BetMGM announced it was prepared to spend more money on customer acquisition which will ultimately lead to higher revenues going forward.
Takes Money to Make Money
Customer acquisition is the name of the game in virtually any business but in the sports betting industry, it can be the difference between thriving and merely existing. We have seen the consolidation of the market as more than a dozen brands have either shuttered operations in certain states or have exited the U.S. sports betting market completely.
BetMGM is a tier-two player in the market behind the dynamic duopoly of FanDuel and DraftKings as the only tier-one entries. The company has announced it will be aggressive this year in customer acquisition even if it means borrowing funds to do so. Bringing in new blood is paramount to BetMGM’s goals and plenty of money will be spent in achieving that aim.
“Our iGaming business continues to perform strongly with attractive returns and to maximize this strength and momentum, we plan to deploy additional marketing in the back half of this year,” CEO Adam Greenblatt said. “Our execution roadmap, building momentum, and prospects ahead all support our confidence in BetMGM’s strong future.”
A specific marketing budget was not revealed but the company, owned by MGM Resorts and Entain, announced a negative first-half EBITDA of $123 million, which it referred to as “consistent with expectations (for an investment year).”
MGM Resorts International’s stock price is trading at $42.97 at the time of this writing.
BetMGM Integrates Angstrom Sports Analytics
Last year Entain acquired sports data analytics company, Angstrom Sports, for a reported $265.4 million. That asset is currently being integrated into BetMGM’s pricing models for MLB, NBA, and NFL offerings and will be active across the board before the NFL betting season begins.
“Their next-generation forecasting, pricing, and risk management capabilities will unlock significant opportunities across BetMGM’s U.S. sports betting offering, particularly in the fast-growing markets of parlay and in-play wagering,” said Jette Nygaard-Andersen, chief executive officer at Entain. “This acquisition will provide our customers with an unrivaled sports betting experience underpinned by enhanced in-house data analytics, a global platform, and market leading brand.”
Incorporating Angstrom’s algorithms and analytics into BetMGM’s pricing models is likely to pay dividends with higher holds leading to increased revenues. And if BetMGM’s expanding marketing efforts pay off, it will increase the customer base which means the handle will rise creating higher profits.
“The first half of this year has been very important in laying the groundwork for BetMGM’s future. 2024 is a year of investment, focusing on improving our customer experience and stepping up our level of investment in players. We are encouraged to see this strategy delivering accelerating momentum. We have exceeded our goals for both acquisition and retention, which should lead to higher year-over-year revenue growth for the second half of this year into 2025,” said Greenblatt.
“Our iGaming business continues to perform strongly with attractive returns, and to maximize this strength and momentum, we plan to deploy additional marketing in the back half of this year. Our execution roadmap, building momentum, and prospects ahead all support our confidence in BetMGM’s strong future,” he added.
