- BetMGM is a sports betting platform that is supported by an equal shareholder partnership with MGM Resorts and Entain.
- The CEO explains the key differentiators between the platform and its competitors and the MGM / Entain partnership.
- He also shares his outlook on the sports betting industry and three pieces of advice for investors.
- You can find more stories in Insider’s business section.
BetMGM, the sports betting and iGaming platform, relies heavily on partnerships.
The platform is supported by an equal shareholder partnership between MGM Resorts (MGM) and Entain (GMVHY).
Most recently, BetMGM teamed up with the 2019 series world champions, the Washington Nationals, giving the company exclusive control over the stadium and the two-block radius around it, said Adam Greenblatt, CEO of BetMGM.
The strategy allows the platform to gain access to sports fans in Washington, but also to fans from neighboring states who watch their team in the national park and download the app to bet on the game.
The shareholder partnership with MGM Resorts and Entain gives the company a competitive advantage over FanDuel and DraftKings (DKNG).
MGM Resorts is offering customers real rewards like a night at the Bellagio Hotel in Las Vegas, which becomes even more appealing once the economy is fully open again after COVID. Entain provides access to a large group of technologists who can help in the rapid development of the product.
BetMGM’s product is aimed at both new and demanding bettors and is one of the top ten sports categories in the Apple App Store with an average rating of 4.8 stars based on around 16,200 reviews.
For the new customers, Greenblatt said they can edit bets after they close and use a generator to create parlays, which are a cumulative series of bets.
The BetMGM app
“You make your selection and the app will automatically generate a parlay that matches your selection if that’s what you want to bet with that type of payout,” said Greenblatt.
For experienced bettors, there is the option to automatically cash out money or sell back part of the parlay in real time, Greenblatt said. The function is similar to a stock trading platform, he added. The difference is that this product is all about entertainment.
There are definitely parallels in the emotional connection between betting and trading, Greenblatt said. However, the underlying activity is very different, he added.
“Nobody loves Stock X as much as his team,” said Greenblatt.
Adam Greenblatt, CEO of BetMGM
MGM & enter into partnership
MGM Resorts recently pursued an unsuccessful merger with Entain.
However, Greenblatt stated that a merger would not have materially changed BetMGM’s operations.
“Where is it located in which organization?” Greenblatt said. “To be honest, I’m not that concerned about that because I know there won’t be any changes that will disrupt or endanger our current spectacular dynamic.”
Continue reading: One of FanDuel’s first investors explains how to capitalize on the booming US sports betting industry in an “enormous decade” of growth
The company has not lacked focus from either shareholder and has received tremendous support, Greenblatt said.
A research report published by Morgan Stanley on February 1 highlighted the same positive view of the partnership, which examined the effects of possible consolidation in the sector.
“”Although the offer has been rejected, we believe it will continue to assist Entain in the valuation and that both partners will continue to seek ways to achieve maximum value for the BetMGM joint venture (of which they each currently own 50%) “said Morgan Stanley equity analyst Ed Young.
Analysts expect M&A to continue to play a role as companies position themselves in the online gambling sector.
Competition with top players
Greenblatt said the partnership allowed the company to operate with a small business mindset but big business capabilities.
The entire industry is becoming a game for big companies, Greenblatt said, because of the cost of market access, lobbying, technology, compliance, testing, third-party vendors, leagues, and royalties in each state.
It’s not for the faint of heart, he said.
Continue reading: Deutsche Bank shares 3 undervalued online gaming stocks that will skyrocket as the industry builds on a 2020 blockbuster
“This is why I believe we are in the sweet spot of having MGM resorts and Entain’s skills and resources, but having this speedboat to get things to market and make sure we are as relevant as we possible are.” a state base, “said Greenblatt.
He predicts 2021 will be the year the narrative changes in the competition and whoever is in the leadership position will be less comfortable.
“So is there room for a newcomer?” Greenblatt said. “Of course there is. Is it very, very difficult, very time-consuming? And very complex? Yes.”
Advice for investors
For investors interested in the sports betting sector, Greenblatt gives three pieces of advice:
1) Be selective
Understand how difficult and expensive it is to operate in this market, Greenblatt said.
“Unless you have the recipe to compete at the highest level, including balance sheet – but it’s not strictly balance sheet,” Greenblatt said. “I think you will find that there will be some sacrifices.”
2) Long term differentiators are critical
3) Understanding market share doesn’t mean profitability
“Don’t assume that 1% of the market share means there is a profitable business behind all the participation costs,” Greenblatt said.
According to Morgan Stanley, the total addressable US sports betting market is projected to grow from less than $ 1 billion in 2018 to an estimated $ 15 billion in 2025.
Young said the pace of state liberalization has accelerated and early-stage revenues have exceeded expectations.
Where will sports betting be in five to ten years?
“I think in five years we will see the US as the largest digital sports betting and iGaming market in the world,” said Greenblatt.
In regulatory terms, BetMGM is currently active in 10 digital states and 5 retail states.
Greenblatt anticipates that regulation will continue to be state-to-state and that around 30 to 40 states will have passed sports betting laws in five to 10 years. He also sees four to six national operators with potential niche players in some regional pockets or certain states that already have brand awareness or physical assets and presence.
In the long term, Greenblatt expects further consolidation, in line with recent reports from investment banks such as Morgan Stanley and Goldman Sachs. He also believes there could be potential for shared liquidity in this sector, which would enable nationwide digital jackpots. That prospect, however, depends on possible amendments to the Wire Act 1961.
“We will see the US regain its place as the leading poker market in the world once we have shared the liquidity to support it,” said Greenblatt. “And it will be great for iGaming because of the customer experience and potential life-changing rewards.”