Rush Street Interactive Revenue Up 57%, Hits $122.9 Million in Q3

Owner of BetRivers and PlaySugarHouse brands spent $45.5 million on adverts and promos to help launches in Arizona and Connecticut.
Rush Street Interactive Revenue Up 57%, Hits $122.9 Million in Q3
By
November 17, 2021

Rush Street Interactive (RSI) ramped up spending on advertising and promotions in the third quarter to help nail down the rollout of sportsbooks in Arizona and Connecticut in October, under the BetRivers and PlaySugarHouse brands, respectively. It also launched its free CASINO4FUN social gaming platform in Ontario during the quarter.

The Chicago-based operator – which reported $122.9 million in revenue for Q3 2021, a 57% increase year-to-year – said success in those markets bodes well for its plans to expand into more states and further into Ontario in the near future.

“There will be plenty of new markets to invest in upcoming quarters, which will put us in investment mode for the time being,” CEO Richard Schwartz said during an earnings call last week to discuss Q3. “We are proud of our ability to remain disciplined and calculated in the way we invest and ultimately generate substantial profitability from markets as they mature.”

RSI is currently live in 11 states for sports betting and has secured market access in another 10, plus Ontario. Its online casino product is live in five states, but the operator has market access in 13 more, as well as Ontario.

The eight states where RSI has secured market access in both verticals are Louisiana, Maryland, Mississippi, Missouri, New Mexico, New York, Ohio and Wyoming. RSI is also live with retail sports betting in six states, with market access secured in Virginia, too.

“In the next six months, we’re going to enter Ontario, New York, Maryland and Louisiana,” Schwartz said. “A lot of growth is ahead for us.”

By the numbers

RSI reported a net loss of $18.9 million in Q3 2021, an improvement over the year-ago quarter, when it posted a net loss of $26.5 million. But under a different metric, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), RSI recorded a loss of $12.2 million in Q3 2021, compared to a loss of just $997k in the year-ago quarter.

Adjusted advertising and promotions costs were $45.5 million in Q3 2021, or 37% of the $122.9 million in revenue for the quarter. That figure is significantly higher than the year-ago quarter, when RSI spent $17.5 million on advertising and promos and had $78.2 million in revenue – creating a rate of 22%.

Schwartz said in a recent interview that operators should focus on building their own layer of content to attract players for the long term, rather than rely on gimmick bonuses for a short-term gain in market share.

But CFO Kyler Sauers’ commentary during the call shows there is a fine distinction.

“As you know, there’s an investment early in market launches and promotions, really before any real revenue starts to be generated,” Sauers told analysts listening to the call. “That’s probably a significant factor in either direction on the fourth quarter.”

It was also a significant factor for RSI to raise its full-year guidance to a range of $480 million to $500 million, up from $465 million to $495 million. Sauers said that if RSI’s revenue hits the top end of its full-year guidance, the operator will be the fourth-largest in the US.

“We expect marketing investments to increase meaningfully in the fourth quarter,” said Sauers. “Depending on launch time in other markets, we could have further investments in the fourth quarter or heavier into the beginning of next year.”

When asked during the Q&A portion of the call when RSI expects to become profitable, Sauers replied that the operator is “already operating profitably in quite a few markets.

“It’s going to depend largely on the pace and timing of rollout of new markets, sports and casino, and what the competitive situation looks like in those markets. We have competitors that are behaving in different ways in different markets, but it’s definitely competitive at this point, both in terms of promotions that are offered and outright marketing dollars that are being put to work.”

RSI’s earnings presentation included a slide that showed increases in the number of its average monthly active users (MAUs) but did not include values. The operator said MAUs grew sequentially and 26% year-to-year. MAUs hovered near 100,000 in Q3 2021 but were definitively less than 60,000 in the year-ago quarter.

Meanwhile, RSI said its average revenue per MAU was $320 in Q3, up slightly from $377 in Q2.

A busy quarter topped off by NY

It was a busy third quarter for RSI.

Besides the sportsbook rollouts in Arizona and Connecticut, RSI entered into a partnership with the Field of 68 and Field of 12 media networks for college basketball and football in Q3. The company also launched CityCast sports podcasts in Chicago, Denver, Detroit, New York, Philadelphia and Pittsburgh.

“These shows hosted by former college football and basketball stars offer our players unique insights into betting and college sports,” said Schwartz of the Field partnerships. On CityCast, the CEO said “stay tuned for upcoming launches and many more cities in the future. This is an effective way to use local talent – talking about local hometown teams – to engage players and enhance loyalty. We know many bettors prefer to bet on their local teams.”

RSI also launched its RushArena multiplayer tournament engine during Q3 and was one of nine operators to be recommended for a mobile sports wagering license in New York.

“We’re definitely confident in our ability to generate profits in New York,” Sauers said. “We think it’s a market where competitors likely will be less aggressive with both marketing and promotions, certainly over the longer term.”

Schwartz added that RSI would leverage some of its customer database in neighboring Connecticut to help build its customer base in New York. It also plans to tap into the database from its retail sportsbook at Rivers Casino & Resort Schenectady.

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