Entain's Strategic Gambits: Why Now is the Time to Bet on BetMGM's Turnaround

The U.S. legal sports betting and iGaming markets have matured into a high-stakes arena, yet few operators have demonstrated the resilience and strategic foresight of Entain and its U.S. joint venture, BetMGM. As Entain raises its financial guidance for 2025 and MGM Resorts weighs its options to consolidate control, the duo presents a compelling investment case rooted in operational turnaround, technological overhauls, and the calculus of corporate power shifts. For investors, the pieces are aligning for a decisive move.

The Profitability Pivot: BetMGM's 2025 Turnaround

BetMGM's journey from annual EBITDA losses of $244 million in 2024 to a projected $100 million EBITDA in 2025 marks a critical inflection point. The first quarter of 2025 delivered a 34% year-on-year revenue surge to $443 million, with adjusted EBITDA jumping to $22 million—a stark contrast to the $29 million loss in Q1 2024. This momentum has carried into Q2, driven by explosive growth in sports betting (+68% YoY) and iGaming (+27% YoY).

The path to profitability is further bolstered by strategic market expansion. Missouri's impending online sports betting launch in December 2025 adds a new revenue stream, while BetMGM's leadership under CEO Stella David—transitioning from interim to permanent—is stabilizing execution. With full-year results due on July 29, the market will scrutinize whether these gains are sustainable. However, the current guidance already hints at a company no longer merely surviving but thriving.

The Angstrom Advantage: Tech as a Competitive Moat

Behind BetMGM's performance lies Entain's $122 million (including contingent payments) acquisition of Angstrom Sports in 2023—a move that has quietly reshaped the competitive landscape. Angstrom's proprietary technology, including simulation-based predictive modeling and zero-latency in-play pricing, now powers BetMGM's product edge.

The integration has enabled BetMGM to offer hyper-granular betting markets, from player-specific wagers to advanced derivative products. This not only attracts risk-tolerant bettors but also reduces reliance on third-party pricing tools, cutting costs. Meanwhile, Project Romer—a cost-cutting initiative targeting a 28% online EBITDA margin by 2026—is on track, with Angstrom's risk management systems directly supporting margin expansion.

Critics may cite regulatory hurdles or slowing U.S. market growth, but the data speaks plainly: BetMGM's Q1 adjusted EBITDA margin hit 5%, up from -12% in the same period last year. With Angstrom's tech now fully embedded, the path to the 2026 target is clearer.

MGM's Incentive to Consolidate: A Catalyst for Value Realization

The wildcard in this equation is MGM Resorts, BetMGM's 47.5% partner. With Entain's stock trading at a 25% discount to its 2022 peak—a valuation gap that persists despite improved fundamentals—MGM has a strong incentive to push for a stake adjustment. A potential acquisition of Entain's 52.5% stake in BetMGM could align MGM's interests with its U.S. operations, particularly as land-based casinos increasingly rely on integrated online platforms.

This scenario is not hypothetical. BetMGM's financial turnaround reduces MGM's risk appetite, while Entain's undervalued equity creates a window for a cost-effective consolidation. Even a partial stake shift could unlock value for both parties, with Entain's shareholders gaining liquidity and MGM securing full control of a high-margin asset.

Investment Thesis: Buy the Dip, Play the Catalysts

The confluence of BetMGM's profitability, Entain's tech-driven margin growth, and MGM's strategic options creates a high-reward scenario. Key catalysts include:
1. July 29 Earnings: A beat on EBITDA or revenue could narrow Entain's valuation gap.
2. MGM's Next Move: Any public commentary on stake adjustments would likely send shares higher.
3. Regulatory Milestones: Missouri's market launch and potential new states could amplify growth.

For investors, Entain's stock—currently priced at £8.50—offers a risk/reward ratio skewed toward upside. Short-term volatility (as seen post-guidance) is a buying opportunity, given the long-term tailwinds.

Conclusion: A Wager on Value and Vision

Entain and BetMGM are no longer just playing catch-up—they are setting the pace. The financial turnaround, tech-infused differentiation, and looming corporate realignment all point to a stock poised for a re-rating. For investors with a 12–18-month horizon, this is a bet on execution and consolidation in a market where the winners are just beginning to emerge.

Investment Action: Accumulate Entain shares ahead of July's results, with a target price of £12.50 (Citi's rating) and a stop-loss at £7.50. Monitor MGM's public statements for stake-related signals.

In a sector still defining its winners, Entain is stacking the odds in its favor—one strategic move at a time.