Rush Street Interactive already operates under the BetRivers brand in the key online poker states: New Jersey, Michigan and Pennsylvania

Rush Street Interactive Will Bring Phil Galfond’s Run It Once Poker To US Markets

Phil Galfond’s plans for his Run It Once Poker (RIO) brand in the US have become a little clearer. The poker pro-turned-entrepreneur announced on Twitter yesterday that his company and team – himself included – have been acquired by Rush Street Interactive (RSI).

RSI made its own announcement of the acquisition the same day, during its Q4 2021 earnings call. The deal will cost it $3.3 million in cash, plus RSI shares worth $2.5 million. This is a fairly small outlay for a company the size of RSI. During the same call, it announced 2021 revenue of $488 million, and a net operating loss of $71 million.

In his Twitter thread, Galfond said he’d considered other offers before settling on RSI:

We spoke with many potential partners over the last 18 months and are very excited to be on team RSI! They share our values: Honesty, integrity, fairness, and transparency – and not only with their players. They stood out to me in the fair and honest way they dealt with us.

Run It Once Poker served international players from 2019 through the end of 2021. Just before New Year, Galfond revealed that he’d be shutting the site down in order to focus on bringing it to the US regulated market instead. It dealt its final hands on Jan 3.

Despite the RSI deal, Galfond says it’s still too early to announce a US launch date. However, no longer being a small, independent operation should speed things up and we could see a RIO launch this year.

A viable fourth option

It was probably inevitable that some US operator would buy RIO. At the moment, US players have only three viable online poker brands to choose from:

Technically speaking, there is a fourth brand available in New Jersey, PalaPoker, but its traffic is effectively nonexistent.

Compared to the range of brands available for sports betting and online casino, poker players could really use some more choice. However, poker software is tricky to get right and has a high development cost. At the same time, it’s by far the least lucrative of the three traditional online verticals (sports betting, casino and poker). Poker typically accounts for only 2-3% of online revenue in states that offer all three.

That makes it a financially dicey proposition for operators without a poker product to develop one, especially at a time when investors are demanding they trim costs. There are some indications that DraftKings might be developing one, and GAN has an unused poker product that a client company like Parx could potentially use. Aside from those possibilities, you’d expect that any new poker product in the US would come by way of an acquisition.

Benefits for RIO

Being acquired by an existing operator benefits RIO as much as it does RSI.

For one thing, it will get to market more quickly this way. The product itself will still need testing and certification. However, RSI already has market access in most states where online poker is legal. That will save RIO some bureaucratic steps in terms of licensing, and also avoid the need to find its own land-based partners.

It also means access to RSI’s customer database, which should mean launching with more traffic, and less need to spend on marketing. RSI’s flagship brand, BetRivers, is a solid second-tier operator in the US. It trails the Big Three – BetMGM, FanDuel and DraftKings – by a significant margin, but is also well ahead of most other brands, including both PokerStars and WSOP owner Caesars.

Finally, it gives RIO some much needed technological assistance. RSI spun off from Rush Street Gaming to focus exclusively on the online space. It therefore has tons of in-house talent, some of which can get reassigned to help with RIO.

Although RIO and Galfond himself are popular with poker players, one major criticism of RIO during its time in the international market was its slow pace of development. Iterating on the product should be easier and faster with RSI’s manpower and financial support. It will also help with scalability if the US launch proves very successful.

Where will Run It Once Poker launch in the US?

There are several places RIO could potentially launch in the US, either immediately or in coming years. Not all are equally likely.

It’s probably easiest to answer this question by looking at the possibilities one at a time.

New Jersey: very likely

A New Jersey launch for RIO seems almost automatic. It’s the oldest full-service iGaming state in the US. Legal NJ online poker rooms and casinos have been operating since 2013. That has made it the traditional jumping-off point for most new iGaming brands in the US.

It’s also the only state BetRivers operates in which has also joined an interstate poker compact. Shared liquidity is of course very important for online poker.

The only downside to New Jersey is that it’s a smaller and more competitive market than Pennsylvania or Michigan. All RIO’s future competitors are already well-entrenched there, and WSOP has a competitive advantage as the only operator currently making use of the interstate compact to share traffic with Nevada and Delaware. That’s unlikely to stop RIO from launching there, but it could potentially make it a lower priority than the other large poker states.

Nevada: unlikely

Although Nevada is part of the traffic-sharing compact with New Jersey, RIO is unlikely to launch there. This is simply because RSI doesn’t have any operations there currently, the state hasn’t authorized online casinos, and poker alone is probably not worth the cost and effort of obtaining a license.

Michigan: very likely

We originally doubted whether RIO would make it in to Michigan. That’s because the Wolverine State has a cap on the number of brands that can operate there, and it was already full by the time RIO announced it was coming to the US.

However, BetRivers has Michigan online poker market access in place through its partnership with the Little River Band of Ottawa Indians. It has been offering online casino and sports betting there since the market opened.

Michigan therefore seems like another obvious place for RIO to launch, and may even be a higher priority than New Jersey. That’s because WSOP hasn’t yet launched there, so if RIO could beat it out of the gates, it would only have two competitors to contend with at first.

Pennsylvania: very likely

Pennsylvania is the biggest US poker market at the moment, by population. BetRivers has a huge presence there, and Rush Street Gaming owns two Rivers-branded retail casinos in the state.

The only potential hiccup in the Keystone State is that there is already one poker room operating on the Rivers license – Borgata Poker. Pennsylvania allows multiple brands on each master license, so there’s no regulatory problem with launching RIO as well. The only question whether the deal between the companies contains any provisions that might make this difficult.

West Virginia: unlikely

Online poker is legal in West Virginia, and BetRivers already operates there in partnership with Mountaineer Casino. However, other operators have found the state too small to bother launching in without shared liquidity, and RSI will likely make the same call.

Connecticut: impossible

Contrary to some reporting by other outlets, Connecticut is not on the table for a RIO launch. RSI does operate in the state through its secondary PlaySugarHouse brand. However, the terms of that arrangement allow it access to sports betting only.

Connecticut online casino gaming, which includes poker, is the exclusive right of the states two tribes. Their partnerships are with DraftKings and FanDuel, respectively, so RSI is cut out of the CT market as far as poker is concerned.

Illinois: likely, depending on legislation

Illinois hasn’t legalized online poker yet, but it has an Internet Gaming Act on the table that would permit both online casino and poker. If that bill were to pass, Illinois would be at the top of the list of states we’d expect to see RIO. Not only is it a large state, but it’s also Rush Street’s home turf.

New York: likely, depending on legislation

Like Illinois, New York is considering online gambling legislation this year, but hasn’t passed it yet. If it were to become law, then the state’s population of nearly 20 million would make it a must-launch for every operator that can gain access, for every vertical they offer.

BetRivers already offers online sports betting in New York. Therefore, a New York launch for RIO would be more or less a given, if the state were to legalize online poker.

Ontario: likely

Ontario isn’t part of the US, but rather Canada. However, the province is in the process of privatizing its online gambling market, and RSI is among the operators expected to launch there.

Unfortunately, like US states, Ontario plans to ring-fence its online poker market. However, with a population of nearly 15 million, it will be a bigger market than any current US online poker state.

Add to that the fact that the market will only open on Apr 4. Depending on how quickly RIO can get its ducks in a line, it could be ready to launch there quite early on. That might mean it’s at less of a competitive disadvantage against US-based competitors. On the other hand, international operators like PokerStars and Partypoker are currently serving Canadians in a gray market capacit. Therefore, they enjoy brand recognition in Ontario even before the market opens.

Overall, a RIO launch in Ontario seems more likely than not, but there are many question marks hovering over the new market.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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