Yesterday, Rush Street Interactive (RSI), a subsidiary of Rush Street Gaming, shared its intention to end its sports betting operations in Connecticut. Despite their initial public offering three years ago, the interactive gaming firm has yet to achieve profitability, reporting a net operating loss of $134.3 million and an adjusted EBITDA of negative $91.8 million for 2022.
RSI’s PlaySugarHouse.com platform is responsible for Connecticut Lottery’s online sportsbook operations, in addition to brick-and-mortar sportsbooks at restaurants and bars. To ensure all prior bets are honored and paid out, Rush Street is currently in the process of working with the Connecticut Lottery Corporation to find a replacement partner.
When the partnership was announced in August 2021, it was considered a significant development for the interactive gaming company. The state, with its population of 3.6 million, is ranked 29th among the 50 US states, yet has an average household income of approximately $80,000, which is sixth in the country. These financial prospects were likely the main driving force behind RSI’s decision to bid on the agreement, which included a minimum revenue share of $170 million over the course of the 10-year contract.
Unfortunately, the sports betting market has proven more difficult than expected. Between the thin margins and the high costs of marketing and promotional incentives, RSI has seen their shares tumble. Moreover, PlaySugarHouse has faced stiff competition from the larger, more well-known brands like FanDuel and DraftKings, leaving the platform light on traffic.
Last year, Rush paid the state just over $1 million in taxes for online sports betting and about $1.3 million for retail betting. Casino.org reached out to the CLC for details on any separation fee for the early termination, but the lottery refused to provide further information.