Rush Street Interactive reveals focus on “high quality” US players

Rush Street Interactive (RSI) CEO Richard Schwartz has revealed the US sportsbook and igaming operator is only looking to acquire “high quality” players in the US market, as costs per acquisition increase substantially.

Speaking as part of the firm’s Q4 2021 financial results call, Schwartz affirmed RSI’s focus would not be on chasing market share or higher player numbers than its competitors in its operational states, but rather attracting ‘sticky’ players.

Schwartz dismissed so-called ‘bonus hunters’ – players who sign up with an operator with the aim of utilizing bonuses who then close their accounts once these bonuses expire.

“We’re focusing on attracting quality players who will play and stay loyal to us for the right reasons,” he told investors.

“We offer a premium user experience to reduce player friction and we target players who appreciate and respond to our product offering and customer service approach.

“We continue to expand the business by growing the top line, while strategically investing in marketing and technology that we believe will drive meaningful revenue growth with long-term value,” he added.

RSI reported full-year 2021 revenue of $488.1m, a 75% year on year (YoY) increase, and figures which were punctuated by a 67% increase in real-money monthly active users (MAU) and average revenue per MAU up 2% over the same period to $346.

In contrast, RSI’s company adjusted EBITDA rocketed to a loss of $65.1m in 2021, up from an EBITDA loss of just $4.4.m in 2020, while its adjusted advertising and promotional expense rocketed 231% during 2021 to $186.9m.

A central lynchpin in arresting these increasing expenses is the unification of its BetRivers and PlaySugarHouse offerings onto one single user interface app, something which Schwartz hailed as a “major milestone” for the firm.

“This will improve our marketing efficiency and ensure better user experience. We plan to have a single app release for the third quarter of this year, with an effort to diversify our business and enhance cross-sell opportunities to both online casino and sportsbook over the long term,” Schwartz said.

Much of RSI’s investment strategy, the RSI CEO suggested, focuses on prudential investment in markets where there is both opportunity and a “clear line of sight” to profitability.

“Every player judges the operator, the quality of the experience you offer them, and the type of service you provide to them,” Schwartz explained.

“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. Why? Because the hardest part of the industry is figuring out how to retain the players once they arrive.

“Once you invest in that, as we’ve done over the last decade, you end up getting a much larger percentage of those players staying loyal for much longer, and ultimately, you build your scale over the long term by having the greater user experience.”

Referencing potential cross selling between RSI’s various product strands, Schwartz continued: “When it comes to horizontal and vertical integrations or opportunities, these are always being considered.

“Certainly, I think there are some categories which benefit from increased scale more so than casino and sportsbook, like daily fantasy sports.

“At the end of the day, we’re already seeing a rationalization in our industry, which we welcome because ultimately it’s positive for companies like ours that look to utilize the best product and the best user experience to gain the scale. Long term that is what we all want for our company,” he added.