Managing Editor
During a Q2 earnings call, BetMGM CEO Adam Greenblatt told investors that he’s hopeful to see iGaming legalized in at least one of three places next year: Indiana, Virginia, and Washington D.C. All three jurisdictions were in the conversation in 2026 but came up short for various reasons.
The lone success story of 2026 was Maine, which passed its bill last year but had to wait for January for Governor Janet Mills to make her decision. She was widely expected to veto the bill, but the Wabanaki Nations successfully convinced her during the legislative off-season of its importance to their communities. That launch was expected to take place this summer, but has been held up by litigation from the state’s commercial gaming operator, Churchill Downs, which objects to tribal exclusivity over online casinos.
BetMGM has a longstanding battle with FanDuel for U.S. market leadership in iGaming, though it’s a distant third in sports betting. Online casino and poker now account for over two-thirds of its gross revenue and continue to grow, while its sports betting has stagnated. In Q2, it earned $483 million from iGaming, up 8% year-over year. Sports betting revenue remained unchanged at $228 million.
U.S. sports betting and iGaming have both been disappointing to investors in different ways. Sports betting, now legal in 38 states, hasn’t proven to be the cash cow that the industry expected. Although the industry’s gross revenue last year was nearly $18 billion, marketing and customer acquisition costs have made it hard to take profits, and some states have begun to turn the screws on sportsbooks through tax hikes.
Conversely, online casinos have proven to be extremely profitable. The trouble there is that they aren’t legal in as many places as the industry had expected by now.
Assessing the Prospects of BetMGM’s Picks
The trouble with Greenblatt’s “hopes” is that BetMGM, its parent companies, and its competitors have all been expressing similar hopes on an annual basis since the iGaming boom began to taper off. Only the subjects of the hope have changed.
First, it was Illinois that seemed near-certain to follow up on its sports betting success with an Internet Gaming Act. After that didn’t pan out, New York’s Sen. Joseph Addabbo emerged as the industry’s champion, promising to bring the Empire State and its 20 million residents into the regulated gaming fold.
Neither of those states is even in the conversation anymore.
Of next year’s prospects, Indiana and Virginia seem similar to Illinois and New York. They’re in the conversation because the industry would desperately like to see a larger state come online, and has managed to find a few amenable lawmakers to lead the charge. However, desire doesn’t actually equate to the likelihood of success.
The problem with all these states is that amount of money on the table is substantial, and existing land-based gaming interests feel they’re entitled to the entire amount. Because they’re already there, they have more sway with the legislatures than the iGaming industry can buy. Where iGaming bills have succeeded in the past are states where a significant percentage of land-based casinos are operated by hybrid companies with online ambitions: MGM, Caesars, Penn, and Rush Street.
With that low-hanging fruit having been collected, where has regulation found success in recent years? Much smaller places with monopoly or duopoly structures for the existing market: Connecticut, Rhode Island, and now Maine.
Based on that, D.C.’s prospects look much more realistic than Virginia’s or Indiana’s. But, like Maine and Rhode Island, it lacks the population to move the needle very much for BetMGM’s business.
Parent Company MGM Resorts Contemplates Take-Private Offer
The underwhelming performance of U.S. online gambling comes alongside a slowdown for Las Vegas. One consequence of that has been a reversal of the online boom-era rush to go public. Bally’s was the first hybrid gaming company to go private to escape shareholder pressures in the post-boom era. Now, Caesars has accepted a bid from Tilman Fertitta, while BetMGM’s parent company, MGM Resorts International, says it is “continuing to evaluate” an $18 billion offer from People Incorporated.
BetMGM itself isn’t publicly traded, but it’s jointly owned by two public corporations: MGM and Entain. A change in structure for MGM has ramifications for the joint venture, particularly in terms of its eventual unwinding.
Joint ventures, especially those between public corporations, are notoriously unstable. MGM and Entain mostly manage to avoid directly competing with each other, but each is subject to the whims of its own group of investors. The longer BetMGM remains under joint ownership, the more likely it is that it will eventually get caught in a tug-of-war.
At the time BetMGM formed, one likely endpoint was an IPO to make it an independent, public-traded corporation in its own right. That no longer seems likely, given low enthusiasm for U.S. iGaming.
MGM attempted to resolve the issue in 2021, toward the tail end of the boom, offering $11 billion. Entain shareholders rejected the proposal. That seems foolish in retrospect; five years later, the company’s market capitalization is now less than $5 billion.
Such negotiations are much easier when one party — or, ideally, both — is privately owned, and does not need to wrangle approval from a mass of greedy third parties. If MGM does ultimately accept a go-private offer, we will likely see another attempt to unwind BetMGM one way or another. ]
