Rush Street Interactive (RSI) might not be interested in launching either its BetRivers or PlaySugarHouse brands in California, even if voters approve a ballot initiative to allow sports betting in CA this November, due to the high costs of doing business in the state.
Analysts with JMP Securities reportedly met recently with “key RSI management,” according to a report released last week by Earnings + More.
Seven gaming operators — led by BetMGM, DraftKings, and FanDuel — are urging voters to support the California Solutions to Homelessness and Mental Health Support Act, which would require operators to partner with a tribal casino for online and retail sports betting.
But the proposal calls for levying an initial fee of $100 million for a five-year license, while a five-year renewal would cost $10 million. JMP said RSI executives at the meeting appeared to balk at the expense.
The $100 million license fee “might not garner the return necessary to justify operating in the state,” JMP analysts said. “If the economics do not work, we expect RSI to focus on its existing, igaming-focused footprint.”
RSI is currently live in 13 US states, including West Virginia, which is the only state in its portfolio with just an online casino deployed — BetRivers Casino WV launched in April 2021.
The company operates online casinos in four states and sports betting in 12, all of which have online sportsbooks available to players. RSI also operates retail sportsbooks in six states — Connecticut, Illinois, Indiana, Michigan, New York, and Pennsylvania.
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RSI Hasn’t Chipped In Towards the Cause
The reluctance of RSI to enter California comes as a bit of a surprise considering that CA is, by far, the most significant potential market for sports betting — regardless of whether voters approve the industry-backed initiative or a rival one backed by a coalition of tribes, the Tribal Sports Wagering Act.
Although RSI reportedly supports the industry’s plan, it doesn’t appear to have paid any money in the fight to get it across the finish line in November.
Bally’s, Barstool, Fanatics, and WynnBET have each contributed $12.5 million to the cause, according to the office of California Secretary of State Shirley Weber. Meanwhile, BetMGM, DraftKings, and FanDuel have each contributed $16.7 million, creating a war chest of $100 million.
Critics of the industry-backed initiative say the fees for entering the California market are cost-prohibitive and will effectively lock out smaller operators that can’t afford the initial cost. That could negatively affect consumer choices and the quality of the sports betting products available to players in the state.
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CEO: RSI “Evaluating Different Strategies” for CA
Richard Schwartz, CEO and Co-Founder of RSI, said in a Global Gaming Business (GGB) podcast last fall that RSI was not actively involved in either of the sports betting ballot initiatives in California.
“We have a very well-established government affairs team that is very involved in all aspects of lobbying around the country,” Schwartz told GGB’s Roger Gros on the sidelines of the Global Gaming Summit in Las Vegas. “At the current time, though, we’re evaluating different strategies for that market.
“We haven’t committed to any strategy. There’s a lot of dynamic parts moving there. It’s for us to kind of evaluate and assess each opportunity and be very careful and cautious in what we do before we commit to a strategy. Right now, we’re sort of neutral.”
