- BetMGM guidance now well ahead of forecasts announced earlier this year
- Sees momentum across both iGaming and sports betting
- Operator says first-quarter strength carried over into current quarter
Supported by strength in its iGaming and sports wagering operations, BetMGM lifted its 2025 financial guidance, reiterating the view that it will generate $500 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) in the years ahead.
The 50/50 joint venture between Entain (OTC: GMVHY) and MGM Resorts International (NYSE: MGM) now expects 2025 EBITDA of $100 million on revenue of $2.6 billion. That’s up from prior forecasts of merely being EBITDA positive on sales of $2.4 billion to $2.5 billion.
BetMGM remains excited about the significant opportunities ahead. Its strengthened business, revised strategic approach, and performance momentum, further reinforce its confidence in future growth prospects and pathway to $500 million EBITDA in the coming years,” according to a statement issued by the gaming company.
In late trading, shares of MGM were up 8.67% on the news while Entain was higher by 13.45%. BetMGM added that its quarter-to-date trading is consistent with the 34% year-over-year growth notched in the first three months of the year.
Entain Stock Inexpensive Relative to BetMGM Performance
In February, BetMGM forecast 2025 net revenue of $2.4 billion to $2.5 billion. At that time, the operator noted its first-quarter sportsbook numbers were aided by improved engagement and product enhancements as well as an emphasis on what it described as premium-mass bettors.
DraftKings (NASDAQ: DKNG) and Flutter Entertainment’s (NYSE: FLUT) FanDuel dominate the US online sports betting industry, but BetMGM is one of the few other operators to gain decent market share in that space while proving to be a force in the iGaming segment. Even with those arguably impressive feats and BetMGM’s compelling 2025 outlook, some analysts argue shares of Entain are cheap.
“Entain trades on 8.4x EV/EBITDA for FY25E. Ongoing positive BetMGM commentary from today’s update and the late April update is at odds with Entain’s valuation that appears to attach little value to Entain’s BetMGM stake,” observes James Wheatcroft of Jefferies. “A sum of the parts implies £13.00, (25% discount to the DKNG’s multiple for ENT’s 50% BetMGM stake) and a c11x recent regulated market transaction multiple for the Online core.”
BetMGM added that online sports betting will deliver a positive earnings contribution this year while iGaming will a sport “a strong contribution” as well. The operator is scheduled to release results for the first half of 2025 on July 29.
BetMGM Strength Could Limit Entain’s Desire to Sell
Top and bottom-line improvements at BetMGM coupled with that momentum not being reflected in Entain’s share price, as Wheatcroft argues is the case, could be motivation for Entain to remain engaged with the joint venture rather than withdrawing from it.
Earlier this year, Bloomberg Intelligence estimated that Entain’s 50% interest in BetMGM is worth $4.2 billion to $5.6 billion. The company’s current market capitalization is $6.52 billion, indicating there’s validity to the notion that the stock price isn’t reflecting positives at the online gaming unit.
MGM management has made clear it would love to control all of BetMGM, but it hasn’t returned to the bargaining table after offering $11.06 billion in January 2021 for the entirety of Entain. That bid was rejected as too small with the negotiating process later thrown into chaos when DraftKings roughly doubled MGM’s bid. In the four-plus years since, analysts have frequently speculated that MGM would return with another offer for Entain or the half of BetMGM it doesn’t control, but that’s yet to happen.
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