BetMGM’s robust financial performance may lead MGM Resorts International to reconsider acquiring Entain Plc. Despite previous statements of disinterest from MGM’s management, the increasing strength of BetMGM’s earnings could reignite discussions around the potential takeover.
BetMGM’s Financial Strength Sparks Speculation
BetMGM, a leading iGaming operator for live casino and online sportsbook operator, recently announced that it has achieved positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in Q2. Furthermore, the company expects to maintain this positive EBITDA trend for the second half of 2023. This revelation, coupled with the prospect of BetMGM becoming self-sustaining, has led to speculation that MGM might once again consider acquiring Entain.
Jefferies analyst James Wheatcroft suggested that MGM could potentially make a new offer for Entain as early as next month. He pointed out that the previous offer made by MGM for Entain in early 2021, despite being deemed insufficient at the time, would value Entain at $29.68 per share today – significantly higher than the current closing price of $17.69 in U.S. trading.
While MGM executives have previously stated their lack of interest in a new bid for Entain, they have also expressed interest in gaining full control over BetMGM.
Impressive Financial Performance of BetMGM
Despite trailing behind competitors FanDuel and DraftKings in terms of online sports betting market share, BetMGM has been posting impressive financial results.
In a statement, BetMGM CEO Adam Greenblatt said, “Our financial guidance for the year remains on track – we expect to deliver $1.8 to $2.0 billion in full-year revenue, as well as to be EBITDA positive in the second half of 2023.”
BetMGM reported a growth of 25% in same-state net revenue and a 65% increase in per-player revenue among clients acquired in 2021 or earlier during the first half of the year. With operations now live in 26 jurisdictions covering 46% of the U.S. adult population, BetMGM’s reach is continually expanding.
The Possibility of MGM’s Acquisition of Entain
While there is ongoing speculation about MGM’s potential offer for Entain, certain factors remain constant. An outright acquisition of Entain will not come cheap, given its market capitalization of $10.17 billion. Furthermore, Entain’s recent spree of acquiring smaller European gaming companies adds to the complexity of any potential buyout.
However, MGM’s strong balance sheet means it could feasibly execute a significant deal if desired. The forthcoming announcement of MGM’s Q2 results on August 2 could provide an opportunity for the company’s management to discuss future plans for BetMGM.