In February of this year, rumors surfaced about the relationship between Entain Entertainment and MGM Resorts. For those unaware, MGM Resorts and Entain Entertainment formed a 50/50 partnership in 2018 to form BetMGM. Entain Entertainment provided the technical knowledge and infrastructure to make BetMGM a reality, while MGM Resorts brought their globally recognized name.
Understandably, the new venture required significant capital. Since beginning BetMGM, the two companies have invested $1.25 billion combined into the joint venture.
Heading into MGM Resorts’ quarterly earnings call on February 8th, many analysts and reporters believed that MGM Resorts would pursue an acquisition bid for Entain. According to sportshandle.com, some analysts even predicted that an acquisition was inevitable. MGM Resorts CEO Bill Hornbuckle, put an end to those rumors, stating, “It’s time to be definitive and give a little direction. The simple answer on Entain is we’ve moved on. We value Entain, we value BetMGM. But as it comes to the rest of the world, we’re going to move forward with a different proposition.”
Two years ago, MGM Resorts attempted to acquire Entain for $11 billion or £8.1 billion. At the time, Entain believed the bid was too low, claiming that MGM Resorts “significantly undervalued” the UK-based entertainment company. As these things often go, Entain now has a market capitalization of $8.25 billion, and MGM Resorts has no interest in purchasing the company in 2023, according to Hornbuckle.
BetMGM Continues Its Growth
According to a BetMGM business update delivered in January of this year, the company maintained a 13% market share across the US in the sports betting market and a 30% market share in the iGaming sector. The online sportsbook expanded to six new markets in 2022: New York, Louisiana, Illinois, Ontario, Kansas, and Maryland. BetMGM also opened four new retail sportsbooks last year and launched in Ohio on January 1st, 2023, with two retail locations in the state.
BetMGM’s CEO, Adam Greenblatt, commented, “The talented team at BetMGM continues to execute our plan with purpose, passion, and discipline. 2022 was a year in which we delivered against many key strategic initiatives and achieved several company milestones, including exceeding our financial targets, launching a redesigned BetMGM mobile app, and furthering our commitment to Responsible Gambling. With continued and unwavering support from our shareholders, we look to 2023 confident in achieving further key milestones, including $1.8 to $2 billion in net revenue from operations and being EBITDA positive in the Second Half of 2023.”
Sources close to BetMGM told reporters that since the venture is expected to generate a positive cash flow during the second half of this year, the funding requirement from Entain and MGM Resorts will likely end. During March’s quarterly report, Hornbuckle also mentioned that he expects MGM Resorts to no longer have to provide capital for BetMGM.
What Will Happen Next?
As for Entain Entertainment, no official statement has been delivered concerning the partnership with MGM Resorts. It seems as though Entain is waiting for BetMGM to be profitable before making any decisions.
After ending 2022 as one of the top three sportsbooks and casino brands in the US, BetMGM will likely continue as is for now. Hornbuckle did not comment on whether MGM Resorts would attempt to gain complete control of BetMGM in the future. If they did pursue this route, the company would be well-equipped to continue its growth. After several years of expansion in the online casino and sports betting market, MGM Resorts has invested heavily. Most recently, MGM Resorts completed an acquisition of LeoVegas, an online gaming operator based in Sweden, for $604 million. Under MGM and Entain’s current contractual agreement, MGM Resorts is prohibited from utilizing LeoVegas’ technologies. If MGM Resorts gains complete control of BetMGM, any partnership restrictions would end.
Mac Daniel is a writer for PlayOnlineCasino and PlayOnlineSportsBetting. He has experience writing about a wide variety of topics, including healthcare, tourism, non-profit organizations, and most recently casino and sportsbetting news. To check out more of his work, visit: playonlinemichigan.com