During a recent Q1 earnings call, BetMGM executives outlined a significant strategic shift designed to insulate the business from the “ever-escalating noise” of the prediction market sector.
The operator confirmed it is reallocating marketing spend away from lower-level recreational users in favor of premium, mass-market players who exhibit higher loyalty and lifetime value.
The “Irrational” CPA Environment
CEO of BetMGM Adam Greenblatt was vocal regarding the aggressive marketing tactics of prediction market entrants, who are currently driving up Costs Per Acquisition (CPAs) by outbidding traditional sportsbooks for media inventory.
“We’re assuming the current CPA environment prevails for the rest of the year… I’m not assuming that what we believe to be irrational current spend suddenly becomes rational. I’m expecting that the land grab that is currently the reality continues, and we are positioning ourselves for when that position changes.”
BetMGM views the current disruption as a temporary distortion. The company believes that recreational users who experiment with prediction platforms will eventually return to traditional sportsbooks due to “faster loss rates” and less favorable player economics in those environments.
iGaming Dominance as a Strategic Shield
The operator is leaning heavily into its iGaming-first identity, which now approaches $2 billion in annual revenue. Greenblatt noted that this segment remains a standout, growing 9% year-over-year while shielding the brand from the volatility of sports betting margins.
“[As] an iGaming first operator who’s approaching $2bn of annual iGaming revenue, we are better positioned than most, if not all others, from the ever-escalating noise of prediction markets present in the market.”
BetMGM is prioritizing quality over quantity, choosing to reduce its total user base to increase the profit per user. Long-term, the company remains optimistic about regulatory normalization, stating it looks forward to an “expedient outcome” in the potential Supreme Court hearing regarding prediction markets.
