Another SPAC Deal Helps Rush Street Interactive Take BetRivers Public

Posted on July 27, 2020

Another US online gaming brand is going public as BetRivers‘ parent company, Rush Street Interactive, will trade on the New York Stock Exchange.

Rush Street confirmed it will be publicly traded under the RSI ticker after it completes its merger with dMY Technology. Bloomberg first reported the likely deal last week.

dMY is a special purpose acquisition company – essentially a blank-check company – that wanted to invest in a mobile-focused business. This means company leadership remains the same with Neil Bluhm as chairman, Greg Carlin as CEO and Richard Schwartz as president.

RSI joins DraftKings, GAN and Golden Nugget as recent online gaming companies to go public in the US.

Not a done deal yet

dMY shareholders still need to approve the deal, which should close this year. Rush Street anticipates more than $235 million in cash and an initial market cap of more than $2 billion once the transaction closes.

RSI anticipates BetRivers to take 4.5% to 7% of US online gambling market share based on Eilers & Krejcik Gaming‘s estimate of $33 billion in annual gross revenue at full penetration. That’s good for $1.5 billion to $2.3 billion in annual revenue, according to the investor presentation.

“RSI has achieved leading online casino and sportsbook market positions by focusing on what players want – a high-quality product, helpful customer service, and transparency and honesty,” Schwartz said. “This transaction will help enhance and broaden our product offerings and attract more players.”

BetRivers expects big revenue growth

Revenue is up significantly so far this year, which has Rush Street calling the business pandemic-resistant.

As sports betting revenue dropped from March forward because of the lack of sports, online casino revenue growth began. The company had $59.7 million in online casino revenue during the second quarter compared to $23.4 million in the first quarter.

Currently, Rush Street’s addressable market is $5 billion in revenue. That includes operations in Colorado, Illinois, Indiana, New Jersey, and Pennsylvania. It also has market-access agreements for Iowa, Michigan, New York, and Virginia, which is another $4.5 billion in estimated revenue.

The company led all other operators as the top US online casino in May with 16.7% of the market, according to estimates. RSI said its monthly average revenue per user is better than $600. That’s compared to the $624 Golden Nugget reported and the $41 from DraftKings in the first quarter.

RSI projects long-term financial targets of $1.5 billion to $2 billion in revenue and $368 million to $500 million in EBITDA.

Hitting records in current operations

RSI’s online gaming revenue is already at more than $100 million through July 4.

The company generated a record $2.2 billion in handle from online gaming and betting during the second quarter. That translated to $64 million in revenue. Those both topped records of $1.2 billion in handle and $37 million in revenue hit in the first quarter.

The company forecasts $226 million in revenue this year, up big from last year’s $63.3 million. That includes $9 million in EBITDA, a positive turn from last year’s $9.4 million loss.

Funds will fuel BetRivers expansion

RSI expects revenue to grow at a compound annual rate of 65% through 2024 starting with last year’s results. The cash from the public listing will help fund some growth initiatives to help hit that goal.

There were four specific key growth drivers listed:

  • Launching in new markets: This includes international markets as well as more US jurisdictions. Along with its US operations, RSI currently operates sports betting and online casino in Colombia.
  • Product development: Specifically, RSI expects to launch a new iOS sportsbook app in the second half of 2020.
  • Scaling operations and marketing budget: RSI noted it’s already doing better than Golden Nugget when it comes to marketing spending. Customers were worth 2.7 times their acquisition costs over one year, which is 23% better than Golden Nugget announced in its recent presentation.
  • Tuck-in acquisitions: This could include additional operators in untapped markets or content creators, like an online gaming content developer.

Busy week in the news for Rivers

Rumors surfaced last week that Rush Street would make exactly this move. The company remained in the news later in the week as well in its home state.

With word from Springfield that Gov. J.B. Pritzker would end his moratorium on in-person sports betting signups, Rivers essentially locked down the mobile Ilinois sports betting market for the time being. The abrupt change of plans cuts off DraftKings and other operators who planned to launch as soon as this week.

Rush Street has feuded with DraftKings and FanDuel for a number of years in Illinois.

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Matthew Waters

Matthew Waters is a reporter covering legal sports betting and the gambling industry. Previous stops include Fantini Research and various freelance jobs covering professional and amateur sports in Delaware and the Philadelphia area.

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