This year, the London-listed gambling group Entain has been involved in some of the most interesting negotiations and movements across the global gambling market. The owner of the world-famous Ladbrokes and Coral brands has been at the heart of the action – on one hand, thanks to its US partner MGM Resorts, and on the other hand, thanks to the DraftKings’ $22-billion acquisition bid.
The joint venture that Entain and MGM Resorts operate together in the US – BetMGM – was created in July 2018. The company currently employs about 1,000 staff members and offers its services across 16 states. By the middle of 2022, it is expected to be live in a total of 23 states.
A little more than three years have passed since the US Supreme Court decided to rule in favour of the much-awaited legalization of the new form of gambling – a decision that changed the rules of the game by putting the lengthy federal ban on sports betting to an end.
The ruling of the Supreme Court significantly changed the dynamic in the country’s gambling sector, as it provided it with the chance for further growth and evolvement and created many new opportunities for already established American gambling companies that are closely familiar with the local market, on one hand, and their British counterparts that have long-time expertise in offering sports betting services, on the other hand.
Entain Currently Operates US-Based Joint Venture wih MGM Resorts
At the time when the UK gambling company Entain first its partnership with MGM Resorts in the US, it was still known as GVC Holdings, and the deal was planned to last 25 years. Under the provisions of their agreement, neither one of the two companies is permitted to secretly launch projects that could result in the destabilisation of their joint venture in the local gambling market, with both of them required to remain devoted to their agreement.
However, considering the fact that the US sports betting market has been extremely lucrative for both local and foreign companies, it is quite normal for each operator to be trying to find new opportunities to expand its presence there. Everybody wants a bigger chunk of the US sports betting sector but Entain needs to make sure both parties in its joint venture agree on any possible changes in the framework.
According to the British gambling company, stability would be extremely important over the next 24 months as it would be critical when it comes to maximising the value and short-term success of Entain’s US joint venture. Even the boss of the gambling giant, Jette Nygaard-Andersen, has shared that it was exactly the joint venture of Entain and MGM Resorts that played an important part in the DraftKings’ decision to walk away from a previously proposed takeover. As Casino Guardian reported at the time, MGM Resorts had noted that any acquisition deal would require its consent.
Currently, sports betting is available in over 50% of the states in the US. As the country’s sports betting market is constantly increasing, Entain has estimated that the sector is likely to be worth $32 billion in the long term, with its joint venture with MGM Resorts expected to be holding a market share of between 20% and 25%.
Ongoing Growth of US Sports Betting Sector Not Slowing Down Soon, Entain Claims
Entain’s executives have predicted that the growth of the US sports betting market would not slow down anytime soon. The British gambling giant revealed that in October BetMGM had its best-ever month of revenue since its establishment. As shared by the company at the time, the growth of its US joint venture had been much faster than initially expected.
According to official projections, the net revenue of BetMGM will be around $1 billion.
As the sports betting industry in the US accelerates the pace of its growth, the rivalry in the local market has increased, too. Currently, all of the largest players in the industry are trying to get a bigger chunk of the market in order to be well-positioned in what is expected to be one of the largest and most significant sports betting industries on a global scale.
The liberalization of the US sports betting market has started an avalanche of never-ending competition among the companies that are legally permitted to offer their services in each of the states that have already legalized the new form of gambling. The fact that sports betting has had a strong presence in the illegal market before also triggers more rivalry across the sector because gambling companies are now able to apply for operating permits and attract some customers who might otherwise spend large sums on illegal gambling operators.
New York Among the Hottest Sports Betting Markets in the US
For the time being, the state of New York remains among the hottest sports betting markets across the US. The local gambling regulatory authorities have already granted operating licenses to nine sports betting companies – a move that has paved the way for these companies’ entrance into one is expected to grow into one of the largest markets in the country.
New York’s population of 19 million people will provide the online sports betting companies with the chance to significantly boost their user bases. However, some experts believe that the economics may be challenging, especially considering the massive 51% tax on the platforms’ revenues.
The CEO of Entain’s US joint venture with MGM Resorts revealed that in order to remain financially viable, BetMGM would have to change its marketing and investment approach. If the operator fails to do so, it would become impossible for it to make money. Still, according to the company’s boss, BetMGM is positioned to be successful more than any other gambling entity in the state of New York, along with two of the largest betting companies that have received operating licenses from New York gambling regulators – FanDuel and DraftKings.
- Author
Olivia Cole
