Rush Street Interactive Mulls Potential Sale, May Have Contacted DraftKings

Key Takeaways:

• Rush Street Interactive (RSI) shares jump on rumors of a potential sale, with DraftKings named as a possible suitor.
• Bloomberg reports, based on anonymous sources, that RSI has reached out to several potential buyers.
• The company's strong financial performance and debt-free status make it an attractive target for acquisition.

Rumors are swirling in the online gaming sector as Rush Street Interactive (RSI), a notable player in the market, is reportedly considering a sale and has allegedly reached out to various potential buyers, including the heavyweight DraftKings (NASDAQ: DKNG). This news has sparked a significant interest among investors, propelling RSI's stock to rally late Thursday.

According to a report by Bloomberg, which cites unidentified sources familiar with the matter, the Chicago-based RSI is exploring its options for a sale. While DraftKings is specifically mentioned, the report leaves us guessing about the other potential suitors that might be in line.

The buzz around this potential sale has had an immediate impact on RSI's stock performance. In a late-day rally, shares hit $7 before settling at $6.39, marking a 4.41% increase. The stock's performance has been impressive, with a 42.3% increase year to date and a whopping 96% over the past year, showcasing RSI as one of the standout performers in the gaming equity space.

A Brief History of RSI Buyout Rumors

The notion of RSI being a target for acquisition isn't a fresh storyline. Speculations have been circulating since at least 2021, with ESPN once rumored as a potential buyer. The narrative gained more traction last year with multiple reports suggesting RSI could be on the buyout list. RSI's CEO, Richard Schwartz, even hinted at the SBC Summit North America in May 2023 that the company would be open to discussions with potential buyers.

RSI's appeal as a buyout target isn't hard to see. The company is profitable, debt-free, and has a growing presence in the lucrative Latin American market, with operations in Mexico and Colombia. This strategic positioning could enhance its chances of securing a gaming license in Brazil, further bolstering its attractive profile to potential buyers.

In the U.S., RSI operates under the BetRivers and PlaySugarHouse brands, with a presence in multiple states and extending its sports wagering offerings to Ontario, Canada.

Who Could Be Eyeing RSI?

With a market capitalization of $1.32 billion as of Thursday's close, according to Seeking Alpha data, RSI could be a feasible acquisition target for a broad swath of larger rivals, including DraftKings. Given RSI's strong foothold in the iGaming sector and its monopoly in Delaware, any deal to purchase the company could command a significant premium.

While RSI might not dominate the online sports betting market share, its significant internet casino footprint makes it an attractive proposition for entities looking to strengthen their position in the iGaming space. This includes companies like DraftKings, among others, who are keen on expanding their market share in this lucrative sector.

The potential sale of Rush Street Interactive underscores the dynamic and highly competitive nature of the online gaming industry, where strategic acquisitions can swiftly alter market landscapes and redefine competitive advantages. As the story unfolds, all eyes will be on RSI and its next moves in this high-stakes game of corporate strategy.

(First reported by: Bloomberg, Date)