MGM Sees Online Bets Surging as Casino Market Remains Sluggish
(Bloomberg) -- MGM Resorts International’s attempt to merge with its online betting partner sputtered last month, but their joint venture continues to thrive.
BetMGM, which it co-owns with Entain Plc, generated revenue of $178 million last year and the amount should more than double in 2021, MGM said in a presentation released Wednesday. The company said it had 17% the U.S. market, which it expects to climb to $25 billion by 2025.
Online wagering has exploded in the U.S. since the Supreme Court allowed states outside of Nevada to offer sports betting if they choose. Twenty states and the District of Columbia have now done so, and more are coming. Connecticut Governor Ned Lamont proposed it as part of his budget plan Wednesday.
The market has initially been dominated by DraftKings Inc. and FanDuel, two daily fantasy-sports operators that were able to turn their customer base into online bettors. FanDuel is a division of Ireland’s Flutter Entertainment Plc.
But MGM has ambitions to get bigger. The largest operator of casinos on the Las Vegas Strip offered $11 billion to merge with Entain last month. Entain’s board said the offer undervalued their business, and MGM decided against paying more.
BetMGM, meanwhile, is off to a strong start in states that are newer to sports betting. It said it has a No. 1 position in sports betting in Tennessee, where it holds more than one-third of the market. In Michigan, it has signed up 138,000 customers since launching last month.
Online betting is a bright spot in a still-suffering gambling industry. MGM reported shrinking revenue in the fourth quarter as its traditional casino business suffered from coronavirus restrictions and consumers’ skittishness to travel.
Sales fell to $1.49 billion, compared with an estimate of $1.5 billion. MGM lost 90 cents a share, after adjustments, better than the predicted loss of $1.01.
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