Bolstered by robust performance in its iGaming and sports betting sectors, BetMGM raised its financial outlook for 2025, maintaining the expectation of achieving $500 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) in upcoming years. 

The 50/50 partnership between Entain (OTC: GMVHY) and MGM Resorts International (NYSE: MGM) now anticipates 2025 EBITDA of $100 million with revenues of $2.6 billion. That's an increase from earlier estimates which projected EBITDA positivity with sales between $2.4 billion and $2.5 billion.

"BetMGM remains excited about the significant opportunities ahead. Its strengthened business, revised strategic approach, and performance momentum, further reinforce its confidence in future growth prospects and pathway to $500 million EBITDA in the coming years,” according to a statement issued by the gaming company.

During late trading, MGM’s shares rose by 8.67% following the news, whereas Entain increased by 13.45%. BetMGM noted that its trading so far this quarter aligns with the 34% year-over-year increase recorded in the first quarter of the year. 

Entain Shares Priced Low Compared to BetMGM Results 

In February, BetMGM predicted net revenue for 2025 to be between $2.4 billion and $2.5 billion. During that period, the operator observed that its sportsbook figures for the first quarter were supported by better engagement and product improvements, along with a focus on what it termed premium-mass bettors. 

DraftKings (NASDAQ: DKNG) and Flutter Entertainment’s (NYSE: FLUT) FanDuel lead the online sports betting market in the US, yet BetMGM is among the limited operators that have captured significant market share in that arena, also establishing a strong presence in the iGaming sector. Despite those arguably notable achievements and BetMGM's appealing 2025 forecast, certain analysts contend that Entain's shares are undervalued. 

“Entain trades on 8.4x EV/EBITDA for FY25E. Ongoing positive BetMGM commentary from today’s update and the late April update is at odds with Entain’s valuation that appears to attach little value to Entain’s BetMGM stake,” observes James Wheatcroft of Jefferies. “A sum of the parts implies £13.00, (25% discount to the DKNG’s multiple for ENT’s 50% BetMGM stake) and a c11x recent regulated market transaction multiple for the Online core.”

BetMGM stated that online sports wagering will provide a favorable earnings impact this year, while iGaming will also offer "a significant contribution." The operator plans to announce results for the first half of 2025 on July 29. 

BetMGM's strength may dampen Entain's inclination to sell. 

BetMGM's enhancements on both ends, along with the lack of corresponding momentum in Entain's stock price, as Wheatcroft suggests, might incentivize Entain to stay involved with the joint venture instead of pulling back. 

Earlier this year, Bloomberg Intelligence valued Entain’s 50% stake in BetMGM at between $4.2 billion and $5.6 billion. The present market capitalization of the company stands at $6.52 billion, suggesting that the idea that the stock price does not represent the positives of the online gaming division has merit. 

MGM management has expressed a strong desire to have complete control over BetMGM, yet it has not reengaged in negotiations after proposing $11.06 billion in January 2021 for all of Entain. That offer was turned down as insufficient, and the negotiation process was later thrown into disarray when DraftKings nearly doubled MGM's proposal. In the more than four years since, analysts have often wondered if MGM would present another proposal for Entain or the portion of BetMGM it doesn’t own, but this has not occurred.