Wager on the Expansion of Online Gaming with Rush Street Interactive
Founded by “industry gaming veterans,” Rush Street Interactive (NYSE:RSI) is an online gaming site operator that’s expanding into multiple U.S. states. Perhaps you heard that online gaming became more popular after the onset of the novel coronavirus, so RSI stock may sound like a good investment.
On the other hand, the price of the stock has dropped slightly in recent weeks. That could be a cause of concern for prospective investors.
Or, it could be viewed as an opportunity to own the shares at a more favorable price point. This is particularly true in light of Rush Street Interactive’s value-added collaboration with a well-known casino operator.
We’ll definitely get into the details of that strategic partnership. First, though, we should examine the stock’s pullback, and measure it against the longer-term price action.
A Closer Look at RSI Stock
A year ago, RSI stock was trading slightly below the $10 level. Interestingly, the onset of the Covid-19 pandemic didn’t cause the share price to move up quickly.
There was a push to $14 in September of last year, but then a retracement to $11 in November. However, in mid-November a fast rally commenced, with the stock touching $24 in December and $25 in January of 2021.
After topping out, RSI stock began to decline sharply. As of today, shares are trading around $19.35.
Whether that’s good news or bad news depends on your view of the company and its growth prospects.
If you feel that the company is on the right track, then you now have an opportunity to own the shares at a decent price, which isn’t a bad thing at all.
No Gray Markets
Rush Street Interactive launched its first social gaming site, known as SugarHouse Casino4Fun, back in July of 2015.
Since that time, the company has been expanding its footprint in the U.S. gaming market – but only where it’s 100% legal.
For example, Rush Street Interactive established social gaming sites for the Rivers Casino in Schenectady, New York; the Rivers Casino Pittsburgh in Pennsylvania; and the Rivers Casino Des Plaines in Illinois.
The company proudly declares that it only works in legal and regulated markets, so there’s no gray market risk with Rush Street Interactive. Therefore, the company always pays gaming taxes to the local governments in each of the markets where it operates.
Rush Street Interactive also made history as it was the first U.S.-based gaming company to establish a regulated online gaming sportsbook in Latin America.
I would contend that the focus on highly regulated markets is a smart strategy for Rush Street Interactive. It should provide the stakeholders with confidence that the company’s business will be sustainable for the long term.
New Partnership, New States
The shareholders should be glad to learn that Rush Street Interactive plans to collaborate with another gaming company.
Specifically, Rush Street Interactive has entered into a strategic partnership agreement with casino operator Penn National Gaming (NASDAQ:PENN).
According to the agreement, Rush Street Interactive will be able “to offer its award-winning BetRivers.com real-money online casino and sports betting platform for up to 20 years in Ohio, Maryland and Missouri through potential second skins in each of those states,” subject to regulatory approvals, state law and license availability.
Even prior to the Penn National Gaming partnership, Rush Street Interactive already operated online gaming sites available for customers to play in eight U.S. states. The combined population of those potential customers totaled more than 68 million.
Rush Street Interactive President Richard Schwartz explained how the collaboration with Penn National Gaming would enhance his company’s market footprint even further.
“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 said.
The Bottom Line
Some folks might be concerned because of the recent small decline in RSI stock. However, there’s no need to be worried.
The important thing to keep in mind is that Rush Street Interactive is expanding its operations. And, it’s doing this in fully legal markets.
Plus, Rush Street Interactive is forming a partnership that will expose the company to more markets. Therefore, the share-price drop should be viewed as a prime buying opportunity.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
