BetMGM has revised its revenue projections for 2026 downward, following an underwhelming first quarter for its online sports betting division. Management attributed this adjustment to unfavorable betting trends and increased competitive dynamics within the U.S. market.

Chief Financial Officer Gary Deutsch characterized the quarter as “poor outcomes for the house,” pointing out that favorable results for bettors led to higher payouts and tighter margins. While net revenue from the sports segment grew by 4% year-over-year, these gains were diminished by elevated promotional expenditures and adverse betting results.

Chief Executive Adam Greenblatt remarked that the year’s initial phase was steady yet fell short of expectations, indicating that performance was hampered by the same unfavorable betting outcomes.

The firm now anticipates total revenue for the year to range between $2.9 billion and $3.1 billion, a downgrade from its previous guidance of $3.1 billion to $3.2 billion. The forecast for adjusted core profit remains steady at $300 million to $350 million, although the outlook now leans towards the lower end.

Chief Executive Adam Greenblatt

This adjustment arrives as the U.S. sports betting landscape continues to grow, buoyed by state-level legalization and consistent marketing efforts from operators, even as regulatory oversight and tax obligations intensify.

BetMGM announced it is recalibrating its approach by scaling back marketing expenses in states focused solely on online sports betting and honing in on areas where it cultivates stronger competitive edges. A key part of this strategy is to target high-value customers, with the company noting a 23% enhancement in transaction volumes from active users, driven by an improved player demographic and a reduction in low-value participants.

Management reported that premium customers have remained steadfast despite the mounting competition, with heightened engagement noted at the top tier of the customer spectrum across both sports betting and iGaming.

Customer acquisition costs have significantly increased, which Greenblatt attributed to aggressive spending from new market entrants. He referred to these newcomers as “emerging sports betting entities … who brand themselves as prediction markets,” and mentioned that BetMGM, in conjunction with 40 state attorneys general, is awaiting potential U.S. Supreme Court deliberation concerning what it sees as a states’ rights issue connected to those platforms.

When asked about the impact of this competition, Greenblatt stated: “I cannot dictate how much others opt to spend, which leads to unwise investments. We focus on what we can control.”

He also suggested that current spending patterns across the landscape are likely not sustainable in the long run and indicated that market conditions are expected to eventually stabilize. Greenblatt expressed confidence that many customers attracted by rival platforms would return over time.

“Most of these players will likely return to us,” Greenblatt asserted, citing the superiority of the product, customer service, and the seamless integration of terrestrial rewards via MGM Resorts. “Our value proposition is superior for the majority of players,” he added.

In the iGaming sphere, BetMGM reported unexpectedly high rates of customer acquisition, albeit at increased costs, and stated that it remains optimistic about the long-term returns from these investments. Player engagement is robust, with users participating multiple times weekly, and the company plans to broaden its content repertoire, including established gaming titles.

Nevertheless, growth in iGaming is somewhat hindered by the lack of new state introductions since 2022. Greenblatt described the prevailing competitive climate as a market evolution and expressed cautious optimism regarding future growth, including the prospect of legalization in Virginia by 2027.

He also acknowledged uncertainties in Maine, where iGaming legislation may still face a repeal via public referendum, though he emphasized that the outcome would not significantly influence the company’s forecast.

During the quarter, BetMGM paid $3 million in parent fees to Entain and MGM Resorts International, with management attributing this to seasonal variations. The company sustained its long-term objective of achieving $500 million in annual cash flow by 2027.

In the aftermath of the announcement, Entain shares initially dipped before recovering to show a 1% increase, while MGM Resorts shares fell approximately 1% in premarket trading.