? When did this shift crystallise?
AG: It was the brand/customer/product fit that drove us to that conclusion. It really started to become more refined and more focused in summer 2024. That is when we started orientating ourselves much more around that premium player. That drove changes in offer strategy, in how we spend money, where we spend money, the extent to which we spend money locally versus nationally in sports and the mix between sports investment and gaming investment.
EGR: Has this had any impact on cross-sell? I assume the biggest funnel is from sports into igaming, rather than the other way round?
AG: This is an area where we’ve really made seismic changes in our business from last football season to this season. Cross-sell from sports to gaming has improved by 11.5 percentage points. That is massive in terms of the efficiency of spend and player value expectations. The extent to which players do both has a massive impact on optimising paybacks and unit economics. So that’s been a real positive improvement. The other way around in casino to sports has been largely stable.
EGR: Can you talk a bit about Jarrod Schwarz stepping up to COO and the wider reshuffle in responsibilities, plus why that was important?
AG: The organisational structure in our sector is vitally important. This is something I learned in my time at Ladbrokes. The guiding principles that we are pursuing drove the change. In my view, there is no complete line structure. So top to bottom sports and top to bottom gaming. It drives a lot of cost and a lot of siloed behaviour in the business.
There needs to be some combination of focus on sports, focus on gaming and shared services. And what we wanted to do was create a structure where we lean into that. Jarrod is fabulous. He’s thoughtful, he’s strategic. The other thing that’s perhaps not evident externally is he’s a fantastic collaborator and communicator and it’s evidenced through the progress we’ve made interacting with Entain.
EGR: During your H1 results, you said BetMGM wouldn’t be a first mover in prediction markets – what are your thoughts on the sector now?
AG: Today, the good guys are in a stalemate. By the good guys, I mean regulated participants in US online gaming. We are in an impossible position now. Our regulators don’t touch prediction markets. Why have they said that? Because it’s illegal sports betting. Unless and until their position changes, all the good guys cannot participate, as simple as that. The path to clarity on this legal question might be six months, it might be 12 months, it might be years.
What’s our best option as an industry? What is our nation’s best option to protect 18 to 21-year-olds and ensure tax revenues for states are maintained, that integrity of sports are maintained and that responsible gambling objectives are maintained? We can either withdraw from the legal market and just go all in on this thing. Or we can all get together and say, ‘Let’s address this thoughtfully, let’s stop this now’.
If there is a way to regulate and tax it in a way that is consistent and coherent with regulated sports betting, as determined by the states, let’s do that. What I need is everybody who is participating in this market to be on a level playing field.
EGR: DraftKings CEO said comparing prediction markets to online sports betting is like apples to oranges in terms of product. Do you agree?
AG: I agree with the statement about product experience. I still have a conceptual problem with it being a betting and gaming experience. Besides the fact online sports betting operators’ end-to-end experience is much better, if this is illegal sports betting, and by definition it is because our regulators are telling us, why is there not more being done?
The CFTC [Commodity Futures Trading Commission] hasn’t expressed an opinion after a year of all this uproar and lawsuits all over the place. In what world does a regulator not express an opinion after all that?
EGR: What do you make of companies going down the prediction market path? We have already seen it with DFS firm Underdog and Crypto.com announcing a partnership.
AG: Risk tolerance is one axis. Cost benefit is perhaps another lens. What’s the downside? For all of us regulated participants in Michigan, for example, there are hundreds of millions of dollars of value at risk for us just in the state of Michigan.
There are probably billions of dollars of value at stake for taking unnecessary risks […] the downside risk is is not losing a Michigan business, for example, and so, it’s perhaps an easier or less risky decision to make.
EGR: Moving to tax increases in the US, do you think the industry has done a good enough lobbying job to stop other states from following New Jersey, Maryland, Louisiana and Illinois?
AG: Our job is to make the arguments as to why a reasonable tax rate is best for everybody. There are a lot of downstream beneficiaries of what the regulated industry does. Part of that is the tax taken. We’ve seen the example of the Netherlands where they’ve lost €200m worth of tax [after a tax hike]. It’s the Laffer Curve [the optimal tax rate that maximises government revenue]. It’s the point of inflection above which you change customer behaviour and therefore actually reduce your tax take.
What the industry needs is a reasonable tax rate that is reliable and dependable. The constant return to the well for a little bit more is, over time, very destructive and corrosive because where does that end? Until the well runs dry, and that’s bad for everybody. I think lawmakers underappreciate the consequences of that, like in the Netherlands, where play is moving offshore in a meaningful way.
EGR: How confident are you feeling on BetMGM’s $500m EBITDA target?
AG: We are on track. One of the things that has changed in the last year is the degree of precision with which we understand player behaviour and therefore value. My confidence level is much, much higher because of what I can see, measure and control, and what’s already been delivered by the business.
EGR: Finally, how is the relationship between MGM and Entain?
AG: We are probably the most successful 50/50 joint venture in the history of anything. It’s astounding what we’ve managed to achieve, notwithstanding all of the challenges along the journey. What I will reinforce, however, is that the relationship is a very strong, really transparent and all about the health and wellbeing of BetMGM and how both parties can help.
I don’t have complete transparency of everything that happens at Entain, and I don’t have complete transparency of everything happens at MGM on the digital side. As we look to the future, I think there would be value in a change in corporate structure to bring together some of those things, but it’s working.
On the $500m EBTIDA target, I don’t need a corporate event to allow me to get there. If something does happen, it’s because both shareholders believe it is even better than the status quo. I remain confident that we’ve got great people on either side. Rest assured, the status quo is still fantastic.
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Adam Greenblatt tells EGR regulated US operators are in “an impossible position” over prediction markets, while he champions the positive effect of product upgrades ahead of the company’s Q3 trading update
The post Q&A: BetMGM CEO on prediction markets, tax concerns and the “most successful JV in history” first appeared on EGR Intel.