Rush Street Interactive raised its annual guidance after a record quarter including iGaming share growth for BetRivers and a successful World Cup.
RSI now projects guidance midpoints of $255 million of adjusted EBITDA on $1.58 billion in revenue after posting the best quarterly revenue growth in over four years, CEO Richard Schwartz said on Wednesday‘s earnings call.
“Our results this quarter reflect the continued strength of our casino-first strategy, disciplined execution across operating regions, alongside a well-planned and strongly executed World Cup period,” he added.
Despite the positive report, shares for BetRivers‘ parent company were down around 10% at 11 am Eastern Thursday.
BetRivers starts strong in Alberta
Alberta online casinos have only been live for two-and-a-half weeks, but the early metrics all read positively for RSI.
First-time depositors and daily active users are about double the levels seen in Ontario at this point on a population-adjusted basis. Ontario’s population is around three times larger.
The launch went so well that RSI is expecting to spend an additional $7 million to $10 million in marketing during the third quarter compared to the second quarter, CFO Kyle Sauers said.
Customer acquisition costs declining for BetRivers
BetRivers continues to find new customers with good player values while spending less on each acquisition, Sauers said.
“I think the reality is that our cost to acquire players has continued to go down,” he said. “Most of our spend in North America has been in the markets that include iCasino. And a lot of that is slots-first type creative. Obviously, we welcome all kinds of players, and we’re catering to table players as well. And clearly, we’re still doing quite well in sports, but most of it is casino first and the cost to acquire players has continued to go down. And the player values continue to hold up as well.”
“So it’s the primary reason that we’re going to be spending more in the back half because there’s a lot of opportunity there.”
Marketing costs rose 34% compared to last year, though it represented a smaller share of revenue at 12.3% compared to 13.4%.
“In fact, because our efficiency continues to improve, even as we have been scaling up, we now expect to spend more on marketing than previously planned in the second half,” Sauers said. “As we’ve always said, when we find strong ROI opportunities, we will increase our marketing spend.”
World Cup floods customer funnel
Schwartz praised the entire team for the successful World Cup, noting the “incredible effort and execution” that spanned across the company from marketing to technology.
North American monthly active users jumped 51% to more than 296,000, with online casino customers up 64%. In Latin America, which includes RSI’s Mexican business, monthly active users surged 62% to more than 652,000.
Perhaps the most important customer stat is that more than 25% of new first-time depositors that signed up during the World Cup have played on RSI’s online casino product as well.
“This is about 50% higher than what we saw during the Copa America two years ago,” Schwartz said. “So this is an encouraging sign and validating that the work we’ve put into improving the cross-sell flows have delivered positive results.”
Record hold in Q2
As for the results, handle and hold “came in very nicely” for the World Cup games in June. The tournament and the NBA playoffs led to the highest quarterly sports hold RSI has ever had.
That is from real improvement in the product offering and not just good luck, Schwartz said.
“This wasn’t just good outcomes – it’s a reflection of an improving product and improving mix of parlays and prop bets that drive higher hold,” he added.
Federal cuts could drive iGaming legalziation
When asked about the future of online casinos in the US, Schwartz named some of the states that have been floating around as possibilities – D.C., Indiana, Ohio, Virginia – but also called out two pretty significant long shots that might be getting closer to reality.
“I think one of the key drivers is going to certainly be that reduction in federal support and some increased fiscal responsibilities for states over the next two fiscal years,” Schwartz said. “It’s going to create even more pressure on funding gaps that we think some reductions in major social programs in many states, including some of the very large population states like Illinois and New York, are going to create opportunities for a greater emphasis on new and sustainable sources of recurring revenue.
“So we believe that’s going to drive the discussion around proven revenue-generating policy proposals like online casino legalization.”
Predictions application for flexibility
RSI submitted an application to offer prediction markets, but would rather stay out.
“As we have stated previously, 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. “However, the prediction market landscape is highly dynamic, and we will continue to monitor developments in this space. And this filing ensures we have the flexibility to navigate all possible outcomes.”
