Rush Street Reports Revenue Growth as Losses Continue

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Rush Street Reports Revenue Growth as Losses Continue

Rush Street Interactive reported its fourth-quarter 2021 and full-year results on March 2 and the basic story was one that’s become familiar in much of the best online casinos sector. Revenues are growing but losses continue.

The next day, March 3, Rush Street Interactive saw its shares drop about 20% by the end of the trading day to the low-$8 range. During the football season, RSI was trading in the range of $15 to $20 a share.

Rush Street Following Familiar Pattern

The company’s Wall Street performance mirrors much of the online gaming industry where investors showed initial enthusiasm regarding online sports gambling and that optimism drove stock prices upward.

Indeed, handle figures have been huge and keep getting bigger along with revenues — especially with the introduction of online sports betting statewide in New York — but operators have failed to produce bottom-line profits.

Overall, online gaming operators have been contending that, in time, profits will materialize and some have targeted 2023 as a breakthrough year.

Rush Street's Revenue Up Big

Meanwhile, RSI reported fourth-quarter 2021 revenue of $131 million, up 31% from the same quarter year-over-year. Full-year revenue for 2021 was $488 million, up 75% from 2020.

The bottom line saw a net loss of $38.1 million during the fourth quarter of 2021, compared to a net loss of $41.6 million during the fourth quarter of 2020. Net loss in 2021 was $71 million compared to a net loss of $131.6 million in 2020.

Generally, online sports betting companies have found themselves having to spend considerably to acquire and retain customers in a fiercely competitive business. RSI reported adjusted advertising and promotions expense of $64 million during the fourth quarter of 2021 compared to $23.1 million in the same quarter the previous year.

In terms of expanding its footprint, in the fourth quarter of 2021, RSI added Connecticut and Arizona to its online sports betting portfolio, and in 2022, RSI launched online sportsbooks in New York and Louisiana.

“During the first half of 2022, we look forward to expanding into Canada and Mexico with our online casino and sportsbook sites and apps in these two large population markets where we are well-positioned to achieve success," RSI CEO Richard Schwartz said.

Strategy is Keeping Customers Longer

Schwartz said the key to success would not be in merely acquiring customers but in retaining them for the long haul.

Rush Street Interactive is an offshoot of Rush Street Gaming, a company that operates full-service casinos in places such as Philadelphia, Pittsburgh, Des Plaines (near Chicago) and Schenectady.

“Ultimately, our strategy is to look long term and to continue to find those opportunities where we know we’re going to get back long-term returns on those investments for new players,” Schwartz said.

“Why? The hardest part of this industry is figuring out how to retain the players once they arrive. Once you invest in that, which we’ve done over the last 10 years, you get a much larger percentage of those players staying loyal to you for much longer.”

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