GVC CEO: US sports margins will rise once parlay betting takes off
Shay Segev wants the firm’s BetMGM JV to be competitive in pricing, brand, and product
GVC expects the wider adoption of parlay bets in the US to help raise industry-wide sports margins in the long term.
Group CEO Shay Segev last week said the lower than average US margins experienced across the board in Q3 would likely subside as customers become more comfortable with the products.
He told analysts and investors that GVC wanted its US JV BetMGM to be more competitive in its pricing, brand, and product.
“We want competitive and attractive pricing due to the competitive market but the average bet in the US is currently a single bet and not a combo bet, so this market has lower margins than we are used to with combo betting,” Segev said.
PointsBet generated a sports margin of 2% across its US business in Q3 after sacrificing bottom line revenue for high promotional spend.
Despite low margins, operators in Q3 reported an overall increase in customer acquisition as all major sports resumed by September.
Segev revealed 25% of its recent sportsbook acquisitions had come through MGM’s M Life casino loyalty database.
BetMGM finished integrating the M Life program into its betting product in August, when Segev said he expected the database to contribute up to 10% of online revenue in time.
Elsewhere, GVC will remain in Canada after committing to generate 100% of its net gaming revenue (NGR) from regulated markets by the end of 2023.
The Canadian province of Ontario last month revealed its intention to establish an online gaming market regulated by its Alcohol and Gaming Commission.
Although GVC’s pledge will likely cause 2021 EBITDA to be reduced, its stance on Canada has improved its revenue outlook.
The operator’s NGR mix from regulated or regulating markets currently stands at 96%, with plans to raise this figure to 99% by the end of 2020.
CFO Rob Wood said: “96% to 99% is 3%, but regarding a significant chunk of that, we have formed a view that Canada is now a regulating territory, hence that is now a market reclassification, so given market exits and lost NGR, it is now a much smaller percentage.”