Sports Betting Operator Rush Street Interactive Set to Turn Profitable in 2023

The operator saw revenue soar to $165.5 million during the final quarter of 2022, an impressive 27% year-over-year increase over the $131.1 million it posted in Q4 2021.

Last Updated: Mar 3, 2023 2:05 PM ET Read Time: 4 min
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Online legal sports betting operator Rush Street Interactive has reported that it expects to turn a profit in the second half of 2023.

This makes it the first niche operator to join the top five U.S. sportsbooks — with the notable exception of DraftKings — that have already forecast that they will finally turn the corner towards profitability and post positive adjusted EBITDA results this year.

Rush Street, which operates online sports betting sites BetRivers, PlaySugarHouse, and RushBet sportsbook brands, narrowed its Q4 loss to $9.0 million — a modest 13.6% YoY decrease from the loss of $10.4 million recorded in the same period in 2021.

Furthermore, the operator saw revenue soar to $165.5 million during the final quarter of 2022, an impressive 27% year-over-year increase over the $131.1 million it posted in Q4 2021. RSI also registered full-year revenue of $592.2 million in 2022, a 21% increase from 2021.

"We are proud to report another strong quarter and record results for the year, spurred by 95% annual growth in our Latin American and new North American markets launched after 2020," said RSI CEO Richard Schwartz in the press release announcing the Q4 results. "We expect to achieve positive Adjusted EBITDA for the second half of 2023 and continue to be selective as we prioritize investments in markets with higher returns."

The operator's entry into profit is further proof that the U.S. legal sports betting industry is transitioning from an era of aggressive marketing and promotional spending to one where surviving operators will focus more on the bottom line. 

"Looking forward, we will continue to focus on earning and retaining customer loyalty, by treating them well, being thoughtful, developing seamless experiences, and reducing friction at every possible point," said Schwartz.

Accordingly, niche operators like Rush Street are forced to adapt to the new industry by becoming increasingly cost-conscious with respect to customer acquisition while also exercising greater caution when entering new markets or abandoning unprofitable ones.

Rush Street CEO emphasizes focus on future growth

Despite generally encouraging fourth-quarter and full-year results, RSI still saw its net losses for the year rise to $38.6 million, nearly double the 2021 figure of $19.5 million.

However, Schwartz was keen to point out during the earnings call that the company is poised to see improved earnings performance as a result of a modified approach to launching in new markets like Maryland and Ohio.

"In our newest sports-only states of Maryland and Ohio, we have evolved our approach and invested less in early marketing initiatives relative to our previous sports-only market launches. We expect this level of investment to be reflected in our market share, but we also expect faster recovery of our initial investment in these market launches."

Rush Street doubling down on shift to iCasino

One of the key takeaways from the earnings call was Schwartz's reiteration of previous comments that gave a clear indication that Rush Street is shifting its strategic focus away from online sports betting and devoting more resources towards online casino.

"It remains a simple fact about our business, the online casino vertical is significantly larger and more profitable than sports betting in the markets where we are operating both," said Schwartz during RSI's November Q3 earnings call

BetRivers only holds a significant share of the OSB market in its home state of Illinois where it commands a 12% market share. Meanwhile, Rush Street's combined BetRivers and SugarHouse sportsbooks operations are hovering just above the 4% GGR share level for the U.S. mobile sports wagering market as a whole.

"In terms of the online casino, the industry is aligned in a way that I haven’t seen before and you’re starting to see a lot of investments being made and lobbying efforts to legalize online casinos in a way that you haven’t seen over the last decade," said Schwartz during Wednesday's Q4 earnings call.

Schwartz's response to a question from Jordan Bender of JMP Securities gave an even stronger indication that Rush Street will be putting more of its chips on iCasino rather than OSB looking down the road.

"One thing to remember is [that] in most markets that have both casino and sports, we typically carry three to five times the share in casinos than we do in sports," said Schwartz. "...So we're obviously very excited about the legislation and the movement by the industry to be talking about iCasino a lot more."

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