Posted on: March 30, 2023, 01:59h.
Final up to date on: March 30, 2023, 02:13h.
Lengthy rumored to be a possible takeover goal, Rush Avenue Interactive (NYSE: RSI) might be extra enticing to potential suitors following the operator’s lately introduced departure from the Connecticut sports activities betting scene.
On Tuesday, Chicago-based Rush Avenue Interactive introduced it’s scrapping its sports activities betting partnership with the Connecticut Lottery Company (CLC) in a bid to stem losses and easy its path to profitability. The operator supplied sports activities wagering providers within the state underneath the PlaySugarHouse.com model.
That information arrived lower than two years after RSI gained the contract to handle CLC’s sports activities betting platform. In Connecticut, solely the lottery, the Mohegan Tribe, and the Mashantucket Pequot Tribal Nation supply sports activities wagering providers.
The gaming firm mentioned the transfer to scuttle the Connecticut contract is “in one of the best curiosity of RSI and our stockholders” and “in keeping with our long-term strategic objectives.”
RSI Takeover Chatter Renewed
With a market capitalization of simply $655.33 million and its shares down 61% over the previous 12 months, it’s not shocking that RSI is often talked about as an acquisition candidate.
The elimination of overhang from the CT Lottery deal, although it seemingly got here with a penalty, might make RSI extra enticing for a purchaser, particularly with the agency now buying and selling round an all-time low (its enterprise worth on the time of writing was roughly $465 million),” in line with Eilers & Krejcik Gaming (EKG).
The analysis agency provides that whereas RSI was seemingly topic to a penalty to get out of the Connecticut pact, the transfer might pay dividends over the lengthy haul because the operator seems to right-size its price construction on the highway to halting losses.
The deal with profitability might be to the liking of traders and suitors alike as a result of the sports activities betting business’s days of development in any respect prices are gone, seemingly on a everlasting foundation, as market contributors demand operators hone their deal with producing earnings.
RSI’s New Method May Spur Takeover
Whereas EKG didn’t point out particular firms that might make a run at RSI, the analysis agency highlighted some components that might make the goal extra alluring to potential consumers. These embrace a deal with particular markets the place it owns superior model recognition.
RSI’s home method seems to be “based mostly round states the place it has properties and/or on-line on line casino entry, similar to Illinois and Pennsylvania,” famous EKG. “For perspective, it at the moment has round a ten% share of Illinois OSB GGR and, per our estimates, roughly 16% share of Pennsylvania on-line on line casino GGR.”
The analysis agency added that RSI could also be striving to maintain a lid on prices till web casinos, the operator’s core competency, are extra broadly authorised throughout the US. At present, simply six states enable that type of gaming, and it might be a while earlier than that quantity grows in a big style.