Rush Street Interactive Partners with Penn National
By
Feb 22, 2021
Rush Street Interactive(RSI on NYSE), home to its mobile betting app BetRivers, is forming a strategic partnership with Penn National allowing the sports betting operator to secure market access in Maryland, Missouri, and Ohio.
BetRivers is one of the fastest-growing sports betting operators in the U.S. and will now have a chance to run its betting platform for up to 20 years in Maryland, Missouri, and Ohio. BetRivers will operate under a potential second skin for Penn National in the three states, subject to regulatory and licensing approval.
Rush Street Interactive will make industry-standard payments to Penn National for the market access granted through the partnership.
“We are pleased to gain potential market access to three new states as we continue the execution of our strategy to gain access and bring our best-in-class online gaming offerings to key markets across the United States,” said Richard Schwartz, president of RSI. “The addition of Ohio, Maryland, and Missouri to our market access portfolio, specifically, builds on RSI’s success in neighboring states and will create enhanced marketing efficiencies for our BetRivers.com brand.”
Schwartz continued by stating that RSI and BetRivers will continue to expand into other states that offer the same opportunity.
Benefits for Both Parties
Rush Street Interactive is currently operating in Colorado, Illinois, Indiana, Iowa, Michigan, New Jersey, Pennsylvania, and Virginia. Maryland, Missouri, and Ohio will soon be added to the list once sports betting and online casino gaming head to those states.
Under the new partnership and current market share RSI has, the gaming operator can be available to 35% of Americans. Rush Street Interactive is the market leader in retail sports betting in Illinois, New York, and Pennsylvania.
Under the Penn National partnership, if Texas legalizes sports betting, Rush Street Interactive will be eligible for the first skin in the Lone Star State, subject to regulatory laws.
Penn National partnered with Barstool Sports in February 2020 to help launch the Barstool Sportsbook app in years to come. The partnership has also allowed Penn to partner with other sports betting operators under a second skin to help its business in sports betting grow.
The partnership formed between Penn and RSI also allowed Penn to enter the New York market under a second skin at Rivers Casino & Resort in Schenectady.
“Gaining potential access to what could become one of the nation’s most lucrative sports betting markets has been a major priority for our Company,” said Jon Kaplowitz, Penn National’s Sr. Vice President of Interactive Gaming.
Penn National is taking bets online in Pennsylvania and Michigan but expects to have Barstool Sportsbook live in 10 states by the end of 2021. Barstool saw $27.5 million wagered from 48,000 customers in its first 10 days in Michigan thanks to the brand Barstool Sports has created over the past decade. The sports betting operator could see similar growth in other states.
Stocks Reacting to the Partnership
Despite Rush Street Interactive potentially entering three states in 2021, its stock was down 4.56% on Monday and hit as low as $18.50.
On the other hand, Penn National saw a 1.95% increase to $122.41 in its stock from the chance to enter the New York market.
The company that is getting more out of the deal in market access is surprisingly down with RSI. The sports betting operator is already taking bets online in eight states and could hit double digits this year.
Investors could be looking at this from a different perspective considering RSI will be entering second skin with Penn. Also, Penn National is expecting to have a big expansion in 2021 and is also forming partnerships with multiple sportsbooks to help operators access emerging markets.
At the end of the day, this is a win-win for both parties to create healthy competition in new states trying to enter the sports betting market. RSI already has a strong presence in the Midwest, thanks to its headquarters in Chicago.
The sports betting industry could see similar partnerships like this as more states come online. Last fall, MGM and William Hill formed a partnership to allow William Hill to take over all sports betting operations. MGM could potentially partner with another sportsbook to operate under a second skin if the opportunity is there.
Other casinos could see this as an opportunity to secure a sportsbook in multiple states and allow someone to partner as a second skin if it’s looking to enter a specific state. Penn could be taking advantage of an opportunity that no one else sees yet.