Rush Street Interactive, which operates BetRivers, pointed out three important markets that have driven the company’s success. Pennsylvania was one of them, as it has a giant influence on RSI as a whole.
RSI has a huge presence in the Keystone State, owning two land-based casinos, Rivers Casino Philadelphia and Pittsburgh, as well as operating two online casinos, BetRivers Casino PA and PlaySugarHouse Casino PA.
While RSI may not attract the headlines as FanDuel and DraftKings does, its product, both retail and online, is what makes the company extremely strong.
RSI credits Pennsylvania market for strong success
RSI announced that Q2 2024 set record-breaking numbers in revenue and adjusted EBIDTA, two extremely important categories in determining a company’s financial health. The business reported the following highlights:
- $220.4 million in revenue, a 34% year-over-increase
- $21.4 million adjusted EBIDTA, a 1683.3% year-over-year increase
- Net loss of $0.3 million, compared to a net loss of $16.7 million last year
- Unrestricted cash and cash equivalents increased to $194 million
Each of these categories indicate that RSI is in a terrific financial position. Company CEO, Richard Schwartz, spoke to the success of its mature states, including Pennsylvania during the call.
“Our ability to deliver much higher growth in our more profitable markets continues to drive higher incremental profitability,” he said. “On our last quarterly call, I shared that each of Michigan, New Jersey and Pennsylvania had the highest levels of year-over-year revenue growth in over two years. This trend continued, again, as all three markets exhibited even higher growth during the second quarter.
“In fact we had nine different markets with a year-over-year online revenue growth rates of over 50%, again demonstrating the breadth of our success in growing the business.”
The Pennsylvania Gaming Control Board does not break down PA online casino revenue by operator, so it’s difficult to measure BetRivers and PlaySugarHouse’s contributions. However, both operators, along with Borgata, each make up the Rivers Casino Philadelphia license, which is third in YTD revenue:
- Hollywood Penn National (DraftKings, BetMGM, Hollywood, Fanatics): $462.2 million
- Valley Forge Casino (FanDuel, Stardust): $337.5 million
- Rivers Casino Philadelphia: $226.6 million
According to RSI’s investors presentation, it positions BetRivers and PlaySugarHouse as the third-best product in the PA online casino market.
RSI spending less on customers, advertising
RSI has become much more efficient in marketing spend, as well as acquiring new customers. The company announced it spent $36.3 million on adjusted advertising and promotions in Q2, a 10% year-over-year decrease. It also increased monthly active users (MAUs) to 164,000 in the US and Canada, a 24% increase from last year.
The increase in players has contributed to RSI’s success. The cost at which it acquires players has also played a key role.
“I think we’ve been improving quite a bit with our investments in technology and marketing tools as well as investing in capabilities to make sure that we find the right players in the right places that are valuable for us, Schwartz said. “What I shared is that we’re getting more players for less spend, which means we’re becoming extremely efficient in what we do, and we think there’s opportunities to continue to improve in that area.”
RSI has also enticed users to spend more money in Q2. The company reported that the average revenue per MAU jumped to $380 in the US and Canada, which was a 6% increase from last year.
While marketing spend is likely to increase with football season nearing, RSI spent less in acquiring more users, and had them average person spend more money on its product.
That is certainly a recipe for success, especially in a rich Pennsylvania gambling market.
Zacks Equity Research advice on RSI stock
Despite RSI’s strong earnings report, the stock is down nearly 8.1% since opening at $11.50. As of Thursday afternoon, the price sits at $10.57.
However, the stock is up more than 151% YTD. Zacks Equity Research provides the following commentary on the stock:
“Ahead of this earnings release, the estimate revisions trend for Rush Street Interactive: mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock.”
