While BetMGM is still far behind the nation’s leaders in online sports betting market share, MGM Resorts CEO Bill Hornbuckle remains bullish on the company’s digital prospects.

Hornbuckle, who inherited the leadership reins from predecessor Jim Murren, indicated as much on Wednesday evening during the company’s first-quarter earnings call. Although Hornbuckle is confident that BetMGM will capitalize on its strategy to optimize product growth, he provided candid views on the venture’s performance relative to its main competitors.

In a departure from previous earnings calls, MGM Resorts modified the structure of Wednesday’s call. MGM Resorts CFO Jonathan Halkyard, not Hornbuckle, opened the call, where he provided insight on the company’s growth algorithm.

He then handed over the mike to Hornbuckle, who gave an overview on MGM’s top-line views. Though Hornbuckle admitted that BetMGM is considerably behind the market leaders in FanDuel and DraftKings, he emphasized that it still ranks first in sports betting among brick-and-mortar operators.

Unlike other quarters, MGM Resorts did not provide a breakout on BetMGM’s market share in a supplemental earnings presentation.

MGM Resorts held its second earnings call since former Entain CEO Jette Nygaard-Andersen tendered her resignation last December. BetMGM is a 50-50 joint venture between MGM Resorts and Entain, one of the largest gambling operators in Europe. Since her departure, Stella David has assumed the mantle as the company’s interim CEO.

Hornbuckle had high praise for David on Wednesday’s call, describing her as a “breath of fresh air.” In recent weeks, David brought BetMGM CEO Adam Greenblatt to India for a meeting with Entain’s design development team. Hornbuckle has also been pleased with David’s transparency and her willingness to keep the lines of communication open with the executive team at MGM Resorts.

“We think it’s movement in the right direction, and it’s something that, frankly, heretofore hadn’t happened,” said Hornbuckle on the call. “Everyone is agreeing to the road map. It’s an extensive road map on product development, and it’s going to take some time, energy, and some investment, particularly on Entain’s behalf. They’re fully supportive of that.”

In February, Entain appointed Eminence Capital’s Ricky Sandler to the company’s Capital Allocation Committee. Last summer, Sandler expressed criticism toward Entain’s allocation strategy in financing bolt-on acquisitions through undervalued shareholder capital.

After Entain’s £750 million offer for Polish sportsbook operator STS, Eminence lambasted Entain for conducting a share issuance to fund the purchase. The issuance represented about 8% of Entain’s market capitalization at the time.

Entain hands activist rebel a place on the boardhttps://t.co/pTpb2XySAZ

— Alfonso Straffon (@astraffon) January 4, 2024

Sandler is among the activist investors who urged Entain to consider a partial or full divestiture of BetMGM. Moving forward, the companies seemingly have three pathways. MGM Resorts could make a renewed attempt for a full takeover of Entain. Entain rejected MGM Resorts’ $11 billion takeover attempt in 2021, claiming the bid substantially undervalued the company. MGM Resorts also has the option of purchasing the remaining 50% stake in the JV from Entain. Finally, the two partners could maintain status quo.

Hornbuckle also indicated on Wednesday that MGM Resorts is off to a good start with its Marriott loyalty tie-in program. BetMGM has a large and established loyalty rewards program, Macquarie wrote in an research note, owning an advantage over online sports betting operators such as DraftKings and FanDuel. Macquarie values BetMGM at $8 a share.

During the first quarter, MGM Rewards added about one million new customers through its rewards program, with about 600,000 from BetMGM, Halkyard noted.

MGM Resorts reported a loss of $32.6 million from BetMGM on the quarter, compared with a loss of $81.9 million in the same period from 2023.

When asked on potential M&A opportunities Wednesday, Hornbuckle demurred, telling an analyst that if any were close, he would not disclose it publicly. Days earlier, a report surfaced from newsletter Earnings + More that Tipico is mulling a sale of its U.S. sports betting platform.

If Tipico consummates a sale, MGM Resorts has materialized as a potential buyer, multiple sources told the newsletter. Tipico may be an attractive asset for MGM Resorts as it would allow the company to shift its LeoVegas platform to the former’s tech stack.

Speaking generally on the M&A environment across the industry, Hornbuckle noted there are some “tuck in,” opportunities down the road, but declined to elaborate further. If BetMGM decides to stand pat, the venture will lean heavily on Angstrom Sports for product growth.

Last October, Entain completed the acquisition of Angstrom, a data analytics provider that specializes in risk management, forecasting, and pricing in the sports betting market. Angstrom has designed new parlay offerings and in-game betting markets in the NBA and MLB, Hornbuckle added.

During the quarter, MGM Resorts capitalized on hotel revenue as Las Vegas hosted the Super Bowl for the first time. As with its rivals, BetMGM dealt with an unfavorable outcome as the public won on the Chiefs across the board.

— KSNV News 3 Las Vegas (@News3LV) May 1, 2024

Overall, MGM Resorts generated first-quarter consolidated net revenue of $4.38 billion topping FactSet estimates of $4.24 billion. MGM also increased earnings per share by 68% to $0.74, easily beating analysts’ expectations of $0.56.

MGM traded around $41 a share in Thursday’s mid-day session, up 2%. Since New Year’s, MGM Resorts has traded in a tight band between $40-$45 a share. Truist Securities analyst Barry Jonas indicated that it will make small tweaks to its MGM model, while leaving the price target unchanged at $58 a share.

Hornbuckle was not asked about the future licensing implications of former MGM Grand President Scott Sibella on Wednesday’s call. A day earlier, the Nevada Gaming Control Board issued a three-count complaint against Sibella stemming from his purported failures to file a suspicious transaction report in 2018. The charges surround a $120,000 cash payment made to the casino by an illegal bookmaker.