BetMGM blasts prediction markets in earnings call
“Bad results for the house” was BetMGM Chief Financial Officer Gary Deutsch’s summary of a less-than-optimal quarter for the sports betting provider. His remarks came during the company’s first-quarter earnings call 14 April.
“It’s been a steady start to 2026” was how CEO Adam Greenblatt put it. He likewise described the quarter as being below expectations because of adverse outcomes.
“We are better-insulated than most from the ever-increasing noise of prediction markets,” Greenblatt continued, saying BetMGM was focused on growing its cash flow. In igaming, he said more players had been obtained than expected, albeit at a higher cost. Still, he professed himself “very comfortable” with the return on player investment.
Those acquisition costs were up significantly, Greenblatt said, thanks to “new sports betting companies … they call themselves prediction markets.” He denounced the rivals at length, saying BetMGM stood with 40 state attorneys general and was looking forward to US Supreme Court adjudication of what he considered a states-rights issue.
Greenblatt predicted that “the current climate of hyper-spend” would pass. He also implied that the present pace of spending was unsustainable.
The CEO called current financial results “pretty amazing,” with BetMGM having year-over-year growth “despite seeing new, billion-dollar spenders in the category,” a poke at prediction markets. They were, he continued, the hot topic at Indian Gaming Association discussions this month. “Directionally, it’s helpful,” as event contracts were spurring pressure to expedite digital expansion in states like California.
As a reaction, BetMGM would be spending less on marketing to OSB-only states, or as Deutsch put it, “we’re going to focus on our strengths.”
BetMGM, Greenblatt continued, was reliant upon higher-value players. These were described as more volatile but more resilient. Handle from active users was said to be up 23%, thanks to an “improved player mix” and fewer marginal players in the active base. “We are well-positioned to capitalize on several opportunities,” he added, citing the World Cup and July’s scheduled rollout of igaming in Alberta.
Even with prediction-market pressures, BetMGM was seeing “incredibly resilient” upper-end players. Greenblatt said. “The higher up you get, the better.” The same was true of igaming bettors: “We’re seeing no bottom of premium players.”
Asked about the effect of prediction markets on the cost of customer acquisition, Greenblatt laughed. “I don’t control what others choose to spend, underpinning bad investment. We’re controlling the controllable. We’re not assuming that irrational spending continues to become more rational. Long-term, the market is going to come back to us and that’s an exciting moment,” he said.
“The majority of these players will return to us,” Greenblatt continued, because of the quality of BetMGM’s product and its customer service. Another ace in BetMGM’s hole, according to Greenblatt, were the terrestrial rewards MGM rewards can provide.
“The value proposition is better for most players,” Greenblatt asserted, “unless you’re in high school. But that is not our customer.” He applauded the Kentucky Legislature for trying to raise that state’s minimum betting age to 21.
Greenblatt forecast that prediction-market dynamics would end in “shark-on-shark violence. Most recreational players flow back in time.” Event contracts would be dominated by sharps, he forecast, while casual players would “lose too quickly.”
Focusing on igaming growth, Greenblatt said, “what we’re going to do is build on our powerful success and our evolution. We’re at the dawn of our Wizard of Oz franchise and Wheel of Fortune.” He added that BetMGM was seeing multiple days per week of action from its players.
Saying the United States market had not been maximized, Greenblatt described its size as “staggering.” Pre-COVID, 40% of US consumers had visited a casino at least once a year. “We have a long way to go” to capture them, Greenblatt said, adding that BetMGM would be building upon the success of its live-studio product.
Parent fees paid by BetMGM to Entain and MGM Resorts International totaled just US$3 million, which was attributed to “the seasonality of our business.” However, BetMGM leadership stood by its goal of US$500 million in annual cash flow by 2027.
Queried about BetMGM’s igaming performance, Greenblatt said it was “just reflecting that we haven’t seen a new state since 2022,” compounded by heightened competition. Of the latter, he said, “we’re just seeing a natural evolution of competition.”
As for new jurisdictions, Greenblatt said Virginia, where igaming was recently tabled in the Legislature, is “pretty positive.” He predicted legalization in 2027.
Igaming in Maine, he cautioned, could yet be repealed by popular vote. “It’s not a needle-mover one way or the other.” Still, he said he remained positive on expansion, saying that we would see greater momentum on the issue and soon.
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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The Backstory
Why prediction markets loom over U.S. sportsbooks
Prediction markets have moved from fringe novelty to front-burner competitive threat for U.S. sportsbooks, reshaping marketing budgets, regulatory postures and investor expectations. Operators say event contracts — wagers on outcomes not limited to traditional games — are siphoning attention and ratcheting up acquisition costs. The shift is testing how far operators will push into adjacent products and how closely regulators will police the boundary between federally supervised derivatives-style contracts and state-regulated sports betting.
BetMGM has repeatedly framed the issue as a challenge to the economic and legal foundations of state-by-state sports betting. In an October earnings briefing, Chief Executive Adam Greenblatt called sports prediction markets “in essence — illegal sports betting” lacking consumer protections or state gaming taxes, and emphasized that multiple regulators warned the company not to dabble in exchanges under threat of license action. He also said the company wouldn’t put itself “on the wrong side of our regulators,” signaling a cautious line in the sand as rivals experiment with new offerings. See BetMGM swears off prediction markets in earnings call.
The stakes for operators are high. Promotions and hyper-spend tied to prediction products can inflate near-term user metrics, but they also raise acquisition costs and compress profitability, especially when sports outcomes swing against the house. The debate now is whether prediction markets represent a durable new customer funnel — especially in states that lack legal online sports betting — or an expensive detour that invites regulatory backlash.
BetMGM’s stance hardens as capital priorities shift
BetMGM’s messaging has sharpened alongside a shift in capital allocation. In October, the company returned a first-ever US$200 million distribution to its parents and set a US$100 million cash floor while keeping its US$150 million credit line untouched. Management touted a disciplined approach to player acquisition, faster app performance and exclusive igaming content as the core growth levers, not exchanges or event contracts. Read BetMGM swears off prediction markets in earnings call.
That posture reflects both strategy and constraint. BetMGM says it won’t chase competitors’ “irrational” spend tied to prediction products and will focus marketing where it has full-stack offerings and terrestrial loyalty to cross-sell. The company’s bet is that premium-mass and upper-end players are resilient and that customer quality, not breadth, will drive cash flow targets. The calculus: absorb near-term noise from new entrants, lean into proprietary igaming content and loyalty, and wait for regulatory clarity and competitive spend to normalize.
Rivals push forward — with different risk profiles
Competitors are pushing in divergent directions. DraftKings has made prediction markets a pillar of its expansion thesis in states without legal online sportsbooks, unveiling a product and distribution strategy it says can leverage its existing national media footprint with minimal incremental spend. The company told investors it expects “many new states” for sports event contracts in the coming months, framing the customer opportunity in markets where traditional sports betting is closed. For details, see DraftKings earnings call focuses on prediction markets and how new partnership with ESPN can be leveraged.
DraftKings paired that push with a brand and funnel advantage: an exclusive sportsbook and odds partnership with ESPN starting Dec. 1. The tie-up could improve conversion and engagement for both traditional betting and prediction products, while dulling customer-acquisition costs relative to smaller challengers. Still, management conceded sports outcomes can swing revenue by hundreds of millions in a year, underscoring the risk of layering additional variable products on top of volatile hold.
Flutter’s FanDuel is more circumspect. Executives told investors they are “monitoring the situation very closely,” calling exchanges an “interesting opportunity” but one that lacks the margin richness of a sportsbook. Flutter is contending with new-tax drag in Illinois and heavy launch costs in Missouri and Alberta while pushing parlay depth and bespoke bet builders to expand margin within its core model. See Flutter executives spar with analysts during earnings call.
Rush Street Interactive is treating the prediction-market surge as potential fuel for igaming expansion rather than an existential threat. Management said that if exchanges erode state sports-betting tax bases, lawmakers could be more open to legalizing online casinos — a space where Rush Street emphasizes returns and product depth, including live-dealer growth. Read Rush Street leaders take victory lap in earnings call.
Policy currents: a patchwork under pressure
The regulatory environment remains fragmented and politically charged. In the U.S., prediction markets sit at the junction of federal oversight and state gaming authority, creating a gray zone that operators interpret differently. Some see a path through federally supervised exchanges for specific contracts; others view the model as a backdoor to sports betting that undermines state frameworks. That ambiguity has prompted warning letters to licensees and a chill among operators that rely on state regulators’ goodwill for broader expansion, particularly in igaming.
Beyond the U.S., political currents underline how quickly the tide can turn against digital wagering. In the Philippines, the head of the Catholic Bishops’ Conference lambasted state regulator PAGCOR for promoting online gambling and urged a total ban, arguing it fuels addiction and targets vulnerable demographics. The group’s call for court intervention highlights how moral and social concerns can catalyze abrupt policy shifts, even in mature markets with entrenched operators. See Catholic Bishops’ Conference leader blasts PAGCOR over online gambling.
For U.S. operators weighing prediction markets, the lesson is clear: product bets that get ahead of regulators may deliver short-term growth but can also jeopardize licenses, tax planning and legislative priorities. That’s especially true as companies push for igaming legalization in select states, where trust with lawmakers is a finite resource.
What to watch as the market sorts itself
Investors are tracking a few telltales. First, whether prediction-market entrants can demonstrate sustainable unit economics without outsized promotional burn. Second, whether regulators or courts draw sharper lines that either validate specific event contracts or push them squarely into state sports-betting regimes. Third, whether customer behavior supports the thesis that exchanges tap new demographics in non-OSB states — or simply cycle existing bettors through a different front door.
Operator positioning reflects those uncertainties. BetMGM is prioritizing premium customer yield, proprietary content and measured marketing amid a noisy competitive field. DraftKings is leaning on media scale and a broadened product funnel to capitalize on non-OSB states. Flutter is tuning margin via product and pricing while testing the exchange waters cautiously. Rush Street is doubling down on igaming’s steadier returns and potential regulatory tailwinds.
The next phase will hinge on state legislatures, regulators and the pace of legalization in new markets. If prediction markets accelerate digital adoption without provoking a crackdown, they could coexist as a feeder channel. If they disrupt tax bases or consumer protections, expect a faster pullback — and a refocus on igaming where operators say the economics are deeper and more predictable.
