Rush Street Interactive Sale Could Be Imminent, According to Report

Rush Street Interactive Sale Could Be Imminent, According to Report

A recent report suggests that the long-rumored sale of Rush Street Interactive (NYSE: RSI) might happen in as little as two months.

The Off Shore Gaming Association (OSGA) reported that a deal for the owner of BetRivers might be made as soon as September, citing unnamed sources; however, particular suitors were not specified. In March, there were reports in the media that the gambling corporation located in Illinois had contacted several competitors regarding a potential takeover. Among those, only one company, DraftKings (NASDAQ: DKNG), could be named.

Even though FanDuel and DraftKings currently have a de facto duopoly in the US sports betting business, Rush Street Interactive may be a more appealing takeover target for companies seeking to increase their market share. In the first quarter, the sportsbook operator saw a 34% increase in revenue and a 34% decrease in net loss to $2.2 million from $24.5 million in the same period last year. Additionally, the operator had a positive earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio.

Why It Could Be Rush Street Interactive's Target

With or without DraftKings, a long list of potential bidders may be generated by the rumored target's alluring position in the iGaming sector.

Furthermore, RSI is a cost-effective way for purchasers to enter the rapidly expanding Latin American sports betting industry. Since RSI has been successful in Colombia and Mexico, it may be in a position to obtain a sports betting license in Brazil, which has the greatest economy and population in the region. The operator saw a 72% growth in monthly active users (MAUs) in Latin America during the first quarter, accompanied by a 4% increase in average revenue per MAU.

Analysts disagree that RSI is a potential target for purchase, despite CEO Richard Schwartz's May 2023 statement to investors and analysts that he would be open to discussing mergers and acquisitions.

It's obvious that the cost has probably gone up. As of the end of US markets on July 12, RSI's market value was $2 billion, meaning a buyer would probably need to make a larger offer to get RSI to the negotiating table. Shares of the firm had increased 98% year to date.

Evaluating RSI Candidates Outside of DraftKings

It would make sense for DraftKings to challenge RSI, as the latter has a track record of acquisition and is focused on growing its iGaming business. Though DraftKings hasn't stated that it is interested in RSI, several experts think the company will pass on acquisitions in the near future.

Although no specific operators were cited, the OSGA study identified "smaller companies who would love to increase their presence" as possible RSI buyers. The massive European betting giant bet365 was also mentioned in the report, although it hasn't verified that it has had any talks with Rush Street Interactive.

With 8.79% of the shares, HG Vora, a hedge fund known for pressuring gaming firms to adapt, is RSI's biggest shareholder. Based on data from GuruFocus, insiders hold 8.08% of the shares, while institutional investors own 28.81%.

RSI is presently available with mobile or retail enterprises in Colorado, Illinois, Indiana, Iowa, Michigan, New Jersey, New York, Pennsylvania, Virginia, and West Virginia. It runs under the BetRivers and PlaySugarHouse brands. Additionally, the company provides sports betting in Ontario, Canada.