BetMGM has released its financial results for the first quarter of 2026, revealing a performance that aligns with analysts' predictions of a slow start to the year.
The company reported net operating revenue of $696 million, marking a 6% increase compared to the previous year, yet falling short of the analyst consensus estimate of $810 million. In the fourth quarter of 2025, net operating revenue was recorded at $730 million.
Adjusted EBITDA stood at $25 million, reflecting an 11% year-over-year increase, but this is significantly below the anticipated $78 million, representing a 68% shortfall.
As has been noted in recent reports, unfavorable sports outcomes, particularly during events like the Super Bowl and March Madness, along with declining consumer confidence, have been cited as contributing factors to this performance, especially following a year of rapid growth in the iGaming sector.
BetMGM, a joint venture between Entain and MGM Resorts, does not disclose its net income separately; this information is provided by the parent companies. However, the disappointing EBITDA figures suggest that net income will likely fall below projections.
The company has revised its full-year revenue guidance downwards, now estimating between $2.9 billion and $3.1 billion, compared to the previous range of $3.1 billion to $3.2 billion.
Concerns regarding profitability are further highlighted by a decrease in active users. Adjusted EBITDA dropped by 68% to $25 million, and the average monthly active users fell by 9% year-over-year to 597,000.
During the earnings call, analysts sought clarity on whether this decline in active users was a strategic decision to eliminate low-value players or if BetMGM is losing ground to more aggressive competitors. A recent report indicated that Kalshi has captured a 21% share of the U.S. sportsbook market.
CEO Adam Greenblatt reiterated that BetMGM does not intend to be a pioneer in what it views as an illegal sports betting market. However, he did mention that they are keeping an eye on the potential for obtaining Futures Commission Merchant licenses if regulations become more favorable.
The management has emphasized its refined player management strategy aimed at enhancing profit margins by targeting higher-value users. Analysts are also keenly observing revenue per user growth to validate the reduced number of users.
Post-call remarks from analysts at Jefferies and J.P. Morgan pointed out that despite disappointing revenue, a 23% increase in handle per active user indicates that the remaining players are more valuable than those lost, suggesting that the management's strategy may be effective.
Looking ahead, the market is now in a “show me” phase as it awaits Q2 results, particularly to see if the sports hold percentage returns to its historical average of 9-10%.
Management has maintained its adjusted EBITDA guidance for FY 2026 at $300 million to $350 million but has indicated that results are likely to be at the lower end of this range.
Recent broker research leading up to the results has proven to be accurate. For example, UBS has adjusted its price target for MGM Resorts from $40 to $39 following a weaker-than-expected start to 2026. Conversely, Wells Fargo has kept its target at $31 but highlighted adverse weather conditions and ongoing marketing expenses as challenges for Q1.
Despite the disappointing top-line results, the iGaming sector continues to shine, with a year-over-year growth of 9%, contrasting the volatility seen in the sportsbook segment. BetMGM confirmed that it remains self-sustaining and has, for the first time, paid a Parent Fee of $3 million to MGM Resorts and Entain.