Rush Street Interactive sees a path toward profitability in the second half of 2023 and it includes a further commitment for BetRivers away from chasing market share.
Despite missing revenue projections in Q3 by 6% and lowering full-year revenue guidance from between $600 million and $630 million to between $580 million and $600 million, RSI executives are still optimistic they have the right plan to achieve profitability in the online gaming industry, according to executives during its earnings call last Wednesday.
RSI shares hit a five-week peak of $4.55 Wednesday following the call before dipping to $3.74 at market close Friday, well below the 52-week high of $21.70. CEO Richard Schwartz and team are optimistic about the future of RSI and its app, BetRivers. Here are the main reasons why:
BetRivers doubles down on iCasino markets
Rather than join the market-share rat race, RSI is focusing on maximizing revenues from loyal customers in specific markets with what they believe is better marketing efficiency. Schwartz said BetRivers was profitable in five US sports betting markets, all of which are more profitable iCasino states except for its home market of Illinois.
“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,” Schwartz said. “This is why our business model, including our platform design, functionality and our approach to marketing and operations is driven first and foremost by our deep understanding of digital casino customers.”
BetRivers holds approximately 4.4% market share in states where data is broken down by operator. That includes Illinois, where it has approximately 12% market share. The five profitable markets:
More iCasino markets coming?
Chief Financial Officer Kyle Sauers said they expect to spend more on casino opportunities during the fourth quarter this year. RSI executives expect some of those markets, like Michigan, will continue to grow. They also believe multiple states could legalize iCasino in 2023:
BetRivers revenue up, losses down
Overall, RSI posted year-over-year revenue growth of 20% for the quarter, up to $148 million.
That resulted in an EBITDA loss of $12.5 million, “a considerable improvement” from a $18.6 million loss in the second quarter, according to Schwartz.
In BetRivers’ nine sportsbook-only markets, the company posted an aggregate loss of less than $5 million. Schwartz said he believes sports betting-only markets can be profitable, with “many headed in that direction.”
Focus on key customers
In talking about new markets like Ohio and Maryland, Schwartz said the operator continues to refine its overall marketing approach. Compared to the same quarter last year, RSI’s cost-per-player is down 50%, he said.
“Our approach remains data-driven as we are investing in customers at what we believe to be viable levels,” Schwartz said. “In other words, we look hard at what we spend and what we get. We won’t target market share.”
In the fourth quarter, Schwartz said marketing allocation has moved toward casino markets. That includes New Jersey, where the company rebranded PlaySugarHouse to BetRivers.
BetRivers progresses in Ontario
Schwartz said Ontario having both online sports betting and iCasino bodes well for BetRivers.
Through the first two quarters of action in Ontario, BetRivers’ market share is approximately 7% for iCasino and 2% for sports betting, according to Schwartz.
“Given the number of competitors in the market and the advantage some of our competitors began with in terms of existing high brand awareness and access to line player databases, we are pleased with the success and hope to continue to build upon that in the quarters to come,” he said.
Expanding bet menus
Schwartz also highlighted expanded bet menus that launched with the NFL betting and NBA betting seasons. That includes single-game parlays in basketball for the first time and new player props.
He hopes there is a Super Bowl betting bump with a new “patent pending squares game.”
“Even if you’ve never placed a sports bet in your life, you’ve probably participated in a squares pool game in conjunction with watching the Super Bowl,” he said. “We talk all the time about how we find ways to delight players and give them unique ways to engage, win and have fun with our platform. Players will be awarded squares based on their actives and bets and will win prizes when their numbers hit.”
More investments coming from RSI?
Rush Street executives seem bullish on their opportunities for the future as they further refine their plans.
“We have almost $200 million of cash on the balance sheets, no debt and very little in the way of long-term marketing commitments,” Sauers said. “This gives us significant flexibility to make investments where we see the best returns and pull back where we don’t.
“All this gives us a continued clear path to profitability at a market level and from an overall business perspective.”