Should Rush Street Interactive (NYSE: RSI) make a foray into the prediction market sector, it’s improbable that sports event contracts will be at the forefront of this initiative.
During the second-quarter earnings call with analysts, co-founder and CEO Richard Schwartz confirmed that Rush Street applied for a Designated Contract Market (DCM) license in May, signaling an interest in prediction markets but emphasizing that sports derivatives are not the driving factor behind this application.
“As previously mentioned, we maintain a casino-first approach and do not intend to delve into the saturated sports-focused prediction market sector,” Schwartz stated in his opening comments. “Nonetheless, the landscape of prediction markets is quite dynamic, and we will remain vigilant regarding developments in this area. This filing ensures we have the flexibility to adapt to any potential outcomes.”
While the discussion around prediction markets was prominent during the call, the gaming firm did not offer particular updates regarding the status of its DCM application.
Rush Street Focused on iGaming Potential
Operating under the BetRivers brand, Rush Street Interactive provides online sports betting across 15 U.S. states, two Canadian provinces, and three Latin American countries. However, in North America, the company has consistently emphasized iGaming over sports betting. This substantiates Schwartz’s remarks regarding a lack of focus on sports event contracts.
Internet casinos, rather than sports betting, are the key revenue source for Rush Street. This form of wagering significantly outpaces sports betting in generating income for the operator, contributing to the company’s record-setting second-quarter performance and an upward revision of its full-year forecast.
Schwartz did not elaborate extensively on how Rush Street’s potential prediction market offering might develop, if it becomes a reality, but clarified that the DCM application is primarily about being well-prepared.
“We see the applications as a means to preserve our strategic flexibility, maintaining our options, as you noted, and ensuring that we’re not unprepared if the market or regulatory landscape shifts in ways that impact our business,” he stated in response to a question from JPMorgan analyst Daniel Politzer. “So it is essentially about being ready and maintaining options.”
Rush Street’s Cautious Approach to Sports Prediction Markets
If Rush Street genuinely pursues prediction markets, its decision to avoid sports derivatives could prove insightful, given that such event contracts often attract legal and regulatory challenges within the industry.
For Rush Street, avoiding sports event contracts is particularly significant. iGaming is becoming legal in eight states, with at least twelve others contemplating legalization to enhance revenue streams. Regulators in those regions might look unfavorably upon operators engaged in sports prediction markets.