Rush Street Interactive is taking a “flexible” approach to prediction markets, seeking federal authorization that could support a future product without committing the online gaming company to the increasingly competitive sports event-contract business.
- Rush Street Interactive applied for a CFTC designated contract market license to preserve flexibility, not to signal an immediate prediction-market launch.
- Executives said prediction markets have not materially affected sportsbook revenue or handle, though they acknowledged limited visibility.
- RSI remains focused on online casino gaming while competitors expand into prediction markets.
CEO Richard Schwartz reaffirmed the company’s prediction market application during Rush Street’s second-quarter earnings call Wednesday. Commodity Futures Trading Commission approval of the company’s designated contract market license, applied for earlier this year, would enable RSI to operate a federally regulated exchange capable of listing event contracts.
Still, Schwartz said the filing is intended to preserve strategic flexibility rather than signal an imminent product launch.
“We do view the application as a way to preserve our strategic flexibility, to maintain optionality,” Schwartz said. “It’s really just being prepared and preserving optionality.”
RSI’s restrained approach to sports prediction markets reflects a business model that remains centered on online casino gaming. Online casino generated 72% of the company’s second-quarter revenue, while sports betting accounted for most of the remaining 28%.
RSI reported $393.8 million in second-quarter revenue, a 46% year-over-year increase, along with $64.6 million in adjusted EBITDA. The company also said it has continued gaining online casino market share in North America.
“We continue to operate with a casino-first focus and do not intend to lean into the crowded sports-focused prediction market space,” Schwartz said.
Sports betting impact muted
Executives said they have not seen evidence that prediction markets are materially cutting into RSI’s sportsbook handle or revenue.
Schwartz said RSI does not believe prediction markets have materially affected customer wallets, though he acknowledged it is difficult to measure with certainty. When asked by analysts during Wednesday's call, chief financial officer Kyle Sauers similarly said the company has not identified significant changes in individual sports, including tennis, where event-contract platforms have reportedly generated substantial volume.
Sauers said RSI may be less exposed than sportsbook competitors because it is not investing heavily in customer acquisition in sports-only states. He added that roughly half or more of RSI’s sports revenue comes from Latin America, placing that business outside the primary U.S. prediction market battleground.
“The answer is no, we haven’t seen that impact,” Sauers said. “But it’s also true that we probably don’t have perfect visibility into it.”
Schwartz said prediction markets may also appeal more heavily to sharp sports bettors, a segment RSI does not specifically target.
RSI’s plan to increase marketing spending by approximately $7 million to $10 million sequentially in the third quarter is also unrelated to prediction markets, according to Sauers. He said “zero” of the increase is a reaction to competitors’ spending or an attempt to match prediction-market promotions.
Competitors move more aggressively
RSI’s wait-and-see position contrasts with several major competitors that have made event contracts part of their U.S. growth strategies.
DraftKings launched DraftKings Predictions as a standalone platform and has since filed sports event-contract templates through its federally regulated DKeX exchange. FanDuel launched FanDuel Predicts with CME Group before expanding its sports and entertainment offerings through Crypto.com’s derivatives exchange.
Fanatics has also moved to strengthen its position. The company earlier this month announced plans to acquire a designated contract market and derivatives clearing organization, giving it infrastructure to operate a prediction-market exchange.
Courts could determine RSI’s next move
RSI’s flexible approach comes as the legal boundaries around prediction markets remain unresolved.
Kalshi secured a significant victory in April when the Third Circuit Court of Appeals found that the company had demonstrated a reasonable likelihood of proving the Commodity Exchange Act preempts New Jersey gambling laws. The ruling marked the first federal appellate decision addressing state authority over sports contracts offered through a CFTC-regulated exchange.
Other disputes remain active in federal courts, including cases connected to Nevada and additional state enforcement efforts. Conflicting appellate decisions could eventually push the underlying state-versus-federal authority question to the U.S. Supreme Court.
Multiple states have also pursued prediction market regulations, including a ban bill in Minnesota that was stayed by a judge before it could take effect. If states ultimately prevail in those legal challenges, prediction market operators could face additional licensing and compliance hurdles across multiple jurisdictions.
Until the courts or Congress provide greater clarity, RSI wants the ability to respond without changing its immediate priorities.
“This filing ensures we have the flexibility to navigate all possible outcomes,” Schwartz said.
