RSI hails Michigan igaming growth amid a 376% US marketing spend increase
Operator eyes bolt-on acquisitions and tech investment as it ends Q1 with $363m in cash
Rush Street Interactive (RSI) increased its marketing spend by 376% year on year during Q1 to $40.5m as it moves into a high-growth phase.
Advertising and promotional expense accounted for 36% of the online casino group’s overall Q1 revenue of $112m.
The operator, which is operational with sports betting in 10 states and igaming in four states, is seeing a marketing spend return on investment within six months, while it is also delivering 3.5x payback returns from players after one year.
As a result of the higher marketing budget, Michigan GGR increased by 60% on a per-day basis when compared to January when the state launched.
Group president Richard Schwartz said the growth had come from new users, although it was also experiencing “very good retention of existing players.”
In March, RSI secured a 7% igaming market share in Michigan, according to the latest figures from the Michigan Gaming Control Board.
“We increased our marketing spend sequentially by 80% during the quarter, which was driven in large part by our launch in Michigan,” Schwartz told analysts during the firm’s Q1 earnings call this week.
“We expect to continue or increase this level of investment as the year goes on and the pace and timing of marketing increases will ultimately depend on when new markets go live, the sports calendar, and where we can find and deliver strong economics from our marketing investments,” Schwartz added.
Group CFO Kyle Sauers said the operator expected to continue to report losses at the adjusted EBITDA line in the short term, as it further invested in marketing and customer acquisition efforts.
RSI recorded an adjusted EBITDA loss of $15.1m during the quarter.
The operator ended Q1 with $363m in cash on its balance sheet with no debt or outstanding warrants.
CEO Greg Carlin said this put RSI in a good position to evaluate potential acquisitions and strategic partnerships, as well as move into new states and improve the technology stack.
“We look forward to executing in future quarters and years as we progress our goals of growing our existing markets, securing access in new markets, improving our technology stack, and customer experience, as well as continuing to evaluate potential acquisitions and strategic partnerships,” Carlin said.
RSI increased its 2021 revenue forecast by $20m to between $440m and $480m, indicating a 65% increase on 2020 revenue.