With Massachusetts expected to be the only US sports betting launch in 2023, BetMGM won’t have too many significant costs outside the Bay State and New York, where it pours much of its US funding. As a result, MGM Resorts International executives project BetMGM could become profitable by Q3 of 2023.
Translation: Launching BetMGM Sportsbook Massachusetts may be what tips BetMGM over the edge of profitability.
This is all according to MGM executives during the company’s Q4 earnings call back on Feb. 8. In that call, MGM Resorts International CFO Jonathan Halkyard said, outside a $500 million licensing fee in New York, they expect to spend $70-75 million in 2023 on BetMGM, which is co-owns at 50% with Entain.
During a question-and-answer session later in the call, CEO Bill Hornbuckle put that investment figure closer to “$50-odd million.” He then said his company has “every reason to believe (BetMGM) should hit its target this year, starting to make profitability in the second half of the year.”
That means Hornbuckle anticipates BetMGM to start turning a profit roughly four months after its MA launch. If Hornbuckle’s projection holds true, the months of July, August, September, October, November and December will be profitable for BetMGM. Those months coincide with the fall NFL and college football seasons, which are always the biggest in sports betting.
How much money will BetMGM make in Massachusetts in 2023?
PlayMA projects Massachusetts will generate $4.2 billion in sports betting handle in 2023. Based on the national average 8% hold, that would be $336 million in revenue. And, based on BetMGM’s 13% US sports betting market share, that would be $43.7 million in Massachusetts revenue over just 10 months (March-December).
(BetMGM could also exceed its national average market share in Massachusetts due to the presence of MGM Springfield.)
What else did MGM executives discuss?
However, MGM executives mostly focused on the future of online casinos when discussing BetMGM with their investors. Hornbuckle said they’ve identified “six additional states” BetMGM will try to enter in the future. Its online casino is currently live in New Jersey, Pennsylvania, Michigan and West Virginia.
Online gambling companies have trended toward investing more resources in their online casinos product. There’s simply a larger audience and more money in online casinos. That’s a major reason why BetRivers and PointsBet, two fast-rising iGaming properties, chose not to launch in Massachusetts and, instead, pour their money elsewhere.
MA launch worth the investment for BetMGM
For bigger companies like BetMGM, though, launching sports betting apps in newly legal states is still worth it. They make enough sportsbook revenue to justify the costs.
According to Eilers & Krejcik Gaming, MA sportsbooks will need to own 7-8% of the Massachusetts sports betting market share to make a profit. Based on PlayMA revenue projections, that means sportsbooks would need to make $32 million.
That won’t be hard for BetMGM. It would, however, for BetRivers, PointsBet, bet365 and others not going live in Massachusetts.