RSI to join growing trend of go-public gaming companies

Rush Street To Wall Street: Interactive Division Going Public Via SPAC

Rush Street Interactive (RSI) is ready to compete with the biggest online gambling companies in the US. This morning, it announced a definitive agreement for a $390 million transaction that will take it public via special-purpose acquisition company dMY Technology Group.

Bloomberg was the first to report last week that RSI was involved in takeover discussions with dMY, the product of a $230 million IPO partially underwritten by Goldman Sachs. That contribution will be supplemented by a $160 million PIPE investment led by Fidelity.

“This transaction with dMY Technology will provide RSI access to growth capital to allow for the expansion of the business in this fast-growing market and we expect it will serve our customers and investors well,” said Chairman Neil Bluhm.

Per the press release, the combined company will trade as $RSI with an initial enterprise value of $1.78 billion and at least $235 million in cash on hand.

RSI takeover vitals

The RSI executive structure will remain unchanged following the takeover, with the three co-founders retaining their existing roles:

  • Neil Bluhm, Chairman
  • Greg Carlin, CEO
  • Richard Schawrtz, President

DMY Chairman Harry You and CEO Niccolo de Masi will both have seats on the board of the combined company. De Masi, who has substantial experience in the gaming sector, spent the first half of the year shopping around for the perfect target for his blank-check investment.

“With their dozens of years of online casino and sports wagering experience, RSI has developed a leading customer-focused online gambling platform,” he said. “Harry and I are tremendously excited about RSI’s positioning and the long-term growth opportunity they have in the expanding U.S. market.”

RSI projects FY2021 revenue of $320 million, putting a 5.6x valuation on the transaction.

Rush Street ready for the big stage?

Purpose-built for online gambling in 2012, RSI is the group behind the BetRivers and SugarHouse brands. Though it’s been largely overshadowed by some of its trendier competitors to date, it’s as eager as any of them.

Rush Street was notably among the very first operators to respond to the 2018 Supreme Court decision, announcing a nationwide alliance with Kambi just three days after PASPA fell. It now offers online sports betting in five states, including a recent deployment on its home turf in Illinois.

RSI also offers online casino gambling alongside its digital sportsbooks in New Jersey and Pennsylvania and owns one of the few access points to New York. While it’s essentially just a placeholder for now, its sportsbook at Rivers Schenectady gives it a golden ticket to offer NY online sports betting should that fog ever lift.

A passing comment in the original Kambi press release also indicates that RSI has at least contemplated exporting its platform into international markets.

SPAC-tacular opportunities in young US market

Such acquisitions have become something of a fad among US online gambling companies looking to capitalize on the rush.

Diamond Eagle Acquisition Company made some of the biggest industry news of the year when it brought DraftKings and SBTech together under its wings of wealth. From an initial investment of $304 million, the market cap of what is now $DKNG has soared to nearly $13 billion.

Landcadia Holdings II pulled a similar trick last month, announcing a public takeover of the Golden Nugget interactive division. The SPAC is controlled by Nugget owner Tilman Fertitta, and its announcement seems to indicate that the NJ market leader has broader ambitions in the US.

William Hill has more recently become the subject of its own rumors as it prepares to take over nationwide sports betting operations for Caesars.

- Eric is a reporter and writer covering regulated US gambling, sports betting, and DFS. He comes from a poker background, formerly on staff at PokerNews and the World Poker Tour.
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