Rush Street Interactive CEO lauds potential boost from Delaware expansion
Richard Schwartz reveals expected $13m GGR benefit from effective monopoly on online casino and sports betting in First State
Rush Street Interactive (RSI) CEO Richard Schwartz has talked up the firm’s prospects in Delaware, where RSI has been awarded an exclusive contract to supply online sports betting and igaming to the Delaware Lottery.
Schwartz was speaking as part of RSI’s Q3 2023 financial earnings call, with the firm reporting a 15% year-on-year (YOY) uptick in its gross gaming revenue (GGR), as well as narrowing advertising expenses and net losses during the quarter.
In August, RSI was confirmed as the Delaware Lottery’s chosen partner, replacing 888, which had previously held the contract but withdrew from bidding for an extension earlier this year following a request by lottery operator for proposals from interested operators.
RSI’s new contract will see it become the sole online casino and sports betting platform for each of the state’s three land-based casinos, effectively giving it a monopoly in the First State’s online market.
Schwartz confirmed that RSI would look to launch its platform across the Delaware market in early winter, with the firm expecting a positive revenue boost.
“We are very excited for this opportunity as we see Delaware as a market that plays to our icasino strength,” the CEO told analysts during the Q3 earnings call.
“As it stands today, before we launch, we see a market that is doing a little above $13 million annually of GGR, of which over 80% of that is online slot revenues. These levels did not include any online sports betting, which has never been offered in this market.”
Schwartz continued: “In addition to adding online sportsbook, another change will be how the digital business will be marketed.
“Our agreement with the lottery provides for an earmarked digital marketing budget which is different compared to how the market has operated historically. We believe this will help us grow the market.
“We are also planning to bring a wider selection of vendors and a greater variety of content to the market. We think it [Delaware] can become a meaningful contributor for us, both in terms of revenue and adjusted EBITDA. We’ll continue to keep the market posted as we launch,” he added.
RSI chief financial officer Kyle Sauers, who was also present on the call, outlined the operator’s journey towards profitability in Delaware, which is the second-smallest US state behind Rhode Island with a population of just over one million people.
“The market is pretty small right now. But over time, we think there’s a pretty nice opportunity to expand. It’s not going to happen overnight,” Sauers told analysts.
“If you just compare Delaware to our other live markets in the US – New Jersey, Pennsylvania, Michigan, West Virginia – in terms of adult population and income levels, you could argue that Delaware is only 1/10 the size relative to those other states as it should be over time.
“So again, it will take some time, but we think it’s a really great opportunity,” the CFO added.
One market where RSI will soon be exiting is Connecticut, where its sports betting partnership with the Connecticut Lottery Corporation (CLC) had been expected to end earlier this year.
RSI had functioned as the CLC’s sportsbook operator since 2021, signing a 10-year contract with the local lottery operator, but in March the pair confirmed an early end to the contract amid strong competition from fellow Connecticut operators DraftKings and FanDuel.
Schwartz refused to be drawn on specifics surrounding the end of this partnership, but said RSI would hand over management of the CLC’s sports betting offering to the corporation’s new partner by the end of the year.