(Reuters) -U.S. sports betting platform BetMGM said on Monday that its losses for the year would be bigger than previously expected as it invests heavily in marketing amid intense competition in the industry.
The joint venture between MGM Resorts (NYSE:MGM) and Entain reported a core loss of $123 million for the first half of the year, and said it expects losses in the second half to be similar to those levels.
Analysts at JP Morgan said the second-half forecast implied an annual core loss of about $250 million, compared with a JPM estimate of about $93 million in losses.
Shares in Entain dropped nearly 10% to their lowest since April 2020, when COVID lockdowns hit. MGM was down 1% in U.S. premarket trading.
BetMGM made about a $67 million loss for 2023 although it said it turned a profit for the second half of 2023.
Founded in 2018, BetMGM has been stepping up its investments and expanding its presence in North America as it faces tough competition in the market with bigger players like Flutter's Fanduel and Draftkings.
BetMGM CEO Adam Greenblatt said: "2024 is a year of investment, focusing on improving our customer experience and stepping up our level of investment in players."
Rival Flutter in May had reported a first quarter core profit of $26 million in the United States. Fanduel increased its share of the sports betting market to 47% in the first three months of 2024.
BetMGM said it had a 13% market share in the U.S. and Ontario, Canada across Sports Betting and iGaming as of the end of the second quarter, which was down by a percentage point from the first quarter.
BetMGM is the third-largest online gambling company by revenue in the United States. It had previously said it was targeting a core profit of $500 million by 2026, but said on Monday that it expected to achieve the milestone in the "coming years".
"We believe today's statement suggests that, with the top spots in the U.S. market now secured by FanDuel and Draftkings, and with some other brands creeping up in some states, marketing intensity in U.S. online sports betting and gaming will not reduce," Roberta Ciaccia analysts at Investec said in a note.
Ciaccia added that it would be challenging for BetMGM to hit its long-term target of a more than 30% EBITDA margin.