Although many mobile gaming firms are eyeing the recent crop of sports prediction models as potential competition and reducing their revenues, Rush Street Interactive is taking the opposite approach, pointing to it propping up iCasino markets for budget-starved states.
Out-of-the-Box Thinking
Chicago-based Rush Street Interactive (RSI) is the parent company of mobile gaming company BetRivers. And although BetRivers has an active mobile sports gaming presence in 15 US states, the more lucrative form of mobile gaming comes in the form of online casino gambling, also known as iGaming, which it has launched in Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia, as well as in Ontario, Canada.
Prediction Models Could Boost the Case for iGaming
In a recent second-quarter earnings call, RSI CEO Richard Schwartz said he believes his company considers sports prediction models as a boon to his company and not the bane that many mobile sports betting platforms have perceived.
In other words, the sports prediction models may be better suited to picking winners than the average human, and if that market takes off, more bettors will have access to that information, thus more winning wagers, and the sportsbooks’ bottom line will decrease.
“I would say that for us in particular, it doesn’t have the same risk as the others,” Schwartz said on last week’s earnings call. “To the contrary, if prediction markets increase the chances of tax dollar erosion for states that have legal online sports betting, I think a very real possibility is that it could accelerate the legalization of iCasino, which doesn’t have the same level of risk. So, it provides a more protected category for states who want to have some meaningful revenue upside for the taxes for their state.
“So, I think it could work out well for us ultimately in the sense that our top priority is legalizing additional iCasino states and opportunities for online casino legalization. And I think this could give a nod towards that being another reason why states should do it.”
RSI War Chest
RSI continues to show a strong balance sheet, as evidenced by its $241 million at the end of the quarter and no outstanding debt. The company does intend to buy back the shares of its company using $42 million of that money, but that leaves about $200 million to invest.
RSI CFO Kyle Sauers said, “I think the biggest opportunity for us in the use of cash is when we have new markets open up, particularly iCasino-led markets. And certainly, if we have more than one of those happening at the same time, we want to make sure we’ve got plenty of capital to invest because we know that returns are really, really strong. We’ve seen that time and again when we’ve launched iCasino markets. So that’s a real need for us, to make sure we’ve got dry powder available.”
Schwartz echoed those sentiments, stating, “And I think, as Kyle indicated, we have a lot of emerging opportunities. I think in the future they are going to exist for iCasino, and we want to make sure we’re properly able to invest the maximum we need to kind of achieve the shares that we know is possible given the quality of our experience.”
