iGaming is the “secret” and economic opportunity for the casino industry as it emerges from the COVID-19 pandemic, but it’s expansion isn’t for companies that are “weak of heart or short of wallet.”
By Buck Wargo, US Correspondent for SiGMA News
That’s the message MGM Resorts International President and CEO Bill Hornbuckle has been repeatedly delivering this month to investors and analysts.
Hornbuckle has been quite active in promoting BetMGM, it’s joint venture with British sports betting company Entain, as a vital part of the company’s future growth and revenue.
As the economy emerges from the pandemic, Hornbuckle said it’s important to diversify and balance revenue between Las Vegas, other US markets, and Asia.
“We need to have less reliance here and potentially more on digital opportunities domestically and internationally through BetMGM and ultimately in Asia in Cotai, Macau and Japan at a future date,” Hornbuckle said.
MGM has estimated the combined markets of iGaming and sports betting will reach $32 billion, including 200 million for sports betting and 100 million, which is 35% of the population having access to iGaming.
“We’re halfway there already particularly as it relates to sports betting but iGaming has got some more work to do,” Hornbuckle said. “The real value to this business and economic opportunity is in iGaming. Sports betting has created a great deal of momentum, ... but iGaming is the economic secret to this business.
"We are in five states, and I think you have seen what we have been able to accomplish. We are one, two, or three in those states. We lead the way in iGaming and Michigan has become that example of the idea of an omnichannel product where you have retail, and online combined with a loyalty program to really get some synergy going and momentum going.”
BetMGM is in 13 states today with sports betting and expects to reach 20 in the next year with access to another four, Hornbuckle said.
The approval of iGaming beyond the five current states -- New Jersey, Pennsylvania, Delaware, West Virginia and Michigan -- will take more time unlike sports betting that quickly expanded when the US Supreme Court struck down a federal ban on full-fledged sports betting outside of Nevada, he said.
“I see iGaming as one more step in that progression and ultimately the integration we have seen in states like New Jersey and Michigan -- and Illinois is up for consideration -- once you are in the business,” Hornbuckle said.
That passage of iGaming in the US will take time. It’s about education of lawmakers with how it works and how responsible gaming ties in, Hornbuckle said.
“No one is going to go from nothing to brick and mortar to iGaming,” Hornbuckle said. “It’s going to be a journey in every state and every state has a different backdrop and story. It is not for the weak of heart or short of wallet. Ultimately it continues to grow. We continue to see what is happening internationally in this space. While there is always dialogue around it, it continues to grow in a meaningful way.”
It will take BetMGM until late 2023 or early 2024 to be profitable, Hornbuckle said. He says his company has an advantage with its M life loyalty program and its casinos in Las Vegas and has “zero” worries about any cannibalization of retail gaming. Instead, he called it “an opportunity to engage customers at a different level.” Some 550 customers from it’s VIP loyalty members have been put into BetMGM and averaged $10,000 in spending during the last quarter.
“History has proven, to the extent we have access to data and opportunity to promote products and people, that we win,” Hornbuckle said. “This example will be no different.”
BetMGM is also already driving customers to stay in its hotels, Hornbuckle said.
“I think iGaming opens to the notion that you can engage with a company 365 days a year if you choose to, come to a brick-and-mortar environment three times a year and be recognised and be rewarded and have a holistic experience whether it’s around iGaming or sports. I can go to Las Vegas to see a Raider game, hockey game and hopefully someday an NBA game.”
Hornbuckle said he expects a concentration in the iGaming sector because the investment “isn’t small,” citing hundreds of millions of dollars. He said the joint venture with Entain works well with its content -- 600 games -- and great technology and management, giving BetMGM a “European-based user experience” for US sports.
Entain’s speed to market has helped greatly and BetMGM looks to gain entry to Canada, he said.
“Being first to market is a big deal,” Hornbuckle said. “We (learned that lesson) in New Jersey. If you’re just getting going, it’s going to be a long battle and long trudge. I see it much like the Telecom industry with four or maybe five key operatives. There will be some real consolidation in between.
"You have seen some of the media companies step in like ESPN and others and get in the space. That will continue. Sports betting is done on a device on your hand and not a television screen and the cost of opportunity on those things will keep folks out but not for lack of trying.
"There are probably 15 operatives in the US, and that probably gets down to half a dozen. There will probably be three or four succeeding in this space, and the balance will either disappear or get gobbled up.”
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