BetMGM Forecasts $32 Billion iGaming, Sports Betting Market, Aims for 25 Percent Share

Posted on: April 21, 2021, 08:24h. 

Last updated on: September 12, 2022, 10:30h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

BetMGM is targeting a long-term market share of 20 percent to 25 percent in the booming US online casinos and sports betting industries. Recent data confirm the operator is well on its way to meeting that goal.

BetMGM
Gamblers stand before staff at the BetMGM sportsbook at MGM Grand Detroit. The business is delivering growth for MGM and Entain. (Image: Associated Press)

The operator, which is a 50/50 joint venture between MGM Resorts International (NYSE:MGM) and Entain Plc (OTC:GMVHY), is holding its investor day today and is out with data points confirming the rapid growth of online gaming.

BetMGM is the number one market leader across the US in iGaming with a market share of 23 percent over the three months ended February 2021, and is on course to take the number two spot in US sports betting and iGaming overall,” according to a statement.

Without specifying a time frame, the company adds it sees the “long-term” total addressable market for internet casinos and sports wagering in the US and Canada swelling to $32 billion. That’s on the more conservative end of forecasts some on Wall Street bandy about. But it’s still well ahead of the $2.4 billion the segments combine for today.

“BetMGM expects to achieve $1 billion of net revenue from operations in 2022,” according to the company.

Momentum Building for iGaming

The update from BetMGM extends a run of data momentum for companies with online casino exposure. It’s a segment that’s taken a backseat as analysts and investors fawn over the increasing legalization of sports wagering.

Recently, gaming operators are signaling that internet gaming offers superior margins and better long-term growth prospects relative to online sports wagering. MGM doesn’t shy away from that outlook, with CEO Bill Hornbuckle earlier this month saying, “iGaming is the secret to this business,” and that it will eventually represent two-thirds of net income in the space.

Assuming BetMGM’s $32 billion forecast proves accurate and the operator can gain 25 percent share, that equals $8 billion — $4 billion of which would flow to the Las Vegas-based company.

That would represent a significant percentage of the gaming company’s top line in a standard operating environment. In 2019, prior to the onset of the coronavirus pandemic, MGM generated $12.90 billion in revenue with $6.52 billion attributable to casinos.

Online Paying Dividends

Should BetMGM prove successful in taking the number two spot among online sportsbooks, that would mean toppling rival DraftKings (NASDAQ:DKNG). That company and FanDuel combine to control over 60 percent of the US internet sports wagering market, with BetMGM ranking third.

Some investors are already betting the casino operator can parlay brand recognition from land-based businesses into online success.

Additionally, the impressive growth of the BetMGM unit raises another issue: Will MGM revisit acquisition overtures toward Entain?

Earlier this year, the British bookmaker rejected an $11.06 billion offer from the Bellagio operator, deeming it too low. At the time, there was chatter MGM would up the bid or revise it to include more cash. But the suitor ultimately walked away. Some analysts believe that with BetMGM growing, the deal talk will pop up again in the future.