MGM Q1 Earnings and LeoVegas Acquisition Shows That the Lion Never Sleeps

Written By Katie Kohler on May 3, 2022 - Last Updated on September 22, 2023
MGM Q1 LeoVegas

MGM reported its Q1 FY 2022 earnings on May 2. Like their signature lion, they roared and made their presence and intentions known. 

Our future has never been brighter,” said MGM Bill Hornbuckle. “We’re sitting on an extensive amount of liquidity. You saw us put it to work immediately with LeoVegas in a space that we’re highly interested and highly motivated by. We have never been in this position.”

On the day of the Q1 earnings, MGM announced it offered $607 million to purchase LeoVegas. In January 2021, MGM attempted to buy Entain for $11 billion. However, Entain nixed the bid.

MGM in Pennsylvania

BetMGM online casino is available in Pennsylvania through its partnership with Hollywood at Penn National Race Course. Through Rivers Casino, Borgata online casino is live in Pennsylvania. 

In March, PA online casinos set a U.S. record with $142.7 million in gross gaming revenue. Online casino skins under the Hollywood/Penn National umbrella, including BetMGM, led all operators in revenue.

BetMGM online sportsbook is live in PA through Hollywood Casino Morgantown. BetMGM sportsbook in PA has maintained the No. 3 spot in terms of market share for sports betting revenue in the state. 

MGM does not operate a casino property in Pennsylvania. However, Borgata in Atlantic City is a 60-mile drive from Philadelphia and a popular choice for Pennsylvanians.

Key figures for MGM in Q1 2022

  • Consolidated net revenues of $2.9 billion compared to $1.6 billion in the prior-year quarter, an increase of 73%.
  • Net loss attributable to MGM Resorts of $18 million compared to net loss attributable to MGM Resorts of $332 million in the prior-year quarter, and net income attributable to MGM Resorts of $31 million in the first quarter of 2019.
  • Consolidated Adjusted EBITDAR of $670 million.
  • BetMGM is currently live in 23 markets. 
  • In February 2022, BetMGM had 24% market share in sports betting and iGaming which put them at the top position nationwide. 

Who is LeoVegas?

LeoVegas is an online gambling operator. Most of its licenses are in Nordic countries and Europe. LeoVegas entered the U.S. online casino market in May when it signed a market access deal in New Jersey through an agreement with Caesars Entertainment.

BetMGM’s acquisition of LeoVegas is planned to close in the second half of 2022.

Comments from MGM on Q1

Comments from CEO Bill Hornbuckle on various topics.

Why is MGM acquiring LeoVegas?

“Our success with BetMGM United States gives us more conviction than ever about the potential for digital gaming and our ability to grow share in the exciting new marketplace. We are expanding internationally with the team at LeoVegas. Its strong technology platform and pipeline for growth present a compelling opportunity for our business to grow online.” 

Long-term vision for LeoVegas

 “I think we see it as a vehicle to continue to grow globally and it’s a great starting spot. We fundamentally liked the foundation of the company, both in management and technology, particularly in iGaming. LeoVegas in Sweden has a dominant share. We’ve seen them demonstrate their ability to grow both organically and with acquisitions. We have a couple of targets in mind with them to continue to grow that we think makes us a bigger piece of the pie for us and ultimately puts us on the map.”

LeoVegas tech, live dealer, BetMGM online casino

During the earnings presentation, it was mentioned that some of the best games at the online casino are BetMGM and MGM-branded games. Some of these titles are Bellagio Fountains of Fortune, Mirage Mega Magma, and MGM Grand Millions. Hornbuckle noted that live dealer is an area that MGM wants to continue to “push into.”

“If you think about it, and you all understand some of the valuations in the industry when it relates to live dealer providers, at our core, it’s our stores that represent what they do. If we can’t do this in a fun and compelling and exciting way, then shame on us, so we think there’s a great opportunity to do that as well. And again, Vegas’ backbone and background enables us to do exactly that kind of offering.”

MGM new rewards program

In early February, MGM updated its loyalty program with the goal to target high-value non-gaming customers in addition to casino players.

Hornbuckle noted that in Q1, 57% of the members who enrolled were driven by the Super Bowl, compared to 39% of those who enrolled during all of 2021.

“We’ve seen solid results particularly as it relates to our omni-channel growth strategy with BetMGM. We’ve committed to the strategy of building loyalty between our different channels and creating a seamless experience for our customers to play online and in-person.”

What’s next for MGM

More information about what’s to come on investor day on May 12.

Analyst reaction to MGM Q1

Following the earnings call, $MGM closed the May 3 trading day at $40.85, down $1.19 (2.8%).

JPMorgan is moving MGM to an Overweight rating and December 2022 price target of $53 from Not Rated. Previously, they had MGM rated Overweight with a year-end 2021 price target of $52.

In a note to clients, JPMorgan analyst Joseph Greff said they like the 15% pullback to the low $40s share due to the continued recovery in Las Vegas, especially as a result of the mid-week group and convention business.

Other points of interest in the JPMorgan note:

“We assume that from here MGM is content in its current ownership stake (50%) in BetMGM and likely waits out valuation and industry marketing rationalization before potentially revisiting an increased stake / purchase of Entain,” commented Greff.

  • JPMorgan models BetMGM run-rating positive EBITDA in 2H23.
  • BetMGM has particular strength in iGaming, which has lower CAC and analysts estimate is profitable today. Estimated 2021 iGaming gross revenues were ~$1.1 billion. Current margin gains are sustainable. <odel 2022, 2023, and 2024 EBITDAR of $3.3b, $4.1b, and $4.6b.
  • Year-end 2022 price target is $53, based on a SOTP approach

Lead image c/o Shutterstock

Katie Kohler Avatar
Written by
Katie Kohler

Katie Kohler is a Philadelphia-area based award-winning journalist and Managing Editor at PlayPennsylvania. Katie especially enjoys creating unique content and on-the-ground reporting in PA. She is focused on creating valuable, timely content about casinos and sports betting for readers. Katie has covered the legal Pennsylvania gambling industry for Catena Media since 2019.

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