BetMGM prepares to return cash to JV parents, has the investment paid off?  

Entain and MGM Resorts’ BetMGM investments are about to pay off as BetMGM could be in a position to return cash to its parent companies this year, CFO Gary Deutsch told analysts this week.

The joint venture between Entain and MGM posted strong Q2 results on Tuesday, with both betting and iGaming growth contributing to a 36% revenue jump. 

As a result, leadership said it is confident BetMGM will hit its full-year EBITDA guidance of $150 million, marking the first year of profitability since its formation in 2018.

“With over $150 million of EBITDA being generated this year, we may be in a position relatively soon where we could start returning cash to Entain and MGM Resorts,” CFO Gary Deutsch told analysts during its H1 earnings call.  

He also noted the operator had maintained a $150 million credit facility which remained undrawn. 

“We started the year with a good cash balance. We’re going to do $150 million at least of EBITDA, so we will have excess cash,” Deutsch said.  

When pressed on how much cash would be returned, the CFO said: “We’ll be in the position to figure that out. But with this guidance, we’re in a position that we can, if we choose, or if the parents choose to receive back cash, that transfer can be made.” 

What was the initial investment in BetMGM? 

BetMGM was established in August 2018 as a 50/50 joint venture between MGM Resorts and Entain, as the two operators sought to enter the US betting market shortly after PASPA was repealed.  

Both parties invested an initial $100 million each into the partnership, which sought to leverage MGM’s legacy branding and thriving Las Vegas business, alongside Entain’s long-standing tech and sports betting capabilities.

At the time the BetMGM deal was signed, MGM Resorts insisted its strategy would “significantly increase speed to market for both parties in an efficient and prudent manner, [while also lowering] execution risk and creating meaningful early-mover advantages”.

The model broke the mould in terms of how European operators were entering the US market and, while numerous competitors have already exited, BetMGM’s strategy has now been proven viable.

Back in 2021, MGM put forward a takeover offer for Entain which was swiftly dismissed as Entain believed MGM had “significantly undervalued” it.

How much has Entain invested in BetMGM?   

But, like many of its peers in the US, BetMGM struggled to reach profitability in the first few years.  

This led to the parents investing more than expected. In BetMGM’s 2021 earnings it revealed the total investment made in the JV would reach $450 million in 2022. 

This brought the total investment amount in BetMGM to $1.1 billion by 2022.

Entain has said it invests slightly more than £300 million ($395 million) every year, between OpEx and CapEx, into the platform that helps operate BetMGM.

But speaking during the London-listed operator’s full-year 2024 results, CFO Rob Wood acknowledged the central platform also benefits the wider Entain business. 

“The way to think about it is of course our obligation to the joint venture is to provide the product and technology, and we have a process whereby anything that’s done specifically for the joint venture is recharged to the joint venture and so the cost of that goes through the P&L,” he told analysts.  

“We believe that [this platform investment] gives us sustained competitive advantage, as you all know online is a product-led sector — that’s how we compete. By investing that quantum every year it gives our brands every chance of capitalising on their podium positions and delivering strong growth into the future.”  

In July 2023, Entain also acquired Angstrom, a specialist US betting analytics provider, to bolster BetMGM’s microbetting abilities. The deal cost £81 million, plus contingent payments totaling a maximum of £122 million.

Again, while the investment was largely aimed at improving BetMGM’s offering, Entain expects to utilise its expertise across other markets where it operates its own brands.

What about MGM Resorts’ investment?

It is less clear exactly how much MGM has put into the JV over the years, but in its Q1 2025 results MGM CEO Bill Hornbuckle said the company was no longer investing any more capital in BetMGM.

“Those investments [including MGM Digital] are behind us and those businesses are really primed to grow,” he said.

While the JV was “moving in the right direction”, Hornbuckle said it would still require more investment on Entain’s behalf. “And they’re fully supportive of that,” he added.

Some analysts have called MGM out for not reaping the full returns from its JV. In a note following MGM’s earnings this week, sell-side analysts Seaport Research urged the operator to buyout Entain’s stake in BetMGM (or acquire Entain itself) “in order [for it] to unlock [BetMGM’s full] value”.

“The 50/50 ownership structure is a significant deterrent in unlocking greater value as is limited financial disclosure (although the latter is improving),” the note said of BetMGM.

Making mistakes and turning its fortune around

After a slow progression to profitability, which is mirrored by much of the US market, BetMGM has turned its fortunes around.

Hornbuckle has cited underinvestment during certain periods as well as mistakes made on marketing and product development as reasons for this.

Speaking during JP Morgan’s Gaming conference on 13 March, he said BetMGM had mistakenly spent $13 million on a Super Bowl ad in 2024, which he now regretted.

“I would say historically we did some things that we’ve learned from, marketing wise and expense wise,” he told the audience.

Management described 2024 as an investment year for BetMGM, a turning point during which the operator became increasingly strategic about its marketing and promotional strategy and really leveraged MGM’s retail sportsbook in Vegas.

It launched the market’s first single wallet enabling players to register and bet in person while in Las Vegas and then transition their funds to the online sportsbook across multiple states.

“We see a lot of green shoots,” Hornbuckle said during the March conference. “Particularly in January, February and March, so far.”

This time, he said, the company’s forecast for a positive full-year EBITDA was obtainable.

“Everything we have seen would suggest that the projection we’ve given is real and that we think we can hit that target.”

Navigating a challenging US market

BetMGM had expected to reach profitability in the second half of 2023. JV CEO Adam Greenblatt told iGB in June that year he would achieve that by expanding its NGR margin and the business’ tax burden.

“Otherwise, there’s no change,” he said at the time.

But uncertainties, a slowdown in new states launching and increased tax burdens in certain states made the US increasingly difficult to navigate.

By this point, DraftKings and FanDuel had established their comfortable duopoly for online betting in the US, which made it challenging for others to gain much market share.

A much stricter approach to customer acquisition and a pivot to targeting higher-value players at BetMGM followed, and Greenblatt told investors in its H1 2025 results that the sportsbook had grown revenue by over 60% during the period, despite reducing marketing and its base of active players.

Under its new system the operator avoids investing in unprofitable players and over-investing in profitable players.

Analysts at Truist Securities reported BetMGM market share stood at 14% in Q2, reflecting 22% in iGaming and 8% in online betting.

Across iGaming, player volume was up 38% for monthly actives in the period. Greenblatt cited a portfolio of unique games and a live casino partnership which streams from MGM’s Bellagio as reasons for this uptick.

While iGaming growth at BetMGM has been steady over the years, the online betting business has only just reached profitability.

Notably, this is a milestone many of its peers have not yet reached.

Steven Pizzella, analyst at Deutsche Bank, reiterated MGM maintained an attractive valuation thanks in part to BetMGM’s inflection to profitability, plus potential for future strategic actions in in the JV.

Will MGM invest further in BetMGM?

While Entain will continue to fund the development of BetMGM’s tech platform, further investment from MGM is a possibility if another big US state were to move online, Hornbuckle has said.

“If California or other large markets — Texas or Georgia — [come online] we would be aggressive there like I think all others would be. And so that would take some capital,” he stated during MGM’s first quarter earnings call in 2024.

“We would never say never, to be clear. And I’m speaking on behalf of MGM in terms of its growth and what it wants to do with that business,” he said.

“If we get product really right and we see an opportunity to lean in, we will.”