Business

Rush Street Interactive CEO weighs in on going public via SPAC

Greg Carlin – Rush Street Interactive CEO joins Yahoo Finance’s On The Move panel to share his thoughts on going public via SPA and discuss the rise of sports betting amid the pandemic.

Video Transcript

ADAM SHAPIRO: Welcome back to Yahoo Finance. It was last July we learned that Rush Street International had agreed to a merger with a blank check company. That would be dMY Technology Group. It’s a SPAC, because you can’t ignore the fact that there is a rise of sports gaming. Some people would say sports betting. Others would say sports gambling.

But who better to help us understand how all of us can get in on this than Greg Carlin from Rush Street Interactive? He is the CEO. Congratulations, and welcome.

GREG CARLIN: Thank you, Adam. Thanks for having me.

ADAM SHAPIRO: So what does the future hold? I mean, we do a lot of discussions about SPACs. But we haven’t done many about firms like yours, which are now going to be public.

GREG CARLIN: Sure. Well, the future holds lots of growth. I mean, if you think about sports betting and online casino, we’re really in the early innings in the US. The Supreme Court overturned PASPA– you know, the law prohibiting sports betting– in May of 2018. And New Jersey was the first state to go live in, I think it was July of 2018. So we’re really seeing a start to a long trend.

ADAM SHAPIRO: Dan Howley, are you there?

DAN HOWLEY: Yeah. Greg, I want to ask– you know, there’s a lot of competition now in the gambling space, especially online. I guess, how do you kind of help differentiate yourself? And as an aside, totally different– what are the odds that the Mets win the World Series next year?

GREG CARLIN: Well, I don’t have that off the top of my head. But you could go to BetRivers.com and check that out, for sure. I’d have to look that up for you. But as far as the competition, you’re right. It’s a very competitive market.

But we really differentiate ourselves. You know, our DNA is in the bricks and mortar business, so we really understand the traditional casino customer. I think that’s been really helpful with our success.

You know, right now, in the last three months, we’ve been number one in online casino. And we’re in the top five for sports betting. And a lot of our competitors are spending a lot of money on marketing. And we’re also spending on marketing, but I think we’re a little more judicious with our capital.

RICK NEWMAN: Yeah, Greg. Rick Newman here. You’ve probably tried to analyze the future market. How many states do you think are likely to legalize gambling? I mean, half the states? I mean, most states? And what is this going to do to what we know are the gambling meccas– obviously, Las Vegas being at the top of that list?

GREG CARLIN: Sure. That’s a good question, actually. The sports betting has really legalized relatively quickly. If you look around the country, I think there’s maybe 14 or 15 states or so.

Some of them have mobile. Some of them are just retail only. But I think you’re going to see sports betting legalized in most states. And then online casino, generally, will be a little bit less and a little bit behind sports betting.

But for example, if you look at West Virginia, they legalized sports betting first. Then roughly a year later or so, they legalized online casino. And if you look at the state of Michigan, which will be hopefully launching before the end of the year, when they legalized online gaming they did sports betting and casino together. But the trend is, generally, the states will legalize sports betting first and then casino following that.

ADAM SHAPIRO: Greg, I have to admit, I’m somewhat ignorant on the legal aspects of all of this. Because I remember, when I first got stationed in Washington, DC for a previous job, the issue of federal legalization of sports gaming, and gaming in general, was front and center. And it hasn’t– it didn’t materialize. So now, 13 years later, would it make it much easier if the federal government just once and for all addressed this, instead of having to do this piecemeal with 50 states, as it seems you have to do?

GREG CARLIN: Well, you know, interestingly, casinos, gaming– legalized gaming has been a state-by-state issue. If you look at bricks-and-mortar casinos, it’s really you have state by state.

Nevada was really the first state to have casinos back in the ’40s. Atlantic City came on in 1978. And then around 1989 or ’90, you start to see other states legalize. And I think with online gaming, you’re going to see a similar trend. So it really has been a state-by-state issue.

RICK NEWMAN: Greg, do you think about reputational risk and things that might be related to that, if this becomes so big that we start to see stories about gambling addictions becoming a bigger problem, people, you know, gambling away their life savings or things like this?

GREG CARLIN: That is certainly something that we think about, is gambling addiction. We really don’t want customers that have a problem with gambling. And online, we have certain safeguards within our app.

So you can self-exclude yourself. You can put a limit on your betting. You can– it’s really important. We want people to be happy long-term customers and not bet over their heads, for sure.

DAN HOWLEY: Greg, I just want to ask, what do you guys do then, you know, as far as COVID and the canceling of different sporting events? You know, the NFL having a heck of a time right now. Baseball managed to get through relatively unscathed, and NBA was probably the best case, and NHL.

But you know, going forward, we’re going to go into the winter sports, and then we’re going to go into the spring. You know, I guess, how do you guys balance the potential for the sports to just be outright canceled at certain points?

GREG CARLIN: Well, that’s certainly a risk for sports betting, actually. But if you look at the– if you look at the pie, for example, in Pennsylvania and New Jersey, where you’ve got online casino and sports betting, casino is actually– in August, casino made up 78% of revenue relative to sports betting. So really, while sports betting gets a lot of media attention, online casino is actually a much bigger market and much less dependent on the sports.

But certainly, for sports betting itself, in March when most of the leagues shut down it had an impact. But the flipside is you’ve seen an acceleration in people moving to online casinos in markets where it’s legal.

ADAM SHAPIRO: Greg Carlin is the CEO from Rush Street Interactive. Thank you so much for joining us “On the Move.” We’ll be right back after this.

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