MGM Digital nears break-even as European markets drive gains

MGM Resorts' international online division, led by LeoVegas, nearly reached break-even in the third quarter. The MGM Digital segment reported revenue of $184 million, an increase from $174 million during the same period last year. Its adjusted EBITDAR loss shrank to $4 million, a significant improvement from a $23 million loss a year earlier. This progress occurred while the company's overall adjusted EBITDA fell to $403 million from $506 million.

Management told analysts that the BetMGM brand boosted MGM Digital's direct-to-consumer revenue by 8%. "Spain, the Netherlands and the UK leading the gains," they said according to a call transcript. The company's own UK sports betting platform, launched in August, now accounts for more than 80% of its online sports revenue there. For the first nine months of the year, the digital segment's revenue is up 21%.

Despite the improvement, the segment's revenue growth slowed considerably from the second quarter. Operators in the UK and Europe are contending with higher taxes, including a UK online casino duty increase that was already in effect during the previous quarter's strong performance. The UK government says its tax package will raise more than £1 billion annually. Another change, a new 25% remote betting rate, is scheduled to take effect in April 2027.

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The MGM Digital segment includes the LeoVegas business and other consolidated interactive gaming subsidiaries, but excludes the BetMGM North America joint venture. MGM has included LeoVegas results in its financial reports since completing the acquisition on September 7, 2022. In North America, the BetMGM joint venture reported third-quarter net revenue of $710 million, a 7% increase from $667 million a year ago. The venture, operated with Entain, paid $34 million to MGM during the quarter. BetMGM said it anticipates finishing 2026 near the lower end of its guidance ranges for both net revenue, between $2.9 billion and $3.1 billion, and adjusted EBITDA, between $300 million and $350 million.

The company's land-based operations faced challenges. Most of the group's overall revenue decline stemmed from an 8% drop at its Regional Operations and a 2% fall at its Las Vegas Strip resorts. Adjusted EBITDAR on the Strip fell 12% to $531 million. In Las Vegas, the average daily room rate dropped 8% to $218, and revenue per available room fell 8% to $193, while occupancy held steady at 89%. Results in Macau were stronger, where MGM China achieved record quarterly revenue of $1.1 billion, a 5% increase, and captured a record 17.1% market share. Its segment adjusted EBITDAR still declined 7% to $264 million, partly due to a $22 million year-over-year increase in intercompany branding licence fees. MGM Resorts' overall net loss narrowed to $17.1 million from $285.3 million a year earlier, though adjusted earnings per share missed analyst expectations.