The rapid growth of prediction markets is being felt by the sports betting industry, with BetMGM adjusting its 2026 plans in response.
BetMGM reported first quarter results on Tuesday, which CEO Adam Greenblatt said were “slightly below expectations due to a combination of player friendly sports results and marketplace conditions, including intensifying competitive dynamics.”
Guidance for 2026 shifted a bit lower than the outlook from February. BetMGM now expects its adjusted EBITDA to fall toward the bottom of its $300 million to $350 million forecast as revenue guidance dipped to between $2.9 billion and $3.1 billion.
That said, Greenblatt remains confident in BetMGM’s path to $500 million in adjusted EBITDA next year.
“Our underlying fundamentals are healthy and growing, and we’ve built the business to ensure that we are nimble and rational allocators of capital between our iGaming and sports businesses,” Greenblatt said. “And, as an iGaming-first operator who’s approaching $2 billion of annual iGaming revenue, we are better positioned than most, if not all others, from the ever-escalating noise of prediction markets present in the market.”
Shifting marketing dollars from sports only states
To help keep adjusted EBITDA within its original guidance range, BetMGM is prioritizing marketing spend in online casino states over sports betting–only markets.
Prediction markets are effectively soaking up marketing dollars across channels, pushing acquisition costs higher and lengthening payback periods for those cohorts, Greenblatt explained.
“We look forward to an expedient outcome of the almost inevitable hearing of the pro states rights, pro tribal rights, and anti prediction markets case by [the U.S. Supreme Court],” Greenblatt said. “In the meantime, we’re refining our approach to OSB marketing for the rest of the year under the assumption that current media conditions persist.”
Looking beyond 2026, Greenblatt said he’s confident the intensity will “abate” based on the unsustainable player-level unit economics for those prediction market operators.
Shift to premium mass continues
BetMGM continues to focus its marketing on premium mass market customers, meaning lower worth recreational bettors are not seeing the same promos as once before.
That focus has been successful so far, Greenblatt said, as active customers have decreased but the value of those remaining has grown.
BetMGM saw its active online casino customers drop 3% in the first quarter but net gaming revenue per active jumped 12%. For sports betting, active bettors dropped 16%, but handle and net gaming revenue per active increased 23% and 25%, respectively.
Prediction markets are not stealing those quality players away, Greenblatt noted.
“We’re actually seeing the more premium parts of our database incredibly resilient,” Greenblatt said. “… Actually, I think the impact of our strategy is proving to be correct, or appropriate, or resilient in these more turbulent times.”
Path to $500M EBITDA for BetMGM
Greenblatt cited several factors underpinning confidence in a $500 million adjusted EBITDA target by 2027:
- An online casino business nearing $2 billion in annual revenue, with a deep product pipeline
- Increased contribution from Nevada and omnichannel integration
- The launch of online casinos in Alberta on July 13
- A refreshed and repositioned Borgata-branded online casino aimed at a new demographic
- Continued strength at the high end, where premium player demand shows little sign of slowing
“You put all of that together, combined with the potential for another new iGaming state next year in Virginia, combined with the potential, not certainty of course, the potential for a more rational sports marketing environment, sports CPA environment, you can quite easily see a pathway,” Greenblatt said.
“Now, are there risks? Sure. But do we remain confident that that is achievable? Yes.”
Building on live casino games
Greenblatt detailed a couple of advantages BetMGM has in the online casino market, including its Wizard of Oz, Wheel of Fortune and Survivor slot content, the rights to which come from its parent in MGM Resorts.
As for table games, BetMGM is “leaning into” live casino.
“If you go to the MGM Grand, you can see the live studio in the casino, which powers our Ontario business,” Greenblatt said. “We think that is a format from which we can build and we have some plans that we’re working with MGM Resorts on to continue to do that.”
