Rush Street Interactive (RSI) has indicated a cooling trend in the US online casino market, leading to revenue projections towards the lower end of its full-year guidance, even as it achieves record player acquisition. Despite the slowdown, the company, alongside MGM Resorts International, maintains optimism for renewed growth driven by potential iGaming legalization in new states by 2027.
What Happened
Rush Street Interactive (RSI) announced its third-quarter results on Wednesday, revealing a 39% year-over-year revenue increase to $385.9 million and a 73% surge in adjusted EBITDA to $62.2 million. However, despite these strong figures, the BetRivers operator reiterated its full-year revenue guidance of $1.56 billion to $1.6 billion, with President and CFO Kyle Sauers attributing recent October trends to a likely finish at the low end of that range. Sauers pinpointed a slowdown in the North American iCasino market as the primary reason, stating it’s “more about the market than it is the share.” CEO Richard Schwartz echoed this sentiment, noting a “more measured pace of growth” across North American online casino and sports markets, supported by broader industry data. The slowdown in growth was observed from July to August, with a smaller change into September, and October mirroring September’s trends. While the exact cause wasn’t pinpointed, lower activity was consistent across RSI’s player cohorts.
Key Details
- U.S. iCasino growth is decelerating, influencing RSI’s revenue projections towards the low end of its guidance.
- RSI added a record 300,572 North American monthly active players, but revenue per player decreased by 15% to $309.
- Online casino constitutes 75% of RSI’s total revenue, growing 32% year-over-year and acting as the primary profitability driver.
- RSI is gaining market share year-over-year in all North American markets except Michigan, where increased competition from new entrants like bet365 and Hard Rock was cited.
- Player economics are shifting, with new players carrying lower expected values compared to previous years, a trend attributed to market maturity.
- Marketing expenses rose 44% to $54.7 million (14.2% of revenue), but player acquisition costs are at their lowest, with paybacks within targets.
- Management expects marketing growth to significantly decrease by 2027, with future growth primarily driven by new player acquisition rather than increased value per player, contingent on new state legalizations.
- RSI and MGM Resorts International express optimism about new states, particularly Virginia, restarting iGaming growth, projecting significant expansion by 2027.
- September marked the worst sports hold of the year for RSI in both the U.S. and Latin America.
Why It Matters
The cooling growth in the US online casino market, as reported by Rush Street Interactive, signals a potential maturation phase for an industry that has been a significant driver of overall U.S. online gambling expansion. While RSI continues to grow its player base and maintain market share in most regions, the decline in revenue per user suggests a shift in player economics and potentially a more competitive landscape. This trend necessitates strategic adjustments in marketing and acquisition efforts, with RSI already planning for lower marketing growth by 2027 and focusing on player volume rather than individual player value. The optimism surrounding potential iGaming legalization in new states, such as Virginia, by 2027 is crucial for the industry’s sustained growth, indicating that future expansion hinges heavily on legislative developments. For investors and industry observers, these insights from a key player like RSI offer a realistic perspective on the current state and future trajectory of the highly dynamic U.S. online gambling market.