BetMGM has significantly reduced its promotional spend
BetMGM has significantly reduced its promotional spend. In May, during a period of relatively low sports-betting activity, BetMGM decreased its bonuses and promotional spend by over 40% compared to previous levels.
This pullback by BetMGM goes against the trend observed in the rest of the market, where other operators increased their promotional spending during the same period. In Michigan, total market promotional spend rose by 19% year over year, in Pennsylvania it increased by 28%, and in Maryland, there was a 21% month-over-month increase.
DraftKings, in particular, increased its promotional spend significantly in the three states. In Michigan, DraftKings raised its spend by 117% year over year, in Pennsylvania, it soared by 226% year over year, and in Maryland, its spend rose by 81% month over month. FanDuel also increased its promotional spend during May, with a 40% year-over-year increase in Michigan, a 26% increase in Pennsylvania, and a 13% month-over-month increase in Maryland.
The observed increase in promotions during May contradicts the wider narrative of operators cutting spend as they aim for adjusted EBITDA profitability in the coming years. This unseasonal rise in promotional spend was surprising to analysts, especially considering that even in newer states like Maryland and Ohio, promotional spend increased month over month during the shoulder season period.
The team at Wells Fargo expressed surprise at the May spend increase, both in mature states and newer states, and noted that it goes against expectations during the shoulder season.
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