Good day, and welcome to the BetMGM Business Update Conference Call. Joining the call from the company today are Adam Greenblatt, Chief Executive Officer; and Gary Deutsch, Chief Financial Officer. Participants are in listen-only mode. After the company's remarks, there will be a 30-minute question-and-answer session. In fairness to all participants, please limit yourself to one question and one follow-up. Please note, this event is being recorded. I would now like to turn the call over to Adam Greenblatt. Good morning or good afternoon, depending on where you are dialing in from. Thank you for joining today's call. I am Adam Greenblatt, CEO of BetMGM, and I'm joined today by Gary Deutsch, BetMGM's CFO. Earlier, we released an announcement on BetMGM's recent performance and updated outlook. On this call, I'll provide a brief overview of what we announced before opening the call up to Q&A. You will also have seen that we plan to hold our second investor event in May, which will provide a deeper dive into business performance and our exciting plans for future growth. As I am sure you will appreciate, we will keep more detailed comments and responses of our future plans until that date. Today's update and our event in May are part of our efforts to provide you with more information about our business and a deeper understanding of how and why we are a leading operator in this exciting market. Turning to today's announcement. 2021 was an incredibly strong year for BetMGM, building on the foundations laid in 2018 and 2019 and cemented in 2020. 2021 saw us accelerate our customer engagement and grow our share to become the number two operator across our active markets. Our revenue grew by nearly 5 x to $850 million in the full year, delivering 140% year-on-year growth in those markets that launched prior to 2021. This continuing momentum has resulted in a 24% market share for the three months to November in online sports betting and iGaming across our live jurisdictions. We have reinforced our number two position in the U.S., and our share is comfortably in line with our long-term target of 20%-25% market share. BetMGM remains the undisputed leader in iGaming across the four markets we operate, with 30% in the three months to November. In OSB, online sports betting, we continue to make great progress and have achieved 18% share across the markets where we operated for the three months to November 2. Let me add a little color to those numbers. Expanding our footprint remains a priority. In 2021, we launched online sports betting in five markets, plus three on-premise sports betting apps in other markets. Online casino in one market, online poker in two markets. We also opened seven retail sports books in a further four markets. We are particularly pleased with having launched three new markets over a period of only nine days in the lead-up to the 2021 NFL season. On the new product front, we launched Borgata Bingo in New Jersey, which is the first of its kind in the market, as well as the BetMGM Horse Racing app in three states where we did not have pre-existing operations. Our focus on players, other than just products, continues to deliver results. We saw increased cross-sell rates across our platform in Q4, with around 40%-50% of players in iGaming states playing both sports and iGaming. I'm pleased to say that we have delivered this fantastic growth and market position while remaining disciplined on promotional activity and spend. The promotional environment and market profitability has increasingly gained interest from investors and analysts, which is understandable given the promotional intensity seen around the start of the NFL season. However, what I think is worth noting is that the aggressive, competitive, and promotional environment was not a surprise to us. It's to be expected in these relatively early stages of development of this market, particularly given the size of the TAM that is at stake. We anticipated this pickup and had factored it into our planning and go-to-market approach. To remind you of that approach, we continue to deploy our best-in-class acquisition and retention marketing tools and processes, which are built on Entain's technology stack and focus on two things. Number one, acquisition efficiency. Number two, ROI built around our predictive models for online sports betting and iGaming. This flexible technology allows us to tailor player investment at a level appropriate to them. In addition, we continue to focus on omni-channel customer acquisition, while also promoting the benefits of our unique omni-channel rewards proposition. Excitingly, we also aired our first national TV advertising campaign in September 2021 in advance of the NFL season and continued to have presence thereafter. These nationwide campaigns improved the efficiency of our marketing spend in other channels while also driving increased brand awareness for BetMGM. I should note that we were encouraged to see signs of a more rational customer acquisition environment as the season progressed. By maintaining our disciplined and returns-focused approach, including executing on all of the items I've touched on above and more, our CPAs were in line with forecast and trending towards our long-term expectation of $250. Evolution of player values continued to support the TAM estimate we set out during our Capital Markets Day in April 2021. We have many exciting plans for 2022, more of which we'll talk about at our Investor Day in May. That said, over the coming months, we expect to go live in two additional U.S. jurisdictions that will enable us to reach around 40% of the adult population in America. We also have advanced plans to launch in Canada, Ontario, and Puerto Rico in the coming months. With this continued momentum, we now expect to achieve net revenues of over $1.3 billion in 2022. We are delivering positive run rate contribution in several states, driven by our prudent data-driven marketing strategy and by leveraging our omni-channel offering. For example, we were contribution positive in New Jersey for the full year 2021, and are also delivering positive contribution in Michigan only a few months after launch. As such, we anticipate reaching positive EBITDA in 2023. Now, that is, of course, subject to our usual caveats around business plan assumptions. For example, just one example, that a large state doesn't come online much earlier than anticipated, which would impact investment plans. Our fantastic performance and success so far is underpinned by the support we get from both Entain and MGM Resorts. From industry-leading technology coupled with an iconic brand to the robust in-house proprietary products and broad customer access via M life and retail experiences. Both companies provide the capital that supports our growth journey, so I'm delighted that they have agreed to invest a combined $450 million into our business in 2022. That will take their total combined investment to around $1.1 billion since inception. I think it is clear from the metrics that we are already delivering that we are on track in achieving 20%-25% of the substantial U.S. TAM and positive EBITDA. The investment case is therefore compelling. Let me just finish by talking about the BetMGM team. Over the last three years, we have brought together an extraordinary group of people that are the lifeblood of this business. Our highly talented team is executing with purpose, passion, and discipline and have cemented the credibility of BetMGM's leadership ambition in sports betting and iGaming. For those colleagues who are listening, I am very grateful to each one of you for your personal contribution every day. Thank you. With that, I'd like to hand over the call for Q&A. We will now begin the question and answer session. As a reminder, in all fairness, please limit yourself to one question and one follow-up. Our first question comes from James Rowland Clark from Barclays. Please go ahead. Hi. Good afternoon, or good morning, everyone, and thanks very much for the update. My question is on Canada, please, which you've outlined as a market you'll be launching in this year. I think at the CMD last year, you said that you would launch both BetMGM and bwin in Canada. I'm just interested in your thoughts as to how you're going to manage that conflict of interest. Thank you. Hi, James. Thanks for the question. Your premise is correct. We did say that both brands would be live in Canada. We see this as incremental. You know, what we see even in the U.S., where we have multiple brands, both can thrive. The brands will be operated by different independent teams. We fully see that as incremental to value. Great. Thank you. I have a follow-up, please. It's actually not on Canada but on your long-term EBITDA margin. I think at the CMD, you also said 30%-35% in 2025. Would you be reiterating that at this point? I know you haven't commented in the release. We haven't commented on. Maybe, Gary. Yeah, Gary, go on, please. Yeah. We're still holding to those estimates. We'll go up and down the P&L more fulsomely on the Investor Day in May. The same value that we expressed as our cost advantages still hold. We still have the marketing advantages of being affiliated with the MGM brand and their resources. We still have the, you know, access to Entain technology. We have casino games that we get from them. All of the things that we reiterated or that we stated in the Investor Day presentation are still holding true and accurate, and our guidance remains the same. Brilliant. Our next question comes from Shaun Kelley from Bank of America. Please go ahead. Hi, everyone, and thank you also for this update. Adam, my question is really about any trends in the iGaming piece. It's been a huge part of your success, and I'm just sort of wondering, can you talk about organic growth rate or maybe, you know, underlying organic outlook for those markets? We're gonna start to lap, you know, Michigan, which has been a big growth driver there. We don't have as many new states coming on in 2022. So what's kinda underlying, you know, your assumptions for kinda core organic growth there in your outlook? Thank you. It's a great question. All of our iGaming states continue to surprise on the upside. You're right, we are lapping exceptionally strong starts, but frankly, all of the KPIs we are seeing in the business today speak of depth to these markets that frankly are really a delight to see. You will have seen our results in Michigan, which were published, I think, yesterday or the day before, showing BetMGM's strength and leadership. Frankly, we continue to perform very strongly. We haven't seen a plateauing of organic demand in our live states. You know, we haven't even started to talk about new state adoption, I suspect, which will come later in the call. I hope that helps. Thank you very much. The next question comes from Ed Young from Morgan Stanley. Please go ahead. Hi, Adam. I'm very struck by your encouraging commentary around profitability. Can you give some color on the positive contribution states? You mentioned several there. What is it that makes them contribution positive? What makes it stand out? Do you have a solely online sports betting contribution positive state? As a point of detail in that, did New Jersey do the $60 million of profits that you'd guided for? Thanks. Great. Gary, can I hand that to you, please? Yeah, sure. Hey, Ed. First and foremost, on the New Jersey, you know, absolutely, we well exceeded that. In terms of the overall outlook that we gave in April, it still holds. We'd guided back then that we were looking at 12-24 months from launch for a sports state and 10-14 months in gaming to get to contribution positive and then about three years in sports to get to pay back and two years in gaming, and that still holds, and we're seeing that. As Adam said, we closed out 2021 with New Jersey being, you know, full year contribution positive. Michigan, you know, just after sort of mid-year became contribution positive. When we look into the coming year, we've expected Arizona's on the fast track to contribution positive. That's a state that is, you know, pure sports. Same is true of Colorado and Tennessee, you know, and Michigan and PA, we expect, you know, very nice years from. Perfect. Just one follow-up also on profitability. You talked about EBITDA reaching positive in 2023. Just to be clear, does that suggest you'll be close to breakeven or could potentially that be late 2023 and therefore a material loss number? Or is it too early to say? Can you give us any color on the shape of that? Thanks. Yep. Let me jump in here. We fully expected the question, but as we said. Let me restate it. We will reach profitability in 2023 based on what I can see today and our state rollout assumptions for this year and next. For next year, there will be months next year where we will be EBITDA positive. Let's not lose sight of our reality. We are not selling toothpaste in a very mature market, in a price stable environment. That's not this business, right? The market is still in its relatively early, exciting stages, with a lot of new states becoming addressable at different and uncertain times. We're also subject to short-term results-based volatility in sports. We only have to look to this football season to bear that out. October was tough, November was fantastic. While we cannot commit as a standard today to profitability for the full year 2023, at this stage, we do expect to enjoy many months of positive EBITDA as the year progresses. Our next question comes from Joe Greff from JP Morgan. Please go ahead. Good morning, guys. Two questions on the comments, Adam, on 2022. One, how much of the $450 million of incremental net revenues in 2022 versus 2021 is related to same state, same jurisdiction growth versus newer states? And then, part two would be you anticipate 2022 cost per acquisition to decline versus 2021 or is that just tough given a state contributing to revenues like New York? Right. Gary, you wanna take both of those as same state versus newer and then CPA trend. In our plan for next year, the 90% of the revenue that we are looking at, or roughly 90%, comes from states that are live as of today. That includes New York in that. You know, the vast majority of revenue, we have visibility on our status in the market, and we know that we are competing there. Obviously the more mature states, we have a clearer view on some aspects of that. In terms of the CPA environment, yes. You know, we're seeing, we're anticipating a continued efficiency there. You know, we've talked about the national advertising has helped and general sort of scale. We do have the CPAs going down in 2022 versus 2021. Just, Gary, let's make sure I understand that you're saying 90% of the GBP 1.3 billion in revenues come from jurisdictions that are open right now. Is that- Correct. Is that a fair representation of what you said? Yes. Exactly. Okay. What about if you looked at it same state relative to 2021? What. How much of that GBP 450 million of incremental revenues relate to- I mean, the only difference would be to subtract New York from that. Okay. I mean, still, you know, the great majority comes from states that, you know. All the material states, besides New York, have been operating at least since the beginning of the football season. You know, we've got good visibility there. Thank you very much. The next question comes from Thomas Allen from Morgan Stanley. Please go ahead. Morning. To put you on the spot a little, New York, you launched two days ago. Any initial thoughts on the market? Yes. Delighted with how it's gone. Look, we've broken all of our records, Thomas. It was the best first day of any live launch. We broke records for most registrations, for most first-time depositors, for deposits, for bets, for handle. What I found particularly pleasing was our technology performed flawlessly in line with our expectations, mind you, notwithstanding the volume, and linked to that, our acquisition funnel KPIs were also very pleasing. We had the highest registration to deposit conversion percentage of all of our markets. We had the highest new player deposit success rate, so everyone who wanted to deposit money was able to get their money in. We had the highest conversion of registration to real money players, right? That's just the technology side, technology linked with some operations. The area of operations is the area that I am most pleased about, and I'll tell you why. Despite the record-breaking volumes, we answered all chats and calls within an average of 29 seconds. This is a standout performance in the market, and we expect will be another reason that New York players choose BetMGM, particularly if you read all the social media, and expect that many of those the players in that New York market have had a difficult experience in those first few days of the market being available. Really positively, I look to the future positively. Helpful. Thank you. Just two logistical follow-ups. First, was there any hold or impact on fourth quarter revenues? Second, can you just remind us how you report, most of the time you use December count of fiscal year-end, but sometimes you use November fiscal year-end. Can you just remind us how that all works? Yeah, sure. Gary, I'll hand over to the first part to you in a moment, which is our Q4 margins. Just on the second element, our fiscal year-end is December. The reason we refer to November for some of the market share data was because we just don't have all the state's market share data published yet for December. It's just, we wanted to provide representative market-wide data in our disclosures. December is our fiscal. I think Is it? Go on. Was that a market share question or was that a net income question? It was a hold percentage. Yeah, the second one was a hold percentage. Like, did you have high hold, low, high or low hold? Yeah, no. For fourth quarter? On the hold percentage, yeah, we had impact from. I guess you would look at it this way. We had a normal September. We had a very weak October. We had a very strong November, and then December put us into the territory where I would say it impacted us. On your first part of the question, Tom, is if you were talking about market share or were you talking about reporting that passes through the parents in terms of net income? Yeah, I think there's some nuance, right? When the parents report it, don't they report it through November for the- Yes ... for their profits and losses? It's a question that's different between Entain and MGM, and it's a quirk of the timing of the sequencing of how we close. But maybe we could address that with you offline at some point without getting into the details of that. Any way to quantify the hold impact on revenue? I- Very difficult. I mean, we expect it to normalize over time. What you can see in some of the states that do report gross margins, you can see that we as usual do a little bit better than market, but the whole market has moved up and down with results. Our next question comes from David Katz from Jefferies. Please go ahead. Hi, good morning, everyone, and thanks for all the information so far. I know, Adam, in your initial comments, you said that the landscape is shaping up so far as you've expected in terms of the aggressiveness. What you've laid out for us today, how much of that is predicated on continuation of those same behaviors? You know, are you expecting or providing for competitors to start to progress toward profitability also? You know, what are you assuming everybody else does in what you've laid out? Yeah. Hi, David. Thanks for the question. The first point I would make is that we have delivered this result, which I think is outstanding in the context of that really aggressive competitive environment. You know, we would back ourselves to continue to succeed almost regardless. To the substance of your question, I think ultimately capital is rational, and capital in this market is getting smarter. What we, I think we BetMGM are able to do with our board is demonstrate the cohort economics and the value of that cohort ROI, which refuels the fire, which almost justifies further investment. I think I wouldn't comment about any of our competitors in this forum, certainly. I do think capital is going to become more demanding, which will drive more selective investment, shall we say. A more prudent approach to investment in player promotion. I think what we will see is a path to a rationalization of the promotional environment. It may happen through the course of this year. I think maybe we've got one more NFL cycle of exuberance ahead of us. Certainly over time, maybe I'm old-fashioned, but capital is rational, money is rational. Right. I appreciate that. The equity market is certainly calling for it. I think we would probably agree. As my follow-up, with respect to the product offering that you have out there today. Mm-hmm. One of the matters that we've debated is that most would say that their product isn't really all that evolved yet, early innings or whatever metaphor. Mm-hmm. You know, the customer acquisition has been assertive to aggressive. Where is your product today, and how do you square the level of investment to induce trial to a product that is still formative? Look, firstly, we offer our players a great player experience. While the product opportunity remains, that's certainly not to say that we are not surprising and delighting our players with the experience that is available today. That's not to say that we are or will ever rest on our laurels. You know, we've got through Jarrod, a colleague of ours in the senior BetMGM management team, and his product team working with BetMGM, working with Entain, we've got very exciting plans for further product evolution over the coming months. You know, what I would say is watch this space. The investment today, our investment today is rational based on, as I said, the cohort ROIs that we can see. You know, the suggestion I think in your question is, if you don't provide a good product experience, then the money is no good. You know, we're investing in a way that is perhaps imprudent. Our retention curves and our churn curves suggest or tell us that that's not the case. We're very happy with the way we acquire players and the fact that they stick around because they enjoy what we're offering. The next question comes from Chad Beynon from Macquarie. Please go ahead. Morning. Thanks for taking my question and all the information so far. Now that you've had more data to sift through throughout different sports seasons, do you believe that your seasonality will be any different than your competitors? Meaning, do you think you'll outperform in NFL and underperform in basketball, so to speak? Or do you think you'll kinda follow the general trends in the United States? Thanks. Thanks for the question. I think seasonality will be broadly similar. Let's firstly separate the parts of our business. Seasonality in gaming is different from sports. I think the focus of your question is around sports. In relation to sports, it will be largely similar. You know, what drives seasonality is player interest and a lesser degree different operators product offerings within that within those sports. I expect the vast majority of operators will see the same kind of seasonality trends subject to their offerings being there or thereabout equivalent. Okay, great. I guess regarding legislation, can you opine on kinda where things stand, when we should expect to see more of a domino effect, particularly on iGaming, understanding that none of this is in your 2022 guidance, but just kinda thinking out over the next five to 10 years, kinda what your legislative contacts are talking about now. Yes. Yes. Important question. Look, the sports betting train has, you know, is doing its thing, and we're very pleased with the progress that's being made in that area. On iGaming, the trends are positive. You will have seen that in Indiana, HB, I think it's 1329, is now in the public domain. There is talk of legislation in a number of other states, Iowa, Illinois, potentially Nevada. Obviously, Ontario is coming. It's not a U.S. state, but Ontario. Look, underpinning all of this, and I think this is the thing that we need to not lose sight of. The long-term opposition, historically, the opposition has come from incumbent land-based casino operators, and that's going away. You know, what we're seeing in states like Michigan is that both land-based casinos and iGaming can coexist. Not only coexist, can both thrive. When that reality becomes more pervasive, you know, just the accepted position, then what I think we will see is, rather than opposition, we will see support from incumbent casino retail casinos. We will also see the lawmakers looking at the success and associated tax revenues from the likes of Michigan and Pennsylvania, New Jersey. I think we'll see a more substantial trend towards adoption of iGaming, perhaps even beyond the 10 that we set up. By the way, this is not suggesting we're changing our 10 guidance at this stage at any point, but the winds are turning, and I think for me, that is the biggest takeaway. Thank you very much. Appreciate it. The next question comes from Joe Stauff from Susquehanna. Please go ahead. Good morning, Adam. Good morning, Gary. I wanted to ask about user growth in general and, you know, are there any KPIs? Can you possibly give us maybe monthly active users that you had in the fourth quarter? Gary, I think we're going to go into that. We can give multiples. Yeah. Yeah. We, you know. Go on, Gary. W hen we look at sort of the monthly active users year-over-year, you know, we were almost 3 x growth in Q4, but we're not gonna give out the raw numbers. Okay. Maybe as a follow-up, just sort of the trends, you know, with respect to, say, your user growth. You know, last year you talked about how you would expect, you know, iCasino revenue in particular versus OSB to be much stronger, at least in the second half. I think that's what you had outlined last year. I'm wondering, you know, kinda how your database, whether it be monthly active user in the fourth quarter, how they skewed, say, OSB, or that is iCasino only versus multiple products, including OSB. Gary, do you wanna take that? Yeah. In the states that we have both products, you've got West Virginia, Pennsylvania, Michigan, and New Jersey, we saw between 40%-50% of unique users in the fourth quarter were engaged with both products. We're seeing excellent cross-sell. When we look at the impact on customer acquisition in those states, you know, the cross-sell has been a big gateway. Most typically the flow is from sports into casino. That's been, you know, working out very well for us from that standpoint. As you alluded to earlier, you know, certainly we're seeing on monthly player values that the casino player values are significantly higher than the sports values. We've always anticipated that to be true, which is part and parcel with why, you know, we expect the acquisition cost for casino players to continue to run a little bit higher than the acquisition cost for sports. In, you know, in the long-term model, as we stabilize on sports, we'll always expect monthly casino values to be higher. Makes sense. Thanks very much, guys. The next question comes from Carlo Santarelli from Deutsche Bank. Please go ahead. Hey, guys. Thanks. I just had two quick ones. One is more of a clarifying issue. To make sure that I'm on the same page with how you define the contribution market or margin, for example. If you use New Jersey, is it effectively just taking New Jersey's percentage of your overall kind of state population databases and allocating shared costs, whether the broader corporate cost and/or marketing cost, national marketing costs, et cetera, over that kind of base of population? Gary, do you wanna take that, please? We look at contribution by going down for each state and assigning all the direct costs. Some are allocations, and some we have definitive, you know, metered usage on, and all of the marketing acquisition costs, and we apply it to that. We don't put into that an allocation of central costs, you know, admin and the overall base of people. Things like the national marketing will be allocated into the states, into the products. Great. Thank you, Gary. Then just one follow-up and decent segue there on marketing. When you guys think about kind of the marketing spend today, or say in 2021, and you think about kinda where that needs to be in 2023, I guess I could ask it two ways. How much do you think it needs to come down to kinda be EBITDA positive? Or how do you think about it in a stabilized or 2023 environment as a percentage of kind of net revenue? All right. Gary, do you wanna take that, please? Yeah. We're not a SaaS business, but there's a dynamic that looks like one in the sense that the marketing as a percentage of revenue is gonna drift down as we're acquiring fewer players as a percentage of the total number of players that are active in the business. When you think about how our model layers together, you know, we're seeing the efficiencies that we alluded to earlier in terms of CPAs. We add new players, you know, but those players include, you know, a bunch of new players that, you know, we've said in the past will churn out quickly. They're being adjoined to older cohorts that have, you know, some amount of retention spend on them. But really they become what we had called the growing profitable annuity. You know, we're already seeing it come down, you know, think of it as between 20%-30% of revenue in the timeframe you're talking about and settling in lower than that for the long term. You know, we're always gonna be acquiring customers, but we get to a more steady state where the percentage of new acquisitions are, you know, a much smaller percentage of the total base than it is today. Gary, sorry, if it's not something you wanna divulge, that's fine. Does that look like 10% of revenue, 15% of revenue? No, we don't. You know, that would be below what you said that would be below what we think a steady state is for the industry. Meaning the marketing spend as a percentage of revenue would be higher than those metrics? Correct. Okay. Yes. Thank you very much. Yes, even in our view, you know, in a near horizon for sure. Yep. That's very helpful. Thank you. The next question comes from Kiranjot Grewal from Bank of America. Please go ahead. Hey. Hey, guys. Could I talk a little bit more about your product offering? We've seen same-game parlay and in-play betting take a chunk of spend outside the U.S. Just wanted to know where you're at with your same-game parlay offering, and also how do you think that should develop in the coming year, both in terms of the offering itself and also the share of spend? Thank you. Yep. Thank you for the question. This is an area where we are particularly excited about having Entain as a partner. One of the things that we will be investing in from a product perspective is exactly that, our One Game Parlay product. Stay tuned, and from BetMGM, you will see improved expanded offering, improved interface with the product, and just a better overall user experience as we go through the summer. And of course, all of the associated benefits of that product, you know, 30% plus margin, will come through into our trading margin. We are already seeing through this season the proportion of parlays versus all bet types increasing. This is something that our business, our operations team is very focused on because of the margin benefits. Yeah, an area of focus for BetMGM, and we're delighted about the progress we're making. Perfect. Actually on the point of the profitability, is this a key component of your profitability target for 2023 and also your long run 30%-35% target? Thank you. For clarity, we're not making any Herculean assumptions around the take-up of One Game Parlay in order to hit our targets. We've been very prudent in our internal business planning to make sure that we build in things that we have that we can see and measure and don't depend on a fundamental change in player behavior. Okay. Awesome. Thank you so much. This concludes our question and answer session. I would like to turn the conference back over to Adam Greenblatt for any closing remarks. Fantastic. Thank you. Well, thank you all for joining. We're excited about the trajectory of our business, as I hope you can feel in every word, and we look forward to updating you on further progress during our investor event in May. Thanks a lot. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.