Pulse
BetMGM: It’s time to change the game
By Lewis - 11 November 2020
A unique collaboration between MGM Resorts and GVC, Adam Greenblatt, Chief Executive Officer at BetMGM, explains how the company is tapping into the entertainment legacy of the former and the technology of the latter to change the US sports betting landscape. Adam expresses his belief that online poker’s best days are yet to come and exults over the potential new addressable markets facilitated by 5G.
Could you tell us more about BetMGM and how the company has evolved since its formation in 2018?
The business started as a twinkle in my eye. I was sitting in GVC and imagining how to build the biggest business and get the best out of a regulating US market. We then theoretically put together the most intuitive combination of assets, capabilities and expertise. If I look at the contributions from both parents, MGM and GVC, we cover tech, product, market access, brand, customer reach, operational expertise, and trading – the whole gamut that would be required to be a leader in the market.
Since formation, we now have a team of over 250 people strong, we’re winning market share in the eight states BetMGM is currently live in and have plans for launches in more states coming very shortly. I’m feeling very optimistic about our prospects centred around our hero brand, BetMGM.
Which states are you entering over the coming months?
Chronologically, we launch in Tennessee on November 1st. We are then hoping to be live in Pennsylvania with a gaming casino and poker. Shortly thereafter, depending on the sequencing and how long the regulatory processes take, we will be live in Michigan with a digital sports and gaming offer encompassing both casino and poker. There are a very busy few weeks ahead and we have Iowa and Virginia earmarked for January.
How does BetMGM tap into the entertainment legacy of MGM and the technology of GVC?
It’s like baking a cake – you’re balancing the milk and the flour, adding the ingredients in such a way to bake the perfect cake and that’s what we’re doing here. Critical to customers experience of our brand is the product so the technology underpins that, and the incredible support and focus from GVC allows us to tailor our products to the US market. We’ve got an exciting suite and new product updates upcoming, so we are really leveraging GVC on the technology and product side just as they are leveraging the US opportunity.
On the MGM side, it’s in our DNA. Our hero consumer brand is BetMGM and when you wrap that identity with integration to MGM’s loyalty program, added to the fact that all of MGM’s physical sports books are now branded as BetMGM Sportsbooks, we are showing great success in acquiring players and building out our omnichannel strategy.
This means acquiring players to digital in retail and encouraging our digital-only players to redeem loyalty rewards in a physical environment on an MGM property. There are synergies in both directions built around our relationship with MGM, the brand, its properties and the loyalty scheme, all of which is underpinned by technology and product.
Based in New Jersey, how is the sports betting market developing two years after PASPA was overturned?
It’s even better than we imagined! Even beyond New Jersey, we’re seeing more states adopting, enabling and introducing regulation. It’s happening quicker and where there is accommodating legislation and regulation, we’re seeing markets grow at a faster rate than we thought possible. To sweeten it all we are also seeing a trend towards more iGaming states. The outlook is very positive.
How much of that success should be attributed to an openness for mobile betting?
It’s not just mobile betting but the combination of channel availability. Yes, digital is absolutely critical but it’s not only the fact that digital is available but New Jersey has shown that untethering mobile on-property sign up and enabling remote deposit and withdrawal is one of the critical ingredients to the fast pace of growth that we’ve seen.
New Jersey has also benefited from the fact that New York State hasn’t introduced mobile – some analysts estimate about 25 per cent of the value in the New Jersey market is driven by New York State residents. It has also benefited from having untethered mobile, a sensible tax rate and a fairly broad sports betting product catalogue. All of those things have come together to support the growth we’ve seen.
Should we be wary of huge mobile revenues or recognise that is how customers want to consume betting?
I’m a free marketeer. I’m one that embraces consumer choice and so we can’t fight a pervasive trend. Nor is this limited to our own industry. Mobile is the channel of choice to increasingly consume leisure and content. It is the future and we are absolutely happy to embrace it.
How much of a threat does over taxation pose to the regulated American market?
Our objectives are to create a great customer leisure entertainment experience, make sure that we uphold to the highest standard responsible gambling objectives and, frankly, to bring the offshore market back onshore. This means that the product needs to be competitive in all aspects versus the offshore market. The higher the tax rate, the less margin there is for operators to reinvest in the market over time. That’s just a practical reality.
Over taxation means there is less available to invest in players and price whilst the proposition becomes less competitive with the offshore market. Our ability to invest in marketing and the product is also affected by the reduced margin available to operators. Operators need to have a viable business that is cash flow positive and profitable in the long term.
The BetMGM app is currently available in New Jersey, West Virginia, Nevada, Indiana, Michigan, Mississippi, and Colorado. How complex are the front and back-end technological challenges to conform with varying compliance requirements between states? With plans to enter four more states over the coming months, how do you tailor and localise the app to those locations?
It’s a very astute question and observation. It’s complex and the more states that go live, the higher the complexity. We have to operate what is effectively a business that spans all of Europe with a common team and tech stack. I will offer an example of that complexity with the case of feature releases. Each state has its own process for evaluating and approving a particular feature and each state has its own governing body. Some use independent test labs, some test it themselves and some do both.
Each of those processes have different timeframes. What that means is that unless we are capable of effectively holding and releasing the feature to a different state at different times, we are only able to release features when effectively the last state approves the feature. It’s like the migrating buffalo – the herd can only move as fast as the slowest buffalo.
The same would be true of rolling out features in states were it not for the fact that we have an incredible team of technologists that have already solved this problem. We have established a cloud based staging environment allowing us to launch product in a state where it is approved even though other states are perhaps lagging. We think that over time this is going to be an incredible strategic advantage enabling us to get player features and product to players faster all over the US, but it is complex.
How much of an advantage is owning your own technology? How different would the challenge be if the technology wasn’t your own and you were reliant on a third party?
It would be hideously complex and very difficult. The orchestration and choreography of managing these processes with multiple parties is hard enough when it’s your own and they are the best in the business. I can only imagine how challenging it must be for those who don’t enjoy that luxury.
BetMGM also operate a number of poker and casino sites. How has poker’s standing and role within online casino changed during your time in the industry and what are your expectations for its future?
I’m going to show my age here – I bought shares when party poker first listed because I was a huge believer in the prospect of the business and the longevity of poker. Poker has since matured and evolved. The Unlawful Internet Gambling Enforcement Act of 2006 had a big impact on the global poker market. There is a future for poker that relies on multi state shared liquidity.
We will see poker be its strongest self when we have shared liquidity across all states that allow it, including New Jersey, Pennsylvania, Michigan, West Virginia, Nevada, and Delaware. We expect next year to see additional states added to the list. Imagine a scenario where those states are cooperating to share liquidity. The customer experience would be enhanced, and it would be good for poker.
How far away are we from this shared liquidity?
We already have a compact between Jersey, Delaware and Nevada so there is a playbook for how it might work. We are waiting for the New Hampshire case which deals with the Department of Justice’s reinterpretation of the Wire Act. Once that has been resolved favourably, we will see the drive toward shared liquidity renewed because while there may be small states who want to regulate poker, an island on its own doesn’t support a tremendous poker experience.
If I’m a poker player in West Virginia, I want to be able to log on and play at a big tournament or full table to enjoy cash games. That’s not possible with the limited population size in West Virginia so shared liquidity will be on the agenda, but we first need to get through the New Hampshire case.
How do you measure the value of free-to-play games? Are they an underrated or underused asset in the US as a means to engage and retain customers?
Even though free to play seems like a fairly simple thing, I think the jury is out. Completely free to play in and of itself has a wide audience and is good for player engagement and potentially brand engagement. Whether it is valuable ultimately depends on whether it converts your player base into real money sports bettors or gamers and are therefore valuable. This needs to be traded off against how much it costs you to get the game, market the game and incentivise players to play it.
In the US, it’s a very crowded market. There are a lot of free to play offerings vying for mindshare of consumers. We have supported free to play games on our own and with some of our partners – we built and supported a free to play game with The Jets and witnessed reasonable success from that. It’s not our primary focus let’s put it that way. In the UK what Sky has done with its free to play games has been effective but the jury is still out.
What potential does 5G have for changing the sports betting landscape and how do you ensure BetMGM is in a position to capitalise on the new technology when it becomes mainstream?
I met the Chief Executive of Verizon some months ago where he was just so enthusiastic about the prospect of 5G and we went through the potential impact that it has not just on our sector but on industry, commerce, the way we consume media, the nature of the media we consume on, and how we connect homes. The potential is amazing. I think we are very well positioned given our exclusive multiyear partnership with Yahoo who are part of the Verizon group, the lead 5G operator in the US.
In terms of our positioning to capitalise, we have the best partner and own our technology which we believe is absolutely future proof. Within GVC, they are talking about all sorts of product extensions to capitalise on the new technology.
I know there is work underway to take us in the direction that we are able to capitalise. I am very excited about the prospects for 5G generally and specifically to our sector. Just one example is how it brings to life live betting in stadium. The ability for hundreds of thousands of parallel connections within a highly concentrated physical area is something only 5G enables. Just that in itself means the opening up of a whole new addressable market which 4G didn’t support.
