Rush Street Interactive, the Chicago-based firm behind the BetRivers and SugarHouse brands, is shutting down operations in Connecticut. In conjunction with its partner — the Connecticut Lottery Corporation — RSI will sunset its operations later this year after the CLC chooses a new online gaming partner.
Richard Schwartz, CEO of RSI, said:
“We thank the CLC for their partnership over the last two years. We are proud of what we have accomplished together in Connecticut and have enjoyed the relationships that we have built with the players. Consistent with our long-term strategic goals, after much deliberation and discussions with the CLC, we believe it is in the best interest of RSI and our stockholders to wind down this partnership.”
RSI in Connecticut
Rush Street Interactive first joined the fray in Connecticut after winning a competitive bidding process. In August 2021, the CLC selected RSI as its sports betting partner. Bet Rivers also operates an Illinois sportsbook.
Beating out 15 other applicants in Connecticut, RSI joined FanDuel (partnered with the Mohegan Tribe) and DraftKings (partnered with the Mashantucket Pequot Tribal Nation) in the market.
Fresh off an IPO, Rush Street hoped Connecticut would boost its profits. The state has a low population but a high median income, which made the market particularly attractive. Additionally, the presence of only two other operators made the state less contested than its Northeastern counterparts, some of which host 10+ sportsbooks.
Now the company is shutting down two years into a 10-year contract.
“As is consistent with nearly everything we do at RSI, both RSI and the CLC remain committed to putting our players first. Through the transition we plan to continue to support all player wagers and ensure a positive player experience and expect the changeover will have an immaterial impact on our guidance for 2023,” said Schwarz.
PlaySugarHouse.com and RSI’s retail sports betting locations in Connecticut will shut down. But not until a replacement operator is chosen by the CLC.
Ongoing struggles for RSI
Rush Street Interactive exists a highly competitive landscape. Consistently the underdog, the company fields its BetRivers and SugarHouse products in markets where DraftKings, FanDuel, Caesars, and BetMGM tend to dominate. In the past year, RSI’s shares fell 61%. The business reported a net operating loss of $134.3 million in 2022.
Tepid earnings in the wake of the Connecticut news has renewed speculation that RSI may be acquired by a larger operator.
Online casinos the next frontier?
Sports betting is notorious for its paper-thin margins, and RSI pulling out from Connecticut reinforces the struggles operates can face. However, RSI’s core product is its online casino product.
The company’s exit from Connecticut could signal a new focus on its casino. Legislation to allow Illinois online casinos is in motion, and many other states are expected to follow in the coming years. That could mean a new chapter for the ailing RSI business.
New competition in Illinois
RSI’s Connecticut exit also arrives amid a new era for Illinois casinos. For some time, RSI has enjoyed a geographical monopoly of sorts on Chicago gamblers. Rivers Casino Des Plaines has long been the closest in-person casino option for Windy City and nearby suburban residents.
Now, new operators are making their way into Illinois, planting RSI in a competitive burgeoning Chicago-area casino scene. The Temporary at American Place is already open, with plans to expand its offerings soon. The Temporary from Bally’s is expected to open at Medinah Temple this summer, likely in June.
Perhaps RSI’s withdrawal signals a renewed focus on its home turf. Illinois is home to a larger sports betting market where the company stands to make more money.
According to Eilers & Krejcik Gaming, BetRivers has about a 10% share of Illinois online sports betting’s gross gaming revenue.