Sportsbook Updates: BetMGM's Growth | Caesar's | BetRivers
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00:00Welcome back to Newswire here on Sports Grid.
00:05Always great to catch up with Matthew Waters from Legal Sports Report.
00:08We're going to dive into a number of topics here.
00:10So stick with us, Rush Street Interactive.
00:12One topic we'll cover.
00:13We'll also talk about earnings reports.
00:15They're coming out for various sports betting operators.
00:18So we will go over that as well.
00:19Matt, thanks for coming on.
00:20Let's start off with BetMGM as they jockey for that third spot, second spot,
00:25first spot in sports betting.
00:27Their new ideas or maybe old ideas becoming new again for acquiring new
00:31customers.
00:32Thanks again.
00:32Good to have you here.
00:34Yeah, thanks for having me, Craig.
00:36You know that my favorite time of year is earning season when we get to,
00:40you know, kind of pull the curtain back and see what these companies are doing.
00:43And BetMGM is kind of a difficult one to get a read on sometimes.
00:47Remember, they're owned by two separate publicly traded company and neither of
00:52those companies have reported their public numbers yet.
00:55So BetMGM in a release yesterday couldn't really say a whole lot.
00:59But what it did say was interesting.
01:01It said that it grew active iGaming customers 18% in the second quarter.
01:06It's notable because there was nothing to stimulate that growth, right?
01:12It was just the second quarter.
01:13There were no new states that came online and that was up from 9% growth in
01:17the first quarter.
01:19And so that is leading MGM to say, you know, we think we have something going
01:22here with these iGaming customers.
01:24We're going to spend more than we thought we were going to to acquire them.
01:29Now, if you remember, Entain and MGM, the two owners, they agreed that they
01:34would need to invest a little bit more in BetMGM this year.
01:38Entain had an interim CEO that admitted after the previous CEO was gone that
01:44they didn't do the best job at getting American focused products to BetMGM in
01:50those early days when grabbing customer share was so important.
01:53And so they're looking at that now.
01:55But interestingly, it said that the additional investment in customer
02:01acquisition was going to be funded by debt.
02:04And that isn't necessarily something I saw coming.
02:06I don't know if anybody saw that coming.
02:09Neither company has said how much they've invested in BetMGM this year yet.
02:14But to bring on debt is a little bit out of left wing, right?
02:21We can look at that and say maybe they're preparing to spin BetMGM off
02:26into its own company.
02:27BetMGM is getting close to profitability and these digital companies have
02:32done pretty well when they've had an IPO.
02:35So that could be something that they're doing and you start to play with
02:39the balance sheet when you're thinking about that, too.
02:41You know, having some debt is better than having no debt in situations.
02:45And so it could be one of those reasons.
02:48Either way, though, we know that BetMGM is definitely taking the
02:52iGaming race seriously in the U.S.
02:55And we know that they want to fight to be top in the U.S.
02:59They were at one point, we just found out today, Craig, a new report
03:02from Iloz and Krejcik that DraftKings took the number one iGaming spot
03:06in the second quarter.
03:07So BetMGM is still fighting from behind, but they're confident in
03:11what they're doing.
03:12Yeah, and look, I think that all of these reports when they come in,
03:16the great opportunity not only is to see the revenue, but also, as you
03:18say, to be on these calls and to hear some of their ideas.
03:21Speaking of which, Caesars, another company that's kind of in that
03:24mix with BetMGM and some of the others after FanDuel and DraftKings,
03:27a new structural hold target that, you know, certainly will definitely
03:31be intriguing to see what they say their earnings are.
03:34They changed things around a little bit, Matt.
03:36So tell us what happened there.
03:37Let's circle back and then why this report will be interesting.
03:41Yeah, it's interesting.
03:42They did raise how much was expected from their structural hold.
03:47They're now looking at 8.5%.
03:48They didn't hit that in the second quarter, but that's okay.
03:51We did see growth coming from Caesars in the second quarter and not
03:56necessarily from the revenue line.
03:57In fact, revenue was flat when it came to sports betting, but they
04:01held 7.2% across the board and that's up from 6.4% last year.
04:07And that was mostly attributed to an increase in how many bets are
04:13turning into parlay bets and same-game parlays and all of that that
04:17we've spoken about, Craig, that we know that these companies are
04:21pushing users toward those higher margin bets and that's helping
04:26them survive in these slow periods and the periods where they really
04:30get walloped by some bad results.
04:34And so Caesars is feeling confident in what it's doing there, too.
04:38And they are also doing very well in iGaming as well, Craig.
04:42They saw their iGaming revenue jump.
04:44I believe it was 33%.
04:46They're bringing in more customers.
04:48They're launching a new brand.
04:50They are branding their new iGaming app after the Horseshoe brand of
04:55Casinos.
04:56That'll be live alongside their Caesars Palace brand online gaming
05:01app.
05:01So there's a lot going on for Caesars right now.
05:05They did say that they are not interested at all in any of the Penn
05:10Entertainment talks.
05:11Remember Penn is potentially up for sale with a couple of companies
05:15maybe interested.
05:17We haven't heard anything, you know, too concrete on that.
05:21But Caesars is confident that they're going to hit this $500 million
05:26adjusted EBITDA rate for the digital segment and they're going to
05:31start seeing that next year.
05:32It's going to hit that run rate, which means it'll eventually hit a
05:36rate where it would be making $500 million annualized.
05:40And CEO Tom Riege understands that the analysts aren't exactly calling
05:45for that right now.
05:46The consensus numbers don't show that that's what's expected from the
05:50market.
05:50But he said, you know, you'll eventually believe.
05:53You will eventually believe our iGaming is growing well, our sports
05:57betting is growing well.
05:58And you will eventually believe when you see that we hit that target.
06:02One thing that's helping with them hitting that target, Craig, is they
06:08have sponsorship costs that are falling off.
06:11Remember, all of these companies went nuts signing sponsorships with
06:15sports teams and stadiums and leagues and everything and they were not
06:21moving the needle as much as the company's expected that they would.
06:25And so Caesars has been really happy to see these costs falling off.
06:30There was $605 million left to be spent at the end of last year.
06:36That's down to about $570 million now.
06:40So it's looking pretty good.
06:44They're falling that off.
06:44They say that's going to fall to the bottom line and help them.
06:49So a lot going on for Caesars right now.
06:52But frankly, Craig, we're starting to see that, you know, in a bet MGM
06:57and a Caesars that the product on the sports betting side is improving.
07:01And we were going to get to the point where those products are going to
07:06be close enough to FanDuel and DraftKings that customers may start
07:11moving to one of these guys if they have a loyalty account or what have
07:15you or just simply have a strong preference.
07:16So it's going to be interesting.
07:18This football season is going to be a lot of fun.
07:20Yeah, especially if any of these companies jumps into that range of
07:23FanDuel and DraftKings.
07:25Well, one that's fairly, I think to say, not in that range, but you've
07:29covered them pretty extensively is Bett Rivers.
07:31And they're obviously, even for being a little company, making some very
07:35big strides.
07:36I know Rush Street Interactive is the company.
07:39Bett Rivers is the parent company of that.
07:40And they seem to be, according to, Matt, your story from last week that
07:44I read, pretty thrilled with the development that they've had.
07:47They're really happy with how they've been operating, Craig.
07:50They report their earnings tonight, and it was interesting.
07:53You know, Bett Rivers is usually pretty conservative.
07:57They don't go out and market a whole lot.
07:59And so they don't really get too bullish on what they expect from digital
08:04and sports betting in specific.
08:06But they raised their adjusted EBITDA expectations after the first
08:12quarter because they had such a strong quarter.
08:14And it'll really be interesting to see if those numbers change again
08:18tonight.
08:19We know that Bett Rivers has been performing very well in my home state
08:23of Delaware.
08:24It's blown out expectations of what the market could do because we had
08:28an operator that just wasn't pulling the right levers last time.
08:31And, you know, they're working to keep their costs down.
08:35They are growing in Latin America.
08:38Their stock finally just hit above $10 for the first time in a long time.
08:43So everything is going well for Bett Rivers right now and Rush Street
08:48Interactive.
08:50Will that continue after tonight?
08:52You know, you certainly hope so for the shareholders there because it's
08:56been close to like $3 at some point, Craig.
08:59So Bett Rivers is churning right now, and I think they are too happy with
09:04where they are and going to keep fighting for some spots.
09:07All right.
09:08Well, let us know next week about the earnings call there.
09:10Matt, I know you'll have a busy day and night ahead of you.
09:12Thanks again for coming on Newswire.
09:13I appreciate it.
09:15Thanks, sir.
09:15Take care.