In revealing its first half of 2023 results Wednesday, BetMGM stated its interest in pursuing a sports betting license in North Carolina.
BetMGM’s news release, which announced the company’s overall profitability in the first half of fiscal year 2023-2024, noted that it would remain on track for future profitability despite the investment in a North Carolina sports betting launch that was “not originally planned during 2023.”
Were BetMGM to receive a sports betting license, it could be a part of the North Carolina online sports betting launch scheduled for a window running from Jan. 8 to June 14, 2024.
BetMGM’s up-front costs
North Carolina has 12 online sports betting licenses up for grabs. Those licenses do not require “tethering” to sports teams, venues, racetracks or other entities. However, the state, in deciding on licensees, plans to consider such criteria as:
- an operator’s plans for job creation in the state;
- an operator’s history and sustained commitment to capital investment in the state; and
- an operator’s “documented history of a partnership with a sports facility” and its intention to build a retail sportsbook at that approved sports facility.
As well as assessing an operator’s investment in the state, North Carolina requires all online sports betting license applicants to pay a $1 million license fee that is good for five years.
That fee puts North Carolina somewhere in the middle nationally regarding up-front costs for sports betting licensees.
For an operator such as BetMGM, which operates in over two dozen states, including New York, Pennsylvania and Illinois that require sky-high licensing fees, North Carolina’s fees shouldn’t be a concern.
The company’s first-half performance, which indicated profitability in H1, projected profitability into H2 despite the unplanned investments in North Carolina and Kentucky sports betting launches in the second half of the fiscal year.
Such fiscal momentum may be needed to lock down a license in North Carolina, where, unlike in many states, partnerships with sports teams don’t guarantee a pathway to licensure. Instead, an operator willing to make costly capital investments in the state, including building a retail sportsbook at one of eight approved sports venues, could offer some leverage when the North Carolina Lottery Commission, regulators of the new industry, considers the applicant pool.
BetMGM shows strong customer retention, especially when it strikes early
Promo deductions and bonus spending have paid off for BetMGM this year. In Wednesday’s earnings news release, BetMGM cited that “digital sports revenue” for all players “acquired in 2021 or earlier” was up 65% in the first half of FY2023-2024.
That would indicate that players who may have been enticed by promotional offers to download the app two years ago are sticking with it. That could be due to BetMGM’s media presence, the app’s user interface or the betting markets and odds offered.
BetMGM also noted it maintained “an online sports betting market share of 11%, with 13% market share in markets where BetMGM was live on day one.”
The data suggets that BetMGM has the motivation to act early in North Carolina and the staying power to secure a user base.
One point to consider is that North Carolina will not offer any tax credits for operators’ promotional spending. That could limit the amount of promo spend across the board in North Carolina. However, as Earnings+More, a leading gaming industry newsletter, noted, BetMGM has recently decreased its promotional spending in all states where such data is recorded.
This dip in promo spending could coincide with the relatively low season for online sports betting, and, should it receive a license, BetMGM may ramp up its promo spending before North Carolina launches sports betting.
North Carolina Lottery Commission slow to move on sports betting
Nearly six weeks after launching its sports betting webpage, the NCLC has not scheduled any sports betting public meetings on its agenda nor updated the page.
With fewer than six months to the earliest possible launch date, the commission must act fast on applicants once it starts accepting them. NCSharp has considered possible launch dates, understanding that the committee may not be ready for launch once the window opens.
Despite the lack of clarity from the NCLC, one thing becoming more clear is that BetMGM will make a strong sports betting push in North Carolina.
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