BetMGM Deep Dive

We hosted an investor update on our joint venture in the US, BetMGM, on Wednesday 21st April. With presentations from BetMGM CEO Adam Greenblatt, Chief Operating Officer Ryan Spoon, Chief Revenue Officer Matt Prevost and Chief Financial Officer Gary Deutsch, the event was a deep dive into the BetMGM business, looking at the incredible progress made since the joint venture was launched in 2018, the people behind the business, and the strategy looking forward. The team in the US have done a fantastic job cementing themselves as a leader in the American market and, while there is plenty more to do, the results are already very impressive.

Created in 2018 to bring together two leading operators, Entain and MGM Resorts, BetMGM benefits from a powerful combination of assets including our market-leading technology, MGM’s iconic brands and an unrivalled depth of expertise and experience.

Since then, the plan has been delivering. The business is growing at a phenomenal pace – in Q1 2021 revenues stood at $163m, representing growth of 430% when compared with Q1 2020 and 90% of revenues achieved in 2020 as a whole. This dramatic increase demonstrates the benefits of solid foundations, effective state rollout and the strength of our broad customer engagement approach through: omni-channel;, affiliates;, Mlife loyalty programme; and other channels combined with our and powerful and highly, effective marketing.

The successes to date are already impressive, but the opportunity ahead is huge. BetMGM is poised to become a national leader based on its powerful, sustainable and differentiated offering and approach:

• Total addressable online market expected to exceed $32 billion in the US and Canada
• Made up of a $14 billion Online sports betting market and $13 billion iGaming market in the US, with Canada adding a further $4bn-$5bn
• BetMGM is now live in 12 states, ten of which are digital, two are retail and four include iGaming
• Market access position is strong with no meaningful gaps and aiming to be live in c. 20 markets by this time next year, addressing nearly 40% of the US population
• Looking to the future, access has already been secured in 24 states, with more in advanced stages of negotiation
• As the markets expand and grow we expect to capture 20-25% share of the sports betting and iGaming market
• With our differentiated and efficient business model we expect to achieve EBITDA margins of 30-35% in the long term

BetMGM has developed a ‘launch playbook’ for entering newly regulated states, aligning all its assets from marketing, affiliations, advertising and sports relationships to maximise the impact from day 1 and get ahead of the competition. In Colorado, for example, leveraging a blockbuster advertising campaign fronted by Jamie Foxx, as well as a partnership with the Denver Broncos, BetMGM delivered a market share of 31% in the first three months. This performance is all the more impressive given that MGM has no retail presence in the state and iGaming is yet to be permitted. This successful launch strategy has been replicated in other states with Michigan delivering 34% market share across sports betting and iGaming in the three months to March 2021.

BetMGM is the market leader in iGaming across the US, with a market share of 23% in the three months to February. In February BetMGM delivered a 22% market share across both sports betting and iGaming in the states in which is active, meaning it is now challenging to be the second largest operator in the entire market.

In BetMGM, we have created a sustainable competitive advantage founded on four pillars:

National market access

• Market access currently secured or anticipated in 24 jurisdictions
• Relationship with MGM Resorts minimizes cost of market access
• Platform enables B2C and B2B entry

Leading product and technology

• Fully-featured proprietary tech stack
• Proven capability and superiority worldwide
• Relationship with Entain provides structural cost advantage

Efficient player acquisition and retention

• Omni-channel attracts and retains players with money-can’t-buy experiences
• Award-winning rewards program builds loyalty and provides distinct competitive advantage
• Strategic partnerships delivery players nationwide at attractive costs per acquisition (CPA)

Responsible gambling

• Longstanding history in responsible gambling
• Committed to a balanced approach to growth
• Our goal is to provide players with an entertaining and safe gambling experience

Looking forward, the message is clear. BetMGM is a leading operator across the US market. It is poised to launch in a further eight states over the next 12 months. It has incredible momentum but has significantly more improvements to come in its customer offer which will consolidate its position as a favoured platform amongst the growing audience of sports betting and iGaming customers. We are excited by the prospects that lie ahead.