Entain CEO Jette Nygaard-Anderson has doubled the group’s belief that BetMGM will deliver profitability in 2023. She cited the launch of new states and a better product as the main reasons for the shift in fortunes.
After publishing Entain’s 2022 Annual Report, Nygaard Anderson addressed investors and expressed optimism about the joint venture’s long-term prospects in the US. More states are expected to deliver profitable years in 2023.
Here are the full results of Entain’s 2022 group elections:
Group NGR: $5.18bn up 12% over the previous year
Revenue: $5.12bn up 12% YoY
Gross profit: PS3.21bn up 11% YoY
EBITDA: $1.18bn up 13% YoY
According to Entain’s estimates, BetMGM’s 2022 NGR was $1.44bn. This is 71% more than the previous year. BetMGM had a 29% market share of online casino, and a 19% share of sports betting and online casinos in 2022. They anticipate an NGR between $1.8bn and $2bn by 2023.
It is a function of where we live
Nygaard Anderson explained to investors Entain’s confidence regarding profitability in the second-half of this year. “We are quite confident when looking ahead for the year in term of profitability, as well as in the second. It’s primarily a function both of the model and where we are currently at the moment. Last year, five states contributed positively to the economy, which includes all igaming countries.
“There should be at least 10 states that are contributing positively this year. When we do the math and run our models, this is what will lead to profitability in the second part of the year with the states we know. The biggest state that is going online is Ohio, which was online in January. Tomorrow, we launch in Massachusetts. From what we know now, there are a few smaller states and product launches we need to go there.
Entain stated that the data-based acquisition approach has resulted in a record-breaking cost-per-acquisition increase over the past year. BetMGM had a 21% lower CPA than 2021.
When asked if marketing costs could rise and possibly offset profitability goals later in the year, the CEO replied that promotions are still possible, but that optimization is the priority.
She explained that it was deliberate for the team to be rational in the market. We’ve done a lot based on intent CRM, which gives them confidence in their work on optimizing bonuses. This is how it’s actually playing out right now. They have all the flexibility that we discussed before. We try to keep marketing flexible so they can invest where there is the greatest ROI.
Brazil is on the right track to regulation
Entain has made a major commitment in 2022 that all its revenues will be from regulated markets by 2023, as it seeks to establish a precedent in this industry.
The discussion turned to Brazil, which has been long waiting for regulated betting on sports. President Lula is expected to sign regulations within the next weeks or months.
Entain had previously discussed its outlook for Brazil during its Q4 earnings call. This was in anticipation of regulations this year. Investors wanted to know the revenue breakdown in 2022 between non-regulated and regulated markets.
Leadership responded by explaining that 92% of revenue is from regulated markets and that 7-8% comes from unregulated ones.
Entain claims Brazil accounts for approximately 6-7% of NGR group, which means that regulation there would almost turn all of the revenues to regulated markets.
Nygaard Anderson added her thoughts about Brazil’s prospects of regulation this year. “When we look at Brazil and other markets that haven’t yet exited, we are quite confident that all of them have a clear path towards regulation.
“When we looked at the remaining markets, were we very, very diligent in looking to, do we see any clear path towards regulation? If so, then we will pull back and that’s exactly what we did. Brazil is the largest, with 7-8% of NGR remaining to be regulated.
Brazil is a market where we are very strong, as you can see from our results. We are expanding strongly. We are growing strongly.
RG Pledges
Entain and BetMGM emphasized responsible gambling at the beginning of 2023. They have laid out their plans for how they will do this. Entain has made a 12-point pledge to ensure responsible gambling messaging in all its marketing materials.
When quizzed by investors about the firm’s commitment towards RG, the CEO stated: “BetMGM just as Entain wants be a leader in responsible gaming and there have been a lot of initiatives. The partnership with GameSense was launched. Entain was instrumental in bringing the industry together and the online operators to agree on 12 principles for responsible gaming.
BetMGM has also started tapping into our ARK program. They’ve implemented the markets of Protection. As you may recall, the first level of markets of protection is a series of very detailed markets that we can incorporate into customer journeys to flag customers who are engaging in different behavior. It’s been very well received by regulators.”
Rob Wood, the CFO, presented the firm’s 2022 guidance. He noted that Entain anticipates low-to mid single-digit growth online NGR, and a online contributing margin of about 40%.
Wood revealed that BetMGM will receive $75m of funding. The group will also have an EBITDA margin around 26%. This is slightly lower than 2022’s 27% margin.
