BetMGM has postponed its target of achieving $500 million in annual adjusted EBITDA, citing uncertainties in regulations surrounding prediction markets and an increasingly competitive landscape. This announcement follows a report of decreased profitability in the second quarter, despite a rise in revenue.
In the second quarter, BetMGM experienced a 3% year-over-year growth in revenue. However, its adjusted EBITDA dropped by 15%, falling to $74 million from $86 million in the same quarter last year. For the first half of the year, adjusted EBITDA also saw a decline of 9% compared to the same period in 2025.
The company had previously indicated it was on track to meet its $500 million adjusted EBITDA goal by fiscal 2027, but has now pushed this target to 'the coming years.' This delay is attributed to the current market conditions, particularly the regulatory challenges posed by prediction markets.
Despite these challenges, BetMGM has maintained its full-year guidance for 2026, projecting net revenues between $2.9 billion and $3.1 billion, alongside adjusted EBITDA expectations of $300 million to $350 million. However, the company now anticipates that results will likely be at the lower end of these projections.
CEO Adam Greenblatt noted that prediction markets represent a significant external challenge for their online sportsbook operations. He remarked, 'Competition is fierce; it's tough out there. The primary macro impacts on online sports betting are prediction markets, along with rising gas prices and consumer discretionary income concerns. Analyzing these impacts is quite complex.'
During the quarter, online sports betting revenue remained steady at $228 million, while iGaming revenue saw an 8% increase.
Greenblatt expressed confidence in the company's long-term prospects, emphasizing that 'our underlying player fundamentals remain healthy' and showing optimism for the business's future. He highlighted that iGaming is a crucial component of BetMGM's overall performance, stating, 'Nearly 70% of our revenue comes from iGaming.'
The company continues to pursue its strategy of leveraging MGM Resorts' physical casino network to attract high-value customers, particularly in Nevada. Greenblatt remarked, 'Anyone who’s been to Vegas understands the strength of the brand there; we benefit from that influence. We recruit thousands of players weekly at MGM properties.'
BetMGM views Nevada's recent decision to geoblock prediction market event contracts as a favorable regulatory move for traditional online sportsbooks.
Even with the delay in its profitability target, Greenblatt believes there is still a viable path to achieving the $500 million adjusted EBITDA through growth in gaming, cost management, and a historical flow-through rate of approximately 40% to 45%.
The company plans to continue investing in states where it operates both online sports betting and iGaming, noting that over 60% of sportsbook customers also engage with gaming products.
Additionally, BetMGM is excited about the newly regulated market in Alberta, product enhancements, and the expansion of its Borgata brand as key factors for future growth.
On a separate note, BetMGM is enhancing its artificial intelligence strategy by creating two new senior leadership positions focused on AI transformation. The company is looking for a Senior Vice President of Business Transformation and AI Strategy, with a salary range of $269,925 to $371,000, as well as a Director of AI Platform and Portfolio Delivery, offering between $176,240 and $230,000.
The job posting states that the Senior Vice President will spearhead the AI roadmap, using AI as a 'strategic lever' to redesign business operations, decision-making, and scaling, while overseeing AI initiatives across various functions including product, technology, data, risk, operations, finance, human resources, and commercial sectors.
Greenblatt concluded by stating, 'I believe AI will be a fundamental disruptor over time, and we will discuss our plans in more detail as they become more concrete.'