MGM: BetMGM Held Its Share Level in 2023, but Incremental Competition in the Cards for 2024

BetMGM, which is equally owned by no-moat MGM and Entain, announced its sport betting and iGaming revenue grew 36% in 2023 to $1.96 billion, near our $2 billion forecast. We calculate BetMGM’s revenue share of the $16.6 billion U.S. sports betting and iGaming industry last year (by our estimate) was stable at around 12%, good for third in the market behind FanDuel’s roughly 30% and no-moat DraftKings’ low 20%. But in our view, 2024 presents a more intense competitive landscape, driven by the launch of ESPNBet last November, which is has partnered with no-moat Penn. Early state data from Pennsylvania and Michigan show that ESPNBet has had early success in gaining a few percentage points of revenue share from BetMGM. As a result, we continue to forecast BetMGM’s revenue share drops toward 11% this year before stabilizing around those levels thereafter. Still, we remain optimistic that BetMGM’s omnichannel presence can differentiate it from others, allowing it to be a key beneficiary of the U.S. sports betting and iGaming market, which we see ramping to more than $40 billion in sales by the end of this decade. And we are encouraged with BetMGM’s EBITDA having inflected into positive territory during each of the final three quarters of 2023 and believe that margins can eclipse 20% in the back half of this decade even amid competition.