BetMGM's CEO Adam Greenblatt announced on Tuesday that the company is shifting its focus towards attracting high-value, high-stakes players as it reevaluates its overall strategy in light of the impacts of prediction markets. During a third-quarter update regarding the joint venture with MGM Resorts and Entain, he emphasized that while BetMGM aims for premium players, it is reducing investments in markets that do not integrate sports betting with iGaming.
"We are hyper-focused on making sure that we look after our premium players in both sports and gaming," said Greenblatt, adding that this targeted strategy is proving effective.
In the third quarter, BetMGM generated $710 million in revenue, reflecting a 7% increase compared to the same period last year. The company's adjusted EBITDA was reported at $86 million for the quarter, up 112% year-over-year.
Greenblatt noted that iGaming now constitutes approximately 70% of BetMGM's business. Net iGaming revenue grew by 6% to $483 million, with the number of active players rising by 2%. The recent relaunch of the Borgata brand in June resulted in a 28% increase in average daily active users in New Jersey and Pennsylvania, surpassing February's benchmarks. Additionally, the company is optimistic about entering the new iGaming market in Alberta.
Despite its commitment to value over volume since early 2025, Greenblatt acknowledged that the competitive landscape poses significant challenges, especially due to substantial investments from unregulated and illegal operators in the sports betting sector. He anticipates these pressures will persist until at least mid-2027, predicting that the U.S. Supreme Court could favor states and tribes regarding the regulatory jurisdiction of prediction markets in its 2026-27 term. Greenblatt dismissed the recent Commodity Futures Trading Commission rules regarding the distinction between sports bets and sports event swaps as mere "cosmetics in the pursuit of survival."
He expressed concerns that if prediction markets continue to exist, casino-like products are likely to resurface in different forms. Consequently, instead of matching the expansive marketing budgets of prediction markets in states where sports betting is the only legal online offering, BetMGM is redirecting funds towards states with online casinos, including Nevada.
Currently, BetMGM operates sports betting without iGaming in several states, including Arizona, Colorado, and New York, among others. In Nevada, where prediction market sports event contracts are prohibited, online sports handle increased by 8% in the quarter.
However, the total average monthly online sports active users for BetMGM dropped by 9% year-over-year during the third quarter. While the number of users declined, those who remained increased their betting activity; handle per active user rose by 13%, and net revenue per active user grew by 18%, with total online sports handle up 3% to $3.24 billion. Online sports net revenue increased by 7%, reaching $216 million, while the gross hold rose from 10.1% to 10.7% year-over-year.
Greenblatt remarked, "Our lower player count is entirely as expected and reflects our intentional decisions around customer acquisition and marketing investment." He also highlighted significant reactivations among high-value customers in September and an increase in first-time depositors beyond expectations. The growing prevalence of parlays and same-game parlays contributed positively to profit margins. Furthermore, the cost per acquisition has decreased significantly since the FIFA World Cup ended.
Looking ahead, Greenblatt reaffirmed BetMGM's full-year revenue guidance of $2.9 billion to $3.1 billion, alongside an adjusted EBITDA target of $300 million to $350 million, although leaning towards the lower end of those ranges. With an adjusted EBITDA of $185 million after nine months, achieving even the low-end target requires approximately $115 million in the fourth quarter, placing additional pressure on the vital NFL season and on the high-value bettors that BetMGM is currently prioritizing. He concluded by indicating a potential pathway to $500 million in adjusted EBITDA "sometime beyond 2027."
