On Thursday, MGM Resorts International provided a business update before its Q4 earnings call in February, focusing this update on BetMGM, which is the legal sports betting operator that it runs in a 50/50 partnership with UK-based Entain plc.
BetMGM made $1.44 billion in 2022 — higher than the projected $1.3 billion. Despite the massive haul, it's still EBITDA negative by $440 million but expects to be profitable in Q2 this year.
BetMGM has a 13% share of the U.S. betting market, lagging behind industry leaders FanDuel and DraftKings. During the update, the operator of retail and online sports betting sites reinforced the benefit of entering a market on Day 1, even though the cost is high: In states where MGM launched on Day 1, they hold 20% of the market share.
CEO Adam Greenblatt and CFO Gary Deutsch explained in a conference call on Thursday that it takes roughly 12-18 months for a market to break even — and 36 months for it to become profitable.
"The cost of launching in new states, you put the cost upfront, and the benefit comes later."
In 2022, BetMGM entered six new states — New York, Louisiana, Illinois, Ontario, Kansas, and Maryland — and additionally opened four retail locations.
The gaming giant also launched in Ohio to start in 2023, and Missouri looks to be a realistic state to target next.
While California and Texas are both massive markets in terms of potential betting revenue, neither state doesn’t seem anywhere close to allowing sports betting.
During the latest November midterms, California voters rejected two measures that would have allowed two different forms of sports betting in the Golden State, while the Lone Star state is gaining supports for legalized wagering, but there it is not happening anytime soon.