Since becoming CEO of MGM Resorts four years ago, Bill Hornbuckle has become accustomed to putting out fires.

Hornbuckle, who succeeded Jim Murren in 2020, has guided the company through a once-in-a-century pandemic, dealt with a comprehensive cyber breach, and provided investors with reassurance during growing pains with BetMGM. A leadership transition at Entain over the past several months created additional uncertainty for the digital gaming venture, but the appointment of a new CEO for the European casino conglomerate may assuage some concerns. Entain and MGM Resorts each own a 50% stake in BetMGM.

Last week, Entain named former Scientific Games CEO Gavin Isaacs as its permanent CEO. Isaacs, a longtime gambling executive, has spent time with DraftKings, SBTech, and Bally Technologies over his 25-year career in the industry. In conjunction with the announcement, Entain also appointed Stella David as chair of Entain’s board of directors. David previously served as temporary CEO at Entain following Jette Nygaard-Andersen’s resignation.

“I’m excited by the relationship we’ve created with Stella as the interim CEO and now the Chair. I’m equally excited by the progress that’s been made by the team and BetMGM’s product enhancements, with a key focus by the Entain Group,” said Hornbuckle on Wednesday. “And now, the recent addition of Gavin is comforting. I think he will do wonders for that business.”

As BetMGM continues to surrender market share, Hornbuckle provided a frank assessment of the digital business on MGM Resorts’ quarterly earnings call. MGM Resorts views 2024 as a reinvestment year for the online gambling venture, one in which the company will deepen its focus on product enhancements. In turn, the improvements should bolster customer acquisition, MGM believes.

Ahead of the earnings call, BetMGM provided a first-half update. While BetMGM reported first-half EBITDA of -$123 million, the venture indicated that exceeded its goals from an acquisition and retention standpoint. Consequently, BetMGM expects the metrics will lead to higher year-over-year revenue growth over the second half and into early-2025. During the first six months of 2024, BetMGM generated about $1 billion in net revenue from operations, a year-over-year increase of around 6%.

“The first half of this year has been very important in laying the groundwork for BetMGM’s future. 2024 is a year of investment, focusing on improving our customer experience, and stepping up our level of investment in players,” BetMGM CEO Adam Greenblatt said in a statement.

As BetMGM concentrates on the retention funnel, the venture has been committed to tech enhancement. During a Dec. 2023 business update, BetMGM unveiled a strategic roadmap declaring 2024 a reinvestment year. Through Entain’s acquisition of Angstrom Sports, BetMGM believes it has gained the capability to provide customers with enhanced betting offerings. BetMGM has been pleased with the in-house technology for MLB Same-Game Parlays, a development that could provide the venture with momentum heading into football season.

Analysts, however, may question whether prior efforts to finance the venture were more than sufficient. Last June, BetMGM announced that the venture may not require additional capital from its parents. At the time, the two companies provided a combined capital of $1.26 billion since BetMGM’s inception in 2018. On the same call, BetMGM noted that it planned to generate approximately $500 million in EBITDA by fiscal year 2026.

Net revenue was $1b, up 6% YoY
Q2 saw net revenue up 9% YoY
Online sports betting revenue up 16% YoY
iGaming actives growing 18% YoY https://t.co/RvyP8ExF9k

— Waterhouse VC (@WaterhouseVC) July 31, 2024

Keen observers from this week’s call picked up on the fact that BetMGM seemed to pull back from last December’s guidance. As Truist Securities analyst Barry Jonas noted, BetMGM has moved the $500 million EBITDA target from 2026 to the “coming years.” The venture did not provide an exact timeline for when it plans to achieve the goal.

The path to $500 million a year of annual EBITDA will need to come from “massive market share gains” JMP Securities analyst Jordan Bender wrote in a research note. This comes at a time when promotional intensity and sales and marketing across online gaming are getting more competitive, he added.

For the second half of 2024, BetMGM expects EBITDA generation to be comparable with the first six months of the year. As a result, BetMGM is on the path to report negative EBITDA of around $250 million this year. After cutting losses last year, the venture expects deficits to balloon in 2024. A year earlier, the venture reported net losses of $90.9 million in 2023, down from losses of $234.5 million the previous year.

For the first half of 2024, BetMGM said it recorded a market share of 13% GGR market share in the U.S. and Ontario across sports betting and iGaming. In online sports betting, BetMGM trails market leaders FanDuel and DraftKings by a considerable margin. BetMGM is live with sports betting in 24 markets, but offers iGaming and online sports betting in five jurisdictions.

“In the big picture, we love what BetMGM has done for our brand. We love the long-term prospects, and we enjoy having a partner during this development stage that is equally focused on the business,” Hornbuckle added. “We are very hopeful for what will come this fall. And frankly, it’s pivotal to the business and to our ability to regain share.”

The first half of the year has been key in laying the groundwork for BetMGM’s future. We’ve been investing more in our players and improving the experience for our customers.

Take a look at the results: https://t.co/07UgpGlSAp pic.twitter.com/3gQ9IsOZtf

— Entain (@EntainGroup) July 29, 2024

At MGM Resorts, quarterly revenues grew more than 9% year-over-year to $4.3 billion. MGM also reported earnings per share of $0.86, far surpassing estimates of $0.66 for the quarter.

Still, MGM shares cratered Thursday, dropping nearly $5 a share (11.5%) to $38. Prior to Wednesday’s earnings call, MGM Resorts traded at near $44 a share before falling slightly in the afternoon session. With Thursday’s declines, MGM erased the gains over the past six weeks, when it jumped about 18%. MGM opened the year around $44 a share.