DraftKings Considering RSI: Rush Street on the Market?
RSI Stock Rises After Bloomberg Report Surfaces
According to Bloomberg, Rush Street Interactive, the parent company of BetRivers sportsbook and iGaming, is on the open market. RSI has pitched itself to potential buyers, with DraftKings being one of them. Neither company has publicly commented on the matter. It makes sense for DraftKings to consider RSI as a possible target. Rush Street Interactive’s Rush Bet is a big-time player in the iGaming world. DraftKings is looking to branch out and spent nearly $750 million last month purchasing the Jackpocket digital lottery app.
Rush Street Interactive stock climbed 3.4% after the Bloomberg report came out. It opened Wednesday at $6.45 per share but still has a ways to go to reach its 52-week high of $7.31. It is up significantly from its 52-week low of $2.77 per share. DraftKings also saw a slight climb in stock price after the Bloomberg report surfaced, climbing nearly 3%.
One main reason DraftKings considering RSI makes sense from a business standpoint is due to the customer base. Rush Street Interactive is considered more of an iGaming company as opposed to a sports betting company. While RSI offers BetRivers sports betting to customers, it’s designed to attract sports bettors and online casino players. Gamblers who bet both sports and casino games bring the operators up to 14 times the revenue as a player who just bets sports. Those are the customers all online gambling operators are looking for. It’s not just DraftKings looking to add those customers to its base.
DraftKings bought Golden Nugget Online Gaming for $1.56 billion in stock in 2021. Rush Street Interactive and Golden Nugget Online Gaming share a number of similar traits as it pertains to iGaming.
Rush Street Interactive Revenue Climbing
RSI was founded in 2012 and is based in Chicago. The company reported its fourth-quarter 2023 revenue earlier this month at $193.9 million, which was up 17% from 2022’s fourth-quarter revenue of $165.5. Rush Street Interactive still posted a loss of $5.5 million, although that’s much better than the previous year when losses were $31.1 million. The biggest positive for RSI was the fourth-quarter Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization. RSI reported an Adjusted EBITDA of $11.5 million compared to an Adjusted EBITDA loss of $17.3 million the previous year.
“We concluded 2023 with a fourth quarter that produced records in both revenues and adjusted EBITDA,” RSI CEO Richard Schwartz said when the financial numbers were released. “For the year, we grew revenue to $691 million on strong customer engagement and retention. At the same time, we improved our Adjusted EBITDA by $100 million compared to the prior year. These results and the ensuing momentum have carried into strong guidance for the new year, reflecting our longstanding customer-centric principles and obsession with developing innovative and differentiated user experiences.”
Few people would be surprised if DraftKings considering RSI for a potential acquisition turns out to be true. Right now, nobody knows anything definitive, which is how DraftKings wants it. A spokesperson from DraftKings told Bloomberg the company speaks to a number of different companies in the normal course of business and, “it is our general policy not to comment on the specifics of any of those discussions.”
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