Industry experts have recently noted that Isle of Man-based gambling giant Entain Plc could still be part of the plans of the US casino and gambling company MGM Resorts International, even though several weeks ago the operator shared that it would no longer pursue a takeover of its partner.
Only a few days ago, the bookmaker published its financial results that managed to hit the top end of preliminary expectations, which disappointed markets and resulted in a 4% decline of the shares on Friday, March 10th, trading. After rising by more than 50% over the past three years, Entain’s shares were down by approximately 15% since in February, the CEO of MGM Resorts International ruled out rumours that his company could pursue another acquisition offer.
However, recently, one of the analysts at Third Bridge – Lara Martinez – shared that market experts suspect that the US casino and gambling giant might still be hiding some interest in taking over Entain. According to analysts, if the company really does so, it could be waiting for the UK Government to finally publish its White Paper on the local gambling sector before making a final decision on whether to pursue an acquisition bid for its counterpart.
The UK Government promised to issue its White Paper outlining potential changes in the UK gambling regulations in December 2020 but the plans have been delayed several times. According to the new culture secretary, the much-postponed White Paper could be published by Easter this year. Ms Frazer, who was appointed as Secretary of State for Culture, Media and Sport on 7 February 2023, further added that Entain has been facing increasing investor pressure along with tightening protection regulations in Europe, making the US gambling sector look a much brighter opportunity for growth.
Entain’s US Joint Venture Gaining Foothold in the US Sports Betting and Online Gambling Market
For the time being, Entain already has a limited presence in the US through its 50/50 joint venture with MGM Resorts International – BetMGM – which has been exponentially growing in the US sports betting market. The joint venture’s increased net gaming revenue by 781% to $1.4 billion in 2022 and contributed to a net income of a £194-million loss.
According to market experts, BetMGM joint venture could be expected to generate net gaming revenue in the range of $1.8 billion to $2 billion in the current year. In the most recent quarter, BetMGM held an 18% market share in the sports betting and online gambling markets in terms of gross gaming revenue (GGR). Currently, it has a 29% share in the online gambling market, with Entain claiming that its US joint venture is on track for getting an expected market share between 20% and 25% in the long term.
On the other hand, Entain itself has shared that BetMGM is expected to post positive earnings before interest, taxes, depreciation and amortisation (EBITDA) in the second six months of 2023, after achieving profitability in a few US states. The joint venture has a long-term target of generating an EBITDA margin between 30% and 35%.
- Author
Olivia Cole
