Rush Street Interactive is going public.
The Illinois-based gaming company is doing so via a special purpose acquisition company (SPAC) deal. DMY Technology Group, a publicly traded shell company whose purpose is to take other companies public, is fueling the deal.
Rush’s projected its 2021 revenue is about $320 million, and the deal values the company at $1.78 billion, a multiple of 5.6 times.
Rush Street Interactive Chairman Neil Bluhm said on CNBC on Wednesday that he hopes the company is public “later this year.”
Bluhm said that wouldn’t have been possible if not for taking the SPAC route.
Rush Street is in an ideal spot compared to its competitors. It has more revenue that Golden Nugget and GAN and has a positive cash flow, unlike DraftKings.
And with the new influx of funding, it can expand its online casino and sports betting businesses.
Rush Street: An online casino leader
While sports betting is an integral part of gaming companies’ success, there is even more potential for online casino. Bluhm cited predictions that online casino revenues could exceed sports betting revenues by 50%.
DraftKings is venturing into online casino, as well. Legal online casinos are currently available in New Jersey, West Virginia and Pennsylvania, with Michigan iGaming to launch hopefully later this year.
But what about online gaming in Illinois? As of now, it has supporters and detractors in the state.
The Illinois Senate passed on online casino bill in 2017, but it died in the House. We at PlayIllinois haven’t heard much about it since.
Rush Street is known to have political sway in Illinois (Hello, in-person sports betting registration requirement). Once public, shareholders will want online casino to be operating in as many markets as possible with the BetRivers brand.
But casinos’ push for online gaming has faced opposition, according to PlayIllinois’ Matthew Kredell.
Sen. Dave Syverson explained why in August.
“Bars and restaurants that have been just devastated by the overly restrictive COVID rules from the state of Illinois need the little bit of video gaming they have going right now to help them stay in business. If they lost VGT revenue to the internet, we’d see a lot of restaurants and bars having to close.”
The next legislative session in Illinois begins in January, but state-government lobbyist Tom Swoik said if online gaming is discussed, it won’t be until May 2021.
However, we know this much; Illinois is feeling strapped for cash, and online casino would provide another revenue stream.
Could this change Rush’s stance on sports betting registration?
Rush Street has long lobbied for in-person sports betting registration to prevent DraftKings and FanDuel from succeeding in Illinois.
That’s due to some bad blood stemming from 2015.
Rush Street had argued that the daily fantasy sports (DFS) companies gained an illegal head start in customer acquisition when they pumped hundreds of millions of dollars into advertising.
Attorney General Lisa Madigan agreed at the time that DFS was illegal, but the state has never attempted to enforce her opinion.
So when the Illinois sports betting legislation rolled around, the final bill included an in-person registration requirement.
Since DraftKings and FanDuel are online companies, the thinking was that people would have no place to register with them. Fast-forward to now, and DraftKings and FanDuel are thriving in Illinois.
That’s because they were each able to partner with land-based operators to secure market access, followed by unexpected mobile registration periods because of the COVID-19 pandemic.
But with Rush Street going public, investors would likely want the sportsbook to attract as many customers as possible, too.
As we know, remote sports betting registration is the best way to do that. Gov. JB Pritzker‘s executive order extending the online registration window expires on Oct. 17, and we don’t know if it will be renewed.
We have a fascinating couple of months ahead of us in the Land of Lincoln.