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Rush Street Interactive is rumored to be approaching potential buyers, including DraftKings, but are those rumors overstated.
The Bulletin Board
NEWS: M&A rumor mill: Rush Street Interactive is for sale, or is it?
WEEKEND CATCHUP: XLMedia sell-off; MGM puts two casinos up for sale; Plea deal in Alabama baseball betting case; MGC leadership changes
VIEWS: ESPN’s first sports betting flub comes at the absolute worst time.
VIEWS: Eilers & Krejcik Gaming offers first thoughts on Underdog’s sports betting app.
AROUND the WATERCOOLER: The
StreisandMulkey Effect.STRAY THOUGHTS: Reddit and betting; is there any there, there?
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RSI Puts Out the ‘For Sale’ Sign. Or Did It?
According to a Bloomberg report (paywall), Rush Street Interactive has initiated a strategic review and contacted potential buyers, including DraftKings.
However, industry veteran Roger Gros pushed back on the report, tweeting, “I have confirmed that there is nothing accurate about this story other than the fact that RSI has a “strong financial performance and expanding footprint in the iGaming market.”
Everything is for sale, so the question is, is RSI actively looking for a buyer or, like every other business in the universe, simply willing to listen to offers?
Setting aside whether Rush Street Interactive is shopping itself around, it’s been on most people’s shortlist of potential M&A targets for quite some time. RSI is one of the top-performing Tier 2 operators on the online casino side and is valued at just south of $1.5 billion.
RSI is active in 15 states (five online casino) and Ontario. Further sweetening the pot, RSI is also operational in Colombia and Mexico and is expected to be a significant player in the recently legalized Brazilian market.
In a note, JMP Securities highlighted RSI’s attributes, noting its 8% online casino market share, proprietary tech stack, and “sticky, high-spending customer base.”
According to estimates by Eilers & Krejcik Gaming (a newsletter sponsor), RSI has just under 2% national market share in the online sports betting sector.
Getting back to the rumors, DraftKings is an intriguing possibility.
On the why would they buy RSI side of the ledger, DraftKings already possesses what is considered the best online casino tech stack in Golden Nugget and has downplayed international expansion. However, as Chris Grove has said, the “mores” will win in the US market, particularly on the online casino side.
From his presentation at the NEXT.io Conference, Grove said the “winners will be the operators with the “most mores.”
That said, ignoring the overlap between RSI’s strengths and Golden Nugget is hard.
JMP considered several other acquisition candidates, including Hard Rock Digital, which it says “has the balance sheet, and we view the focus on iGaming in the US as a natural fit with RSI’s fully functioning technology stack and exposure to international markets, like Mexico, Colombia, and potentially Brazil.”
With Hard Rock controlling Florida (roughly 5% of the current US sports betting market), a Hard Rock-RSI mashup would be a significant development, especially with a Michigan license (sports and casino) up for grabs following the departure of 888-SI.
Per EKG, there will be no shortage of suitors for the Michigan license, but one possibility is “… Hard Rock angling for the rights.” Hard Rock could also gain market access in Michigan by acquiring RSI - BetRivers ranks fourth in Michigan online casino revenue, with about 5% of the market. Adding a Hard Rock brand plus additional cross-sell from a Hard Rock sports betting app would boost that number.
Preventing it could be a secondary reason for DraftKings to make an offer. Remember, DraftKings bid on PointsBet to keep Fanatics from acquiring the platform or, as it turned out, to increase the price it paid.
Weekend Catchup: XLMedia Sells Off Assets; MGM Casinos For Sale; AL Baseball Betting Scandal; MGC Changes
XLMedia sells off sites: XLMedia’s share price has been in a downward spiral, leading the company to follow in the footsteps of Catena Media and sell off a number of its non-US assets, including Freebets.com and WhichBingo.co.uk. The purchaser, Gambling.com. The price was $37.5 million, with the possibility of a deferred payment of $5 million. XL shares nearly doubled on the news.
MGM offloading casinos: Not for the first time, MGM is rumored to be entertaining offers for its MGM Springfield Casino in Springfield, MA. The property, which cost more than a billion dollars to build, has never lived up to expectations. State Rep. Angelo J. Puppolo, Jr. places the blame on MGM’s shoulders: “It’s evident to me that since day one, MGM has not been fully committed to this project.” The company is also considering selling its Northfield Park Casino in Ohio, per reports.
Alabama baseball scandal: The man at the center of a betting scandal in an Alabama-LSU baseball game, Bert Eugene Neff, has pled guilty to numerous charges that carry a maximum sentence of not more than 10 years and a fine up to $250,000. Neff is accused of receiving inside information from now-former Alabama baseball coach Brad Bohannan.
MGC shakeup: Massachusetts Gov. Maura Healey has named Commissioner Jordan Maynard interim chair of the Massachusetts Gaming Commission following Cathy Judd-Stein’s departure. In other MGC news, Dean Serpa has been offered the executive director job after Karen Wells’s departure.
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ESPN’s First Sports Betting Flub
A comment (joke?) by ESPN anchor Rece Davis has caused a stir in the gambling world. Davis called sports betting “risk-free investing” during a segment on College GameDay after a bunch of ESPN picks hit the day before.
Davis later apologized for the comment, but the damage had already been done.
As Geoff Zochodne tweeted, “I can picture the Massachusetts Gaming Commission meeting already.”
Or, as Steve Bittenbender tweeted, “Barstool just mentioned the sportsbook while holding a show on a college campus, and it caused a six-figure fine for PENN in Ohio and some heartburn in Mass.”
MGC Commissioner Eilleen O’Brien has stated her concerns about the Penn-ESPN partnership on multiple occasions, including in November, when O’Brien said (bold mine), “I’m concerned about the name being the same and being that level of exclusivity and integration, which again, from a business perspective, I totally understand. But it is an area that I would love to get, when you have it, more detail on the guardrails. Because to me, that’s critical for this.”
Those guardrails seem to be missing in betting-media tie-ups, on social media, and in marketing.
The flub couldn’t have come at a worse time.
The industry is dealing with bad PR from all angles, with March Madness amplifying every signal from Shohei Ohtani to Temple Basketball to Rep. Paul Tonko’s federal effort to crack down on gambling advertising to states prohibiting college prop bets to the long list of problem gambling stories that have been written over the last couple of years.
First Reactions to Underdog’s Sports Betting App
Author’s note: Eilers & Krejcik Gaming and Underdog Fantasy are newsletter sponsors.
Eilers & Krejcik Gaming app testers have mixed thoughts on Underdog’s sports betting app.
The testers noted the speed of the app (a plus), saying, “Getting around the app is zippy, easy, and smooth.” EKG also notes that “Underdog is attempting to replicate the fun, easy pick’ em experience of its DFS+ app, with player markets given premium real estate.”
The EKG testers also expressed some concerns, calling the app “shallow” with limited markets available (NBA, NCAA basketball, and MLB) and lacking the core features of Tier 1 Sportsbooks.
However, that review is through the lens of traditional sportsbook users.
As Underdog CEO Jeremy Levine told STTP prior to the company’s debut in North Carolina:
Underdog’s goal is to differentiate its product from the global products used by its competitors. According to Levine, the Underdog Sportsbook will be “clean, simple, and easy to use,” focusing on the US bettor.
“We [US bettors] are more about players and stats,” which is the app's focus. As Levine told STTP, there are more DFS players in North Carolina than sports bettors.
“One app will look far more familiar to them than the others,” Levine said. “It looks like our fantasy sports product.”
EKG also notes that this is Underdog’s first step in the sports betting world.
As Levine told STTP: “a number of enhancements will be made by the 2024 NFL Season,” and by the 2025 NFL season, “Underdog will be the best way for fans to engage in sports.”
Around the Watercooler
Social media conversations, rumors, and gossip.
This bit is not betting-related today, but it was hard to avoid the press conference given by LSU Women’s Basketball Coach Kim Mulkey late last week.
Mulkey went on the offensive about a yet-to-be-published Washington Post story by Kent Babb (Babb confirmed he is writing a story on Mulkey).
As Michael McCann noted at Sportico, “The contents, subject matter, and expected publication date of the anticipated story are unknown, though Mulkey says the reporter has been compiling information for a couple of years.”
Mulkey has increased interest in this story exponentially, so unless her team really let her down, this has to be a bombshell report.
Stray Thoughts
A while back, I reported on former 888 executive Yaniv Sherman’s thoughts on betting-media partnerships. The LinkedIn post was filled with gold, which is why one statement may have flown under the radar: “It is incremental value to their business, but it’s all of yours.”
That statement crystallizes my thoughts anytime a non-gambling superpower is mentioned as being the next industry disrupter. The latest is Reddit, which had its IPO last week.
In its SEC filing, the company mentioned “allowing third parties to license access to search, analyze and display historical and real-time data from our platform,” including sports, which caused the sports betting world to take notice.
But sports were mentioned along with “movies, news, fashion, and the latest trends,” and betting was not mentioned, just sports. And as Chris Grove wondered on X, is there even any there, there?
“I'm curious if anyone in my feed thinks Reddit data can materially improve sports betting pricing.
I understand there is *some* value on the margins. But I'm not asking about the edge cases (unless you believe there are so many edge cases as to create cumulative value).
I also understand that the data may be valuable for sportsbooks looking to better appreciate consumer preferences, brand positioning, and emerging trends. But I'm specifically curious about its applicability to pricing.”
Gambling companies may be multi-billion-dollar behemoths, but gambling is small potatoes to a company like Reddit, so don’t expect them to give it much attention. As Sherman said, “It’s incremental value to their business.”