Rush Street Interactive Q2 Sports Betting Results Suggest Profitable Year

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03 August 2023

Rush Street Interactive Q2 Sports Betting Results Suggest Profitable Year

RSI added several features in the quarter to improve their parlay and prop bet offerings.

Rush Street Interactive (RSI), parent of the BetRivers, PlaySugarHouse and RushBet online betting site brands, had the kind of quarter that Wall Street loves. In fact, its stock popped more than 20% after the release of its Q2 2023 results.

RSI, a leading online legal sports betting and casino company, posted strong quarterly results. Revenues were $165.1 million, up 15% over the same period last year. Meanwhile, its average revenue per month active user (ARPMAU) grew 11%.

While RSI’s top line improved, it’s bottom-line performance truly impressed. RSI’s gross margins came in at 33.6%, gaining 640 basis points over Q2 2022. The company’s adjusted EBITDA ticked into positive territory, coming in at $1.2 million compared to an adjusted EBITDA loss of $18.6 million in the same quarter last year.

In the first half of the year, RSI improved adjusted EBITDA by over $54 million compared to the first half of 2022. On the earnings conference call, CEO Richard Schwartz said, “We are proud that almost two-thirds of our improved profitability was driven by revenue growth and improving operations with the remaining one-third for more efficient marketing spend. These results set us up well for the second half of the years, where we continue to expect to be adjusted EBITDA positive.”

Rush Street still lost money, posting a net loss of $16.7 million during the quarter. But that was an improvement over its $28.3 million net loss in Q2 2022 and its Q1 2023 net loss of $24.5 million.

Parlay and Prop Bet Improvements Gain Traction

Sports betting has become a competitive industry. In fact, many gambling companies have begun to think of sports betting as a loss leader for their iCasino offerings. RSI, however, has started to see real improvement in its sports betting operations. In fact, excluding New York, RSI’s sportsbook-only markets in the aggregate were profitable in the second quarter.

RSI added several features in the quarter to improve their parlay and prop bet offerings. For instance, RSI improved prop bet access by aggregating player and league prop bets in distinct views. As a result, baseball prop bets were up more than 60% compared to a year ago. RSI also specially configured their squares game for the NBA playoffs, increasing same game parlays by 150% over the regular season activity.

RSI’s sports betting operation improvement should continue to pay off heading into the NFL and NCAA football season.

Latin America Opportunities on the Horizon

RSI has continued to benefit from its Latin American operations. For example, Colombia’s revenues grew 30% when compared to last year — growing 50% when measured in Colombian pesos. Mexico is ramping up to contribute more during the second half of this year.

RSI also sees a tremendous opportunity in Brazil now that it has authorized legal sports betting. Meanwhile Peru, Chile, and Argentina are making progress in their efforts to become regulated gambling markets.

“We’re really excited about the region and think we have a head start over most of the sophisticated operators in the industry and a chance to really deliver some outsized results,” Schwartz said.

In March, Schwartz predicted that RSI could see a profitable adjusted EBITDA in the second half of the year. RSI hit that goal earlier than expected, given the strength of its second quarter. Wednesday, Schwartz was asked if RSI would be profitable for the year.

“We’re more efficient with marketing,” Schwartz responded. “Our gross margins were good. G&A costs were kept under control. So, I think if all those things continue to trend and there’s no signs that we’re not operating well and not achieving those and won’t continue to. I think our expectations are higher. And to the point of the last question, is it possible that we could be profitable for the full year? It is possible in that guidance range. So that — I think that alone tells you that we’re optimistic about the back half and the future.”