Rush Street Interactive stock jumped nearly 18% after the BetRivers parent produced its second straight quarter of strong results.
The positive market reaction followed a second quarter BetRivers earnings report that saw Rush Street raise its guidance for the second time this year.
“Looking back over the past 12 months, our results have been a clear sign to us that our approach is working,” CEO Richard Schwartz said on Wednesday evening’s call. “We have consistently exceeded expectations and this quarter is no exception.”
New guidance for BetRivers
Rush Street now expects adjusted EBITDA of $68 million at the midpoint of the new range. That is up 23.6% from the previous guidance midpoint of $55 million and a significant step up from the $8.2 million made in all of 2023.
That will come from an expected $880 million in revenue at the midpoint, a 5.4% increase from prior guidance.
CFO Kyle Sauers pointed out that the EBITDA raise was coming despite the higher Illinois tax rate and costs associated with launching in Peru.
Customer growth despite lower costs
Rush Street reported a 24% increase in monthly actives in the US and Canada to 164,000. Latin America, which includes Mexico, saw a 79% increase to 288,000.
The company is benefiting, as other operators are, from a less intense promotional market across sports-only, and sports and iGaming markets. Despite the growth in customers, advertising and promo expenses fell 10% to $36.3 million for the quarter.
The customer growth led to a slight contraction in revenue per monthly active user in Latin America, dropping to $37 from $38 last year. Those US and Canadian actives, however, saw average revenue up 6% to $380.
The Copa America and Euros soccer tournaments helped boost new customer growth in Latin America, Schwartz said. The Olympics offer a similar opportunity in the US and Canada, he added.
Promos, prop hub drives volume
Rush Street said it saw “material growth” from its Basketball Squares promo on NBA bets.
Qualifying bets on basketball games get bettors a random square entry at no additional cost. That helped drive same game parlay bets up 55% in the quarter.
The new Prop Central section of the sportsbook led to a 70% jump in MLB player prop bets. It is also bringing new customers into the world of prop betting with a nearly 50% increase in unique bettors placing an MLB prop bet.
BetRivers expects another DE push
Schwartz expects to face another expansion battle in Delaware after this year’s effort failed. Rush Street bid for and won an exclusive license that other operators passed on, which Schwartz noted in the call.
“Certainly, our success has caught the attention of others in our industry, who chose to bypass the Delaware RFPs over a year ago,” he said.
Schwartz is bullish on what the first NFL betting season with online wagering and a much improved iGaming offering will look like, especially after adding live dealer games.
“The bottom line is that if we continue to perform in the way we have and the way we believe we will in the future, it makes it that much more compelling for the same structure to remain in place for the future,” Schwartz said.
IL changes bode well for BetRivers
The higher graduated tax system in Illinois “probably bodes well” for “less aggressive” sportsbooks, Schwartz said.
July marked the beginning of increased Illinois sports betting taxes, setting the highest rate at 40%. Rush Street expects an annual impact of under $2 million from the change.
“You can imagine that there will be a change of effort and investment made in the state because of that, and therefore, I think the competitive intensity will decline,” Schwartz said.
Sticking with casino-first markets
Schwartz does not expect BetRivers to enter any other sports-only markets anytime soon.
Rush Street always looks at the markets it is not in, but likes where it is right now, he added. Nine out of 19 global markets include online casino.
“So while it’s possible, we are getting much better in sports constantly, Schwartz said. “Our product’s improving, our user experience is improving. We’re bringing some innovation to the market in the last year that have worked really well.
“We have some additional ones we’re working on for later this year. So I think it’s never something we don’t consider, but I would say that we’re really glad that we are growing in the way that we are in all of our markets.”
OK with outsourced sportsbook tech
Rush Street owns a lot of its own technology, like its rewards program and its player account management system.
Sportsbook is the only product that relies heavily on an outside vendor (Kambi) but Schwartz is OK with that, given how Rush Street personalizes the platform.
“The only thing we haven’t brought in-house is sportsbook platform, which we integrate through Kambi for many years,” Schwartz said. “As I’ve shared previously, it’s probably been a while, our philosophy on that relationship is that we like to sort of get the bread and butter from Kambi, but we have a development team internally that adds our own flavor, our own twists, our own innovations on top of the sportsbook.
“So we get the benefit, I think, of a core, fundamentally strong core technology, and we differentiate by building our own features on top of it, which are things like the squares have worked and the player props things we did last year that really worked well as well, we have some new ones under development.”
