Despite reporting a net loss of $52.3 million in Q1 2022, Rush Street Interactive (RSI) raised its full-year revenue guidance and said it expects to be profitable by the second half of 2023.
The recent launch of online sportsbooks in New York, Louisiana, and Ontario — as well as an online casino in the Canadian province — are certain to help make the Chicago-based company profitable by its stated goal of late next year.
But during an earnings call to discuss Q1 2022 on Thursday, CEO Richard Schwartz indicated that the development of a successful online poker product — with a focus on providing players the best user experience — is also a major component in the drive to profitability.
- Best wagering req’s
- Live dealer games
- Rewarding promotions
Full-Year Guidance Raised
RSI’s earnings call for Q1 2022 comes two months after the company acquired and onboarded the Run It Once Poker (RIO) team, in a cash-and-stock deal valued at $5.8 million. RSI has since been tight-lipped about plans to integrate poker into its platform.
Ironically, RSI discussed the RIO acquisition during a call to discuss Q4 2021 and the full-year 2021.
For its Q1 2022 presentation, RSI raised its full-year revenue guidance to between $600 million and $650 million, up from $580 million to $630 million. The midpoint of the new range represents a 28% year-to-year increase from 2021 revenue ($488 million).
But RSI also needed to report that its net loss in Q1 2022 was wider than the $100k net loss it suffered in the year-ago quarter.
RIO Fits Into Profitability Plans
During the Q&A portion of the call, Schwartz stressed that a player’s experience trumps spending on marketing. “Marketing is necessary to attract players, but long-term players will migrate to those sites that they like the best,” the CEO said.
The discussion then turned to efforts at scaling the user experience. Schwartz said companies should keep those efforts in line with the rest of the competition. “For example, making sure that you have enough scale to invest in the proper data feeds, streaming fees, things of that nature, which we’ve been market-leading on,” he said.
“As long as you’re able to offer players [a better] experience by investing in those things … we think the scale is less relevant than it is, for example, in a poker market, where often the inferior product sometimes wins. That’s because poker is all about liquidity and the number of players you have, whereas in the casino and sportsbook categories it doesn’t work that way.”
Schwartz then said RSI is “very optimistic and excited by continuing to build innovation on the product side.” While he didn’t mention RIO by name, Schwartz was very likely talking about the poker platform and development team RSI recently acquired.
The product development RSI has under way currently “is going to differentiate our user experience so that players have a reason to play with us when they have a choice,” Schwartz said.
The fact that Schwartz mentioned online poker, a product the RSI currently does not offer, during the earnings call shows the vertical is not far from the CEO’s mind. But considering he mentioned poker to answer a question on where he saw opportunities for RSI to increase revenue suggests a future online poker product will be part of the plan to turn a profit by the second half of 2023.
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RSI, RIO Applaud Michigan Joining MSIGA
RSI (and RIO) have also been closely watching developments in Michigan. The state was formally invited to join the Multi-State Internet Gaming Agreement (MSIGA) last month.
Once Michigan officially joins, operators in that state will be able to combine their player pools with those in Delaware, Nevada, and New Jersey.
“RSI and RIO are pleased about the recent developments involving Michigan joining the MSIGA, and we believe more jurisdictions will continue to join the MSIGA over time,” poker professional Phil Galfond, who founded RIO, told Poker Industry PRO last week. “This reaffirms our belief that the US online poker market is poised for future growth.”
