Rush Street Interactive executives aren’t viewing prediction markets as threats to the sports betting industry.
Key Takeaways
- Rush Street Interactive is investing in online casino growth.
- Executives are monitoring the prediction market landscape.
- Virginia, Maine, New York, and Illinois are potential iGaming jurisdictions.
Instead, the gaming operator’s CEO Richard Schwartz said during a fireside chat on Thursday that the competition among operators and trading exchanges is helping the company behind the BetRivers brand seize an opportunity to expand its online casino business.
“As others are distracted and focusing on that (sports betting) part of their business and having to spend huge amounts of money and executive attention on that, we're focusing on executing and innovating further in the casino-first space,” Schwartz said. “And frankly, it's given us a great chance to legalize online casino in some jurisdictions that are at risk of losing, in their perception, some of the revenues from sports betting and having less certainty on the future of that revenue stream.”
That doesn’t mean Rush Street is forgetting prediction markets altogether. Schwartz said the company continues to monitor a space, which has been entered by competitors FanDuel, DraftKings, and Fanatics, that’s regulated federally.
For now, Rush Street is staying on the sidelines when it comes to prediction market business, but “we certainly are never going to be caught flat-footed. We're always monitoring and have strategies in place. Should there be an opportunity that makes sense for us,” Schwartz said
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Focused spending
Schwartz said several gaming operators are spending more than Rush Street on marketing to retain and draw in sports bettors at a time when prediction markets like Kalshi and Polymarket continue to grow in popularity and trading volume.
With trading exchanges staying out of online casinos and focused on sports events contracts, which make up a huge part of their business, Rush Street wants to get iGaming legalized in other states to increase the company’s revenue.
“It's giving us a chance to go there, say, ‘Hey, it's a disruptive moment in time. Let's try to legalize online casinos at accelerated rates,'” Schwartz said. “I think that's actually gonna be helpful for us.”
Beaming with optimism
Rush Street is more optimistic than in past years that iGaming legalization is more likely across the U.S. because of the impact of sweepstakes casinos and people getting used to having the ability to play slots and table games on their phones.
“Everyone's spending all their money in time with sports, and we're happy to have them do that so we can continue focusing on what matters, and continuing to differentiate our experience, to continue to advance the reasons why players stay loyal with us, which ultimately is the most important thing,” Schwartz said.
Rush Street is confident in the operator’s ability to acquire and retain customers in the iGaming space.
“You treat them well,” Schwartz said. “You offer them experiences that are fun, that are unique, and that they feel like you're there, being thoughtful with them and treating them well, and then you have that retention that comes from that,” Schwartz said. “I think that's just the opportunity for us, which we're taking advantage of.”
New markets?
To do that, though, Rush Street needs legalized and regulated online casinos to expand beyond the current seven states. Virginia came close this year to making that reality when both sides of the legislature approved iGaming bills, but neither the House or the Senate would approve the other’s proposal.
Rush Street president Kyle Sauers compared potential Virginia revenue to what the operator is doing in Michigan, which is "approaching a $300 million GGR run rate.” Despite the legislative issues, Rush Street will continue making a push for Virginia, which Sauers called a “meaningful market.”
Maine is the only U.S. jurisdiction to legalize online casinos this year, but a lawsuit has slowed the process. Rush Street executives said they will remain “actively involved” in expanding to that state when the legal process is resolved.
Eyes on big states
There are much bigger jurisdictions that are getting Rush Street’s attention as well, like New York and Illinois, two highly populous states with already lucrative sports betting markets. Schwartz said that with federal government changes to Medicaid this year, states won’t have sufficient funding and will turn to other ways to generate tax revenue, which could open the door to further legalization of online casino gaming.
“States like New York and Illinois are going to have even greater surpluses in this area, and they all recognize the value of online casinos being a meaningful, proven, reliable method to raise taxes at a large volume, a large dollar amount," Schwartz said. “You look at Michigan, they've generated a couple of billion dollars in revenue the last five years as a meaningful move the needle number for all these states.”
Heading to Alberta
Rush Street plans to be among more than 30 gaming operators launching sports betting and iGaming in Alberta on July 13.
Executives recently added $115 million in revenue and $20 million to the midpoint guidance. Rush Street expects a “$10 million headwind” for marketing and launch costs, as well as slow profitability.
“We're going to remain flexible, and if there are opportunities to invest more, because things are going well in Alberta, we will certainly do that,” Sauers said. “We've got a lot of learnings from Ontario, so we think we're in a much better position going into this launch versus Ontario, but it'll be competitive, right? There are a lot of players that will launch on day one.
“We’re very excited about Alberta.”
