BetMGM Q3 2026 Business Update - Events Platform - Q4 - MGM RESORTS INTERNATIONAL

Financial Performance:

• Q3 2026 net revenue reached $710 million, representing a 7% year-over-year increase.
• Adjusted EBITDA for the quarter was $86 million, driven by strong iGaming and online sports performance.
• iGaming segment generated $483 million in net revenue (up 6% YoY); NGR per active player grew 4%, while active players rose 2%.
• Online sports generated $216 million in net revenue (up 7% YoY); retail sports contributed $11 million (up 5% YoY).
• Q3 handle grew 3%, with handle per active player up 13% and NGR per active player up 18% YoY.
• Active monthly players decreased 9%, reflecting a strategic shift from volume to value.
• The company paid $68 million in total cash to parent companies ($18 million in parent fees + $50 million in distributions).
• Profit margins remain robust with an approximately 12% adjusted EBITDA margin; operating leverage is being realized through marketing efficiency.

Guidance and Future Outlook:

• Full-year 2026 guidance is reaffirmed: Net revenue between $2.9 billion and $3.1 billion; Adjusted EBITDA between $300 million and $350 million.
• Management expects full-year results to land toward the lower end of both guidance ranges.
• Long-term target established to achieve $500 million in adjusted EBITDA sometime beyond 2027.
• Q4 outlook remains positive, anticipating strong momentum during the heart of the NFL season.
• Competitive pressures from unregulated operators are expected to persist into mid-2027, requiring continued agility.

Business Segments and Product Lines:

• iGaming is the primary growth engine, accounting for ~70% of total business revenue.
• Launched "Game of Thrones" franchise titles in the U.S., noted as the most successful game launch to date.
• Introduced progressive side bet jackpot features in Michigan and West Virginia, with full rollout planned by year-end.
• Deployed new live-streamed slot experiences in partnership with Awager in New Jersey.
• Released NFL-branded casino content, including partnerships with the Minnesota Vikings, ahead of the football season.
• Launched in Alberta, showing attractive ROIs and per-player metrics exceeding post-launch benchmarks in Ontario.
• Refreshed Borgata brand saw Average Daily Actives (ADA) up 28% in New Jersey and Pennsylvania versus pre-launch levels.
• Sportsbook enhancements improved app speed, stability, cash-out capabilities, and rewards hubs.

Market and Competitive Landscape:

• Market remains highly competitive, driven by significant marketing investments from unregulated and illegal operators.
• BetMGM's market share remains stable at approximately 8% for sports betting and 20% for iGaming.
• Predicted market share resilience is attributed to a refined marketing mix and focus on retained high-value players.
• Acquisition costs (CPAs) have improved significantly since the back half of the World Cup due to reduced competitor spending in certain pockets.
• Regulatory ambiguity regarding prediction markets persists, though a Supreme Court decision is anticipated in the 2026-2027 session.

Risks and Challenges:

• Intense competition from illegal operators offering sports betting poses a long-term threat to revenue growth.
• Regulatory risks associated with prediction markets and potential "casino-like" products remain unresolved pending Supreme Court ruling.
• Payment processing costs face tension between customer flexibility and operational velocity; taxes are trending upward.
• Market saturation in mature states may lead to deceleration in overall iGaming market growth, though BetMGM's specific performance remains strong.
• Calendar effects impacted Q3 comparisons (World Cup inclusion in Q3 2026 vs. prior year).

Management Commentary and Tone:

• Management tone is confident, disciplined, and focused on profitability over volume growth.
• CEO Adam Greenblatt and CFO Gary Deutsch emphasized "controlled, disciplined execution" and "value over volume" as core strategies.
• Leadership highlighted the success of reducing investment in lower-return markets to optimize ROIs.
• Management expressed satisfaction with the acquisition environment improving post-World Cup, noting favorable payback periods.
• Emphasis placed on the "Omni-channel proposition" in Nevada driving significant new customer acquisition.

Analyst Questions and Answers:

• Promotional Intensity: Management acknowledged elevated promo levels due to one-off events and new market launches (Alberta) but expects GGR promo percentages to ease over time as focus shifts to retention.
• Market Growth: September activity was strong following a slower August; momentum continues into October.
• Prediction Markets: Competition spend on prediction markets remains high; BetMGM is mitigating impact by finding unexplored acquisition pockets.
• Capital Allocation: Acquisition costs have reduced, and the company will continue investing as long as returns (ROIs) remain attractive.
• Nevada Acquisition: Nevada remains a key source of new registrations and first-time depositors, though it is one component of a broader multi-state strategy.
• Content Pipeline: BetMGM possesses a rich iGaming content pipeline with seasonal releases and exclusives planned for the next 12 months.
• EBITDA Flow-Through: High flow-through in Q3 was driven by reduced marketing spend; a 40-50% long-term flow-through target remains relevant.
• Alberta Impact: Negligible revenue impact in Q3 due to short runtime, but contributed ~2% iGaming growth and 20% of new player acquisitions; performance is exceeding initial Ontario trajectory.

Other Key Points:

• Parent fees to Entain and MGM Resorts are recorded as operating expenses, calculated as a percentage of revenue.
• The company is leveraging AI to improve staffing efficiency and operational leverage.
• Cross-sell metrics indicate 55-60% of sports players also play casino games, while 15-20% of casino players engage with sports.
• NFL hold percentages in the first four weeks suppressed handle recycling, but bet mix is shifting favorably toward parlays and SGPs.
• BetMGM is optimizing its geographic targeting and media channels to drive strong customer acquisition and attractive ROIs.