Rush Street Touts Marketing Efficiency As BetRivers Fights For US Share

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Executives at BetRivers parent RSI praised its disciplined marketing and online casino mix for its spot as a top operator in the US.

Rush Street Interactive laid out its expectations for 2022 earlier this month, which include launching in Ontario and Mexico while continuing to ramp up new US sports betting states like New York and Louisiana.

RSI reported $488.1 million in revenue for 2021, up 75% from 2020. The company is not yet profitable, though, with an adjusted EBITDA loss of $65.1 million spurred by ad and promo expenses of $186.9 million. Those expenses more than tripled the $56.5 million spent in 2020.

Profitability is not in the cards for the full company this year but some states should be contribution-positive, execs said. RSI expects revenue of $580 million to $630 million for 2022. Investors were less than thrilled, it seemed, as the stock was down more than 20% in early trading following the report.

BetRivers, PlaySugarHouse combine for fourth in Q4

RSI’s BetRivers and PlaySugarHouse brands accounted for 10.5% online casino market share and 4.5% online sports betting market share in the fourth quarter when measured by GGR.

That makes the operator among the best in the US, CEO Richard Schwartz said.

It was clear BetRivers was not trying to hang with the big boys when it launched mobile NY sports betting alongside Caesars, DraftKings and FanDuel. The brand offered a fraction of free play that the others did which led to just a 1.9% handle share through the first two weeks.

Measured marketing means focusing on right players

That is all part of the plan in New York, Schwartz said.

“There is a lot of frost reflected in the early results from the state and the early results are following the promotional spend. Similar to RSI’s other state launches, we’ve been more measured with our promotional offerings and expect to earn market share over time as the high-quality customers we target enjoy the experience we bring to them.”

Even with limited promo spend in New York, the market will be a negative drag on revenue in the quarter, CFO Kyle Sauers said. Ontario and Mexico should turn positive faster than New York because those markets have lower tax rates and include online casino, he added.

RSI promos significantly lower than the rest of the market, it estimates. In Pennsylvania, promo credits as a percentage of online gross betting revenue were 29.6% for RSI and 37.3% for the rest of the market.

Increased Q4 marketing paying off

RSI did bump up its marketing in the fourth quarter during NFL betting season. That led to higher costs per acquisition, but it is already paying off, Schwartz said.

The increased marketing in the quarter helped reach a wider audience during the “most intense sports season of the year,” Schwartz said. But the increased brand awareness is already bearing fruit in the first quarter with cost per acquisition down to “significantly lower” levels.

Monthly active users are up 27% from where RSI was in the fourth quarter, Schwartz said.

RSI profitable this year … without newer states

RSI would be a profitable company in 2022 if it paused new state launches after the first half of 2021, Schwartz said. That means stripping out Arizona, Connecticut, Louisiana and New York, all of which launched in October or later.

That shows a path to profitability in live markets, and that massive marketing is not needed to achieve it, Schwartz said.

Sauers would not give any specifics beyond 2022 but said there is a “real good opportunity” to show profitability in 2023.

Could BetRivers and Yahoo Sports combine?

RSI is at least considering a potential combination with Yahoo Sports, Schwartz said.

CNBC reported Apollo Global is in early talks with sportsbooks to merge with Yahoo Sports.

“So, I think anytime you have a media partner asset that could help you drive traffic and have some brand awareness in the marketplace is something that is important for us to consider,” Schwartz said. “We consider all opportunities, all companies that maybe have opportunities, so that’s certainly something that is worth companies like us and others taking a look at. Because certainly they’ve been in the business for a long time and have some great assets.”

Wither RSI in Illinois with remote registration?

Remote registration is up and running for Illinois sportsbooks, whichwere stuck with in-person registration since last April.

That will increase competition in the state without a doubt, Schwartz said. Along with increased marketing, there could be a wave of new entrants starting with BetMGM, which waited until remote registration returned to launch.

BetRivers has a strong local brand in Illinois, though, which Schwartz expects will help the company continue to do well despite the competition.