The Q1 earnings report from Rush Street Gaming and Rush Street Interactive show that, like many competitors, the group’s online gambling business is curbing losses and trending closer and closer to profitability.
The numbers were up across both the land-based and online businesses, but as Rush Street Interactive CEO Richard Schwartz noted, full profitability is still a couple of quarters away.
“On the back of these excellent results, we remain on track to achieving our goal of profitability for the second half of this year. We are staying disciplined in our approach and successfully balancing growth and profitability over the long run. Our results continue to show the approach is working well and we remain confident that our focused strategy will reward our shareholders over the long term.”
Here is a look at the top-line numbers from Rush Street Gaming Q1:
Revenue: $162.4 million, up 20.4% YoY
Net loss: $24.5 million, down 53.2% YoY
Adjusted EBITDA loss: $8.7 million, down 20% YoY
Rush Street Interactive net losses: $7.3 million, down 50.6% YoY
Guidance from Rush Street suggests the company will pull in between $630 million and $700 million across the entire year.
Even though no states will legalize online casino in 2023, the topic was at the forefront of the company’s earnings calls. Schwartz noted that Illinois, Pennsylvania, and New Jersey produce over half of the company’s online revenue. Both Pennsylvania and New Jersey are online casino states. Michigan and Ontario, also online casino markets, are the company’s biggest drivers of growth.
“We would expect the legalization of online casino in new markets to provide an outsized benefit to RSI, given that we often earn 3 to 5x the market share in online casino compared to sports betting in those same states,” Schwartz said.
Schwartz also spoke at length about the company’s decision to exit Connecticut, confirming there was no financial payout from the company or the Connecticut Lottery related to the early termination of the partnership.
“As the Connecticut market and partnership unfolded, it became clear that it was not the right fit for RSI and our capital and resources could be used more efficiently elsewhere,” Schwartz said. “We are very determined to build profitability in a manner that makes sense for our shareholders. Towards that end, we announced a joint agreement to wind down our online and in-person sports betting partnership with the Connecticut Lottery. The lottery has begun an RFP process to pursue a new operator, and we are planning to continue to support that market until that transition happens, likely sometime in the second half of this year.”
Schwartz explained the exit was not a sign the company was going to consolidate its online gambling efforts. However, the company is making deliberate choices about which markets to enter, which is why the company passed on the opportunity in Massachusetts.
States with the potential to add online casino in the near-term are at the top of the list but also noted several other factors, including how fast a state can turn profitable, are factored into the equation.
“We’re not really focusing on market share as a goal because our goal is to recover our investments as fast as we can and to be profitable long term. And so we are only spending we — what we believe we can get a strong return on and we’re staying disciplined and not just marketing for the sake of marketing or trying to grow share in a market like that, but to be able to make sure that when we spend on marketing in a launch situation like Ohio that we are going to be able to get our return quickly,” he said.
In Ohio, Rush Street just ranks in the top ten operators, sandwiched just behind PointsBet and just ahead of Betfred.