In an exceptional turn of events, MGM Resorts International has reported an all-time record revenue for the second quarter, bolstered by the positive performance of its online business, BetMGM.
High Stakes Turn Positive for BetMGM
While MGM Resorts recorded a massive $1.95bn in Q2 revenue, marking a 43.4% increase from the same quarter in the previous year, a significant point of interest was BetMGM’s financial stride. The online business announced its first EBITDA positive quarter, an achievement hailed by MGM CEO and President Bill Hornbuckle, who stated, “BetMGM reported that it achieved its first positive EBITDA quarter and remains on track to achieve its next milestone of second-half profitability.”
Despite this breakthrough, BetMGM recorded a $22.5m loss for the quarter, a marked improvement from the $71.2m loss reported in the same quarter the previous year, signifying a 68.4% reduction in losses.
Profit Records Amid Rising Costs
MGM announced an impressive operating income of $371m, a substantial increment from the $2.4bn reported in the same period the previous year. However, this figure was majorly influenced by the sale of its real estate investment trust, MGM Growth Properties LLC. The sale similarly affected the company’s net income, which stood at $1.8bn for Q2, while the adjusted EBITDAR recorded was $1.1bn.
As MGM’s Macau operations revived in Q2, following the removal of Covid-19 related restrictions, the company’s expenses also escalated to $3.55bn, with casino costs increasing by 65.5% to $1.03bn. However, MGM’s entertainment and corporate expenses witnessed a slight decline.
Despite the increased costs, the six-month period ending 30 June saw the company report $3.83bn, a 21% rise from the previous year, with an operating income of $1.10bn and a net income of $667.6m.
A Strategic Partnership and Future Licensing Prospects
MGM recently disclosed its partnership with Marriott International hotel chain, a development with significant implications for BetMGM. Hornbuckle optimistically highlighted the potential for cross-selling BetMGM to Marriott’s customers, stating, “Ultimately, it’s our ability to market to their customers and then their customers having an opportunity to see BetMGM and its context.”
MGM’s aspirations also extend to acquiring a New York license, with Hornbuckle expressing confidence about progress on their application amidst frustrations over the slow process.
Implications for the iGaming Industry
This development brings into focus three significant implications for the iGaming industry:
- Profitability Threshold: BetMGM’s performance indicates that online betting platforms can achieve profitability, paving the way for other online gambling enterprises.
- Strategic Partnerships: The MGM-Marriott deal underscores the potential of strategic partnerships in expanding the customer base and driving growth in the iGaming industry.
- Regulatory Challenges: The pursuit of the New York license exemplifies the regulatory hurdles the industry faces, and the need for patience and strategic planning.