Entain Stocks On The Rise As BetMGM Announces Improved Guidance Figures

Entain is looking like one of the best recovery plays among publicly listed gaming stocks. Its share price climbed 18.8% to £8.93 ($12.26) after its US joint venture, BetMGM, recently updated its guidance. 

In a strong indication of the profits on the table in the US sports betting sector, BetMGM has revised upwards its guidance for fiscal year 2025 net revenue, from $2.4 billion-$2.5 billion to at least $2.6 billion. 

BetMGM is a joint venture between MGM Resorts International (NYSE: MGM) and UK-listed Entain (LON: ENT). The trading update, reported on June 16, was enough to send the shares of Entain skyward, up 15.2% on the day to £8.56p ($11.76), while MGM Resorts stock climbed 8% to $34.30. 

Entain PLC ADR also trades in the US over-the-counter under the tickers GMVHY and GMVHF.

A global sports betting business, Entain owns numerous other brands, including BetCity, bwin, Ladbrokes and Coral.

Since the US Supreme Court ruled in 2018 that the prohibition on sports gambling was unconstitutional, the sector has exploded. US sports betting is now legal in 40 states and generated revenues of $13.78 billion in 2024 (not including the sportsbook operations of tribal casinos), according to Statista.

US online and offline sports betting market size is forecast to reach $19.8 billion by the end of 2025, with a compound annual growth rate of 10.9% set to see that top $33.2 billion by 2030, according to Grand Review Research. 

Fuelling the growth is online and mobile betting. The surging popularity of crypto-based iGaming is also powering expansion. 

Gaming revenue overall grew to $72 billion last year, an increase of 7.5% from 2023, according to the American Gaming Association.

BetMGM growth is accelerating

Digging down into the numbers, BetMGM reported Q2 trading as being “broadly consistent” with impressive Q1 growth of 34%. In July, Entain says it will divulge more details regarding BetMGM’s Q2 performance. 

BetMGM posted net revenue of $2.1 billion in FY2024, a year-on-year rise of 7% attributed to growth in its iGaming division.

In this article, we are concentrating on Entain stock because of its potential as a recovery play and the combination of value and momentum it presents. 

Although BetMGM is not one of the big five of the US sports betting world, measured by market capitalization, it nevertheless has the brand power and financial support of two big hitters: Entain and MGM Resorts International.

For instance, in the Grand Review Research report cited above, BetMGM is prominently mentioned despite its relatively small size compared to Flutter International (market cap $47.2 billion), DraftKings ($21.1 billion) or FanDuel. The report notes that BetMGM “through its joint venture structure, combines retail presence with digital scalability.”

FanDuel is jointly owned by Flutter Entertainment, Boyd Gaming (market cap $6.35 billion) and Fox Corporation (market cap $24 billion). 

Entain is turning the corner after regulatory pain, helped by new CEO Stella David

Entain has had its difficulties of late, and that’s what gives rise to the mispricing opportunity. The company could be set for a positive rerating for several reasons.

First off, the company has new leadership that augurs well. Then, there’s its primary listing on the London Stock Exchange. Could there be a move to the NYSE on the near horizon? That would bring a flood of new liquidity into the trading of its shares.

For sure, there are things not to like about Entain, such as its debt burden and a history of stubborn underperformance. But, could a move to the NYSE be the shot in the arm that enables the firm to bring its experience with sports books more into play in BetMGM’s ongoing expansion plan execution?

Entain has had three different CEOs since December 2023. Stella David took over from Gavin Issacs, who was in post for a mere five months following the resignation of Jette Nygaard-Andersen. She was forced out by the bribery scandal involving a Turkish firm that was part of the group. For that, Entain was slapped with a £585 million ($803 million) penalty.

David has been the company’s interim CEO since February and is a former chair of the board. David has extensive business experience having spent 15 years in c-suite roles at Bacardi. By all accounts, she made a pivotal contribution in growing the business. 

She has been at Entain for three years and continues as a non-executive director at Domino’s Pizza and Norwegian Cruise Line Holdings. She is also the chair of Vue, a cinema chain.

In a statement of intent when she took up the CEO role, David placed US online sports betting at the center of Entain’s growth strategy, in addition to renewed efforts in new markets such as Brazil.

BetMGM the $500m earnings jewel in Entain’s crown?

If the BetMGM update is anything to go by, the shift in focus is paying off handsomely. Earnings before interest, tax, depreciation and amortization (EBITDA) earnings were also revised upwards to $100 million after previously not supplying a figure.

According to the upgraded guidance, EBITDA is expected to continue to improve and “further reinforce its confidence in future growth prospects and pathway to $500 million EBITDA in the coming years”. 

So what about the difficulties Entain management has been struggling with in recent times? Are they behind it now?

Well, the £585 million hit from the Turkish bribery case obviously stands out. But in 2022 there was also a fine of £17 million ($23) imposed by the UK regulator, the Gambling Commission, for lax player safety and anti-money laundering (AML) compliance. And in 2024 the Australian regulator sued the Entain subsidiary for breaches of AML rules.

These regulatory issues have undoubtedly soured investors on the firm, but David’s new path forward looks like it could be the inflection point long-suffering bulls have been waiting for.

Market is not pricing in ‘improving trends’

Looking at BetMGM’s business operation, the positive bottom-line outcomes show that it is successfully leveraging the strengths of both parties in the joint venture. Entain brings its technological prowess to the business, while MGM Resorts International provides the customer-facing expertise.

Stock analyst Graham Neary says he would prefer to see a reduction in net debt and an improvement in profitability before taking a positive view on the stock. 

For sure, net debt is high at £3.5 billion and the stock could be a momentum trap. For instance the stock’s return on capital ranking is 40th out of 47 in the FTSE’s hotels and entertainment services sector at -3.1%. 

However, net profit in 2025 is estimated to come in at £305 million, bouncing back from the £453 million ($622 million) loss in 2024, the year of that multimillion-dollar bribery penalty, so a one-off writedown. Forecasts for 2026 have net profit climbing higher still to £431 million, which would be up 41%.

In the opposite camp to Neary, Greg Johnson, an analyst at Shore Capital, reckons Entain is undervalued by the market, which is “failing to reflect the improving trends”.

With company delistings from the London Stock Exchange threatening to turn into a flood, Entain is likely to be a candidate for a lucrative transatlantic exit.  

Takeover bids incoming? Entain stock could rocket

It’s not just the prospect of a US listing that has savvy investors salivating. A history of Entain being subject to hostile takeover bids indicates, given recent positive trading news, that more such moves are to be expected. 

DraftKings offered £16.2 billion for Entain back in 2021. Entain’s market capitalization today is £5.2 billion ($7.15 billion). If DraftKings was willing to pony up that sort of money in 2021 for what turns out to be an overly priced valuation, it would probably still be in the market at a much lower valuation. 

Then there are the activist investors sharks thought to be circling. Among them are hedge funds Sachem Head Capital Management, Corvex  Management and Eminence Capital.

Eminence Capital’s Ricky Sandler was behind pushing the board to dump Jette Nygaard-Andersen, the CEO prior to Issacs. Sandler was a big critic of Entain’s £594 million purchase of STS Holding S.A., a Polish sports betting company.

Brokers have an average target price of 987.8p on Entain, 15.51% above the current price, with an outperform consensus rating.