On Rush Street Interactive’s Q2 2024 earnings call on Wednesday, CEO Richard Schwartz confirmed that the company is pulling back on its affiliate deals in several states.
Gambling 911 had reported that Rush Street sent an email to affiliates on Tuesday informing them that the Rush Affiliate Program would be shut down in some states as of Sept. 1.
“Accordingly, this email shall serve as notice to you that your agreement to participate in the Rush Affiliate Program will be terminated as of 11:59 pm ET on Aug. 31, 2024,” read the message. “Please ensure that any and all BetRivers advertising, tracking URLs, affiliate codes or similar items to these jurisdictions are completely removed by this time.”
The email reportedly listed eight affected states but did not include major markets such as New York, New Jersey and Michigan, RSI’s stronghold Pennsylvania or its monopoly state Delaware.
CEO Schwartz confirmed affiliate spending cuts
Schwartz addressed the reports directly on Wednesday’s call.
“There were some recent articles about us that recently came out where we decided to pull back some affiliate spend in some markets,” he told investors and analysts. “The reason why we did that is ultimately we want to have the flexibility to spend more with affiliates in other markets, make sure we focus on the markets where we get the best ROI.
“And secondly, there are other channels in the markets where we may have pulled back that we see opportunities to do other types of channels to acquire customers. So we’re constantly looking at the data and evaluating the right opportunities to deliver the best ROI for us in those markets.”
CFO Kyle Saunders added that RSI has cut ties with affiliates in specific markets to facilitate spending more on affiliates in other markets and channels.
Schwartz also highlighted that RSI has seen 50% growth in nine of its 19 markets. Notably, nine of those 19 markets offer online casino play.
RSI sets another quarterly record
RSI’s Q2 2024 results posted a quarterly profit of $220 million, a 34% year-over-year rise. Revenue ticked up 1.2% from Q1 and adjusted EBITDA grew to a record $21.4 million, up $20 million from the same quarter in 2023.
Schwartz said on the earnings call that the new quarterly record revenue and adjusted EBITDA is “a clear sign to us that our approach is working… we have consistently exceeded expectations and this quarter is no exception.”
In particular, RSI saw a 40% YoY increase in Q2 iGaming revenue and BetRivers Sportsbook enjoyed a 25% spike in profits. RSI’s monthly average users grew 24% across all U.S. and Canada markets, the sixth consecutive quarter of North American growth.
RSI credited the improved EBITDA to lower marketing costs to acquire new customers, as unique player acquisitions rose 50%. It put the sports betting uptick down to innovations such as a new same-game parlay product and a prop central feature. NBA SGP wagers jumped 55% yearly and MLB player props rose 70%.
Rush Street pleased with growth elsewhere in US
RSI executives were particularly pleased with the company’s growth outside Pennsylvania and its home market of Illinois. Profits outside those two states made up 59% of total Q2 revenue, the highest since RSI went public. RSI has surged in Delaware, where GGR reached $37 million in the first half of 2024 and Q2 iGaming profits more than quadrupled year-over-year.
The company had already seen its highest revenue growth in two years in Michigan, New Jersey and Pennsylvania in Q1, and those numbers all rose again last quarter.
“Our ability to provide much higher growth in our most profitable markets continues to drive higher incremental profitability,” said Schwartz.
Based on that success, RSI has altered its yearly guidance, projecting midpoint revenue of $880 million, up $45 million from the previous estimate. The adjusted EBITDA forecast for 2024 jumped $13 million to a midpoint of $68 million.
“We remain steadfast in our commitment to innovate, grow, and deliver value to our customers,” Schwartz added. “We are confident we are well on our way to becoming a leader in online gaming across the Americas.”
