New changes are coming for sports betting in Connecticut as the state lottery must now decide which company will fill the void in its online sports betting market after Illinois-based gaming giant, Rush Street Interactive (RSI), leaves after canceling its 10-year contract.
Promises Promises
There’s an old saying, “Be careful what you wish for because you just might get it.” And that age-old maxim has relevance in RSI’s decision to offer almost double the $95 million minimum the state was asking, which turned out to be $170 million to the CT Lottery over the life of the 10-year contract and a guarantee of more than 50% revenue to the lottery.
Lottery Chair Rob Simmelkjaer at the time said, “We chose RSI for several reasons. First of all, from the purely financial point of view, we graded and we perceived their offer to be the best offer among the ones received from various bidders.”
Simmelkjaer went on to add, “I was public in my desire for us to receive at least 50% of net gaming revenue, and their offer did achieve that for us. Again, as I stated we can’t name a specific number because of the deductions, and how much is deducted will end up determining exactly where on that scale we will end up. But we were very pleased with the revenue share as well as the minimum revenue guarantee.”
Why Did RSI Leave?
Although the contract was supposed to last a decade, the partnership came crashing down after less than two years. There simply wasn’t enough money in it for RSI as the state’s other two mobile sports betting platforms just happened to be the top two in the nation with FanDuel and DraftKings completing the triumvirate in the Constitution State.
Banging heads with the industry’s twin titans was not good for business as RSI pulled just 9.7% of the handle and contributed only 7.4% of the revenue over the 18 months that they had been live in Connecticut.
“Consistent with our long-term strategic goals, after much deliberation and discussions with the CLC, we believe it is in the best interest of RSI and our stockholders to wind down this partnership,” CEO Richard Schwartz said in the announcement.
Other Disappointed Bidders
Four other companies were left at the altar when the CT Lottery chose RSI to be one of its three platform providers. Caesars, MGM Resorts, Penn National, and PointsBet were outbid the last time.
It will be interesting to see if PointsBet gets back into the game considering there is an ongoing battle for its USA assets between Fanatics and DraftKings. As of this writing, DraftKings swooped in with a late bid of $195 million which was 30% more than the offer Fanatics made and PointsBet was reported to approve.
The current RSI pact has roughly eight years remaining and whichever company gets the nod will have its agreement in place. RSI pulled out in March and the deadline to announce its replacement has already come and gone. We expect CT Lottery to state the new sportsbook entering the market at any time.
*Bookmakers Review will continue to monitor this story and update our readers as events unfold.
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