Richard Schwartz is president of Rush Street Interactive, a multi-jurisdictional, multi-product online gaming company offering online casino and online sportsbook solutions in the Americas. It is the only online gaming provider with a footprint in legal and regulated markets in North America and Latin America, where it recently was awarded a concession license in Colombia, the region’s only nationally regulated online market. It also owns and operates a social gaming platform that powers five social gaming websites utilizing the same technology as its for-money platform.
Casino Journal Executive Editor Charles Anderer spoke with Schwartz about the company’s thriving New Jersey flagship operation, where it recently added a sportsbook solution to its fast-growing casino product, PlaySugarHouse.com, as well as other future growth opportunities. Below are some excerpts from this conversation.
First, please describe the lay of the land regarding your New Jersey product, which is affiliated with Golden Nugget.
SCHWARTZ: Golden Nugget currently has three umbrella brands using their one online license in New Jersey. They have their own website; Betfair, which I believe will soon begin to use the FanDuel brand; and PlaySugarHouse, which is ours. At the end of every month, Golden Nugget reports one revenue number, which is an aggregation of all their websites, including ours. How much each site generates is not published.
I’m not able to disclose specific revenue figures, but since we entered the market in 2016, we’ve grown faster than anybody else has in the New Jersey marketplace. We’ve built a differentiated online casino product based on our own in-house technology, which is unique. We’re the only land-based casino operator in the Northeast that has built its own in-house online platform and casino. Everyone else is essentially licensinga European platform. This has enabled us to be very nimble and innovative and not be distracted with other global opportunities that many of these European operators are confronted with on a daily basis.
Anything we create is exclusive to us in New Jersey. We have an advantage in that we’re able to innovate and not have to share the results and enhancements with other competitors, which other platform providers are required to do.
It has been reported that your average player session times are the longest in the market.
SCHWARTZ: We don’t disclose retention rates but we believe they are market leading, which validates that players are enjoying the user experience and the program that we offer.
What would you say you’ve gotten better at in the last two years?
SCHWARTZ: Really everything. When we launched the new platform, it was really risky to do so, given all the media attention in the U.S. market, you don’t really get a chance to have a beta launch outside of the limelight. But we’ve improved our product every day, by adding automation functionality and innovations that are built into new versions of our product every two weeks, which is very fast compared with the rest of the industry.
On top of that, we get instant feedback from the players channeled straight to our development organization as we operate. When we discover issues that can be improved, we have a real-time ability to get that information back to the development arm of our company that is responsible for scoping and implementing improvements.
There needs to be a lot of cohesiveness between an operating company and a platform. When the same company is vertically integrated and can manage both, the pieces fall into place in a more seamless fashion than if you have two different entities that aren’t truly connected in the way that we are.
New Jersey’s monthly online gaming revenues are five times higher now than when the business launched in the beginning of 2013. Obviously some of that comes from additional supply, but are you seeing real-growth rates on your site?
SCHWARTZ: For the last 12 to 18 months, while the online market in New Jersey has been showing growth, if you look at the individual property numbers, most of that growth has come from the Golden Nugget license that we are aligned with and the rest of the market has primarily been flat. It’s a bit of a misunderstanding when people say the whole market is growing; it’s really just a few operators within the market that are generating that growth and they happen to be the ones using that Golden Nugget’s license.
Are you seeing any positive impacts on the brick-and-mortar side of the business or is that even a goal?
SCHWARTZ: We view online gaming as being very complimentary with land-based casinos… primarily as a way to attract a new younger demographic to a land-based casino brand that in the past wouldn’t have attracted these players. For the last decade, the industry has talked about ways to attract a younger, Millennial audience, and that audience has gone digital with gaming, just as they have with cable and Netflix. Online is enabling us to capture that new audience and incentivize them to visit a land-based property. It has been well-documented that the majority of online players are not in the land-based databases, even in New Jersey, which has a mature land-based player base. Online gaming is a great marketing tool to attract a new demographic of player to the gambling industry.
Also underappreciated is a compelling data point released by that Golden Nugget: not only is online gaming attracting a new demographic, but existing players who start out as land-based and subsequently register and play online generate incremental online revenues and increase their spend at the land-based property by over 10 percent. That’s consistent with what has been seen in global markets such as the UK and British Columbia, Canada. When you get an additional channel for players to engage with a brand, players engage more with that brand in both channels.
Anything new in the way of game content?
SCHWARTZ: We just launched live dealer with Evolution Gaming. We have 10 live dealer games now, which we launched last month. It’s still early, but we think live dealer games attract land-based players who want to try online and they’re looking for games they feel they can trust more. They can see the cards being dealt by a live dealer. Players who don’t trust that an online software-based random number generator will get you the fair results may be more inclined to believe it when they see cards come out of a shoe. Also, VIPs should like it because the limits are often higher than for a digital-only game. And younger players, especially sports bettors, who want a little more action, may appreciate the overlap between sports and live-dealer games like blackjack.
Where do you think New Jersey is right now in terms of exploiting the full potential of online gaming?
SCHWARTZ: I think we’re in the beginning stages of the regulated market. But companies like ours that have made a six-year investment in this technology have an exciting opportunity ahead of us because every day that we’re live in highly-regulated markets represents an opportunity to improve on what we’ve done in the past. Certainly, there has been a lot of enhanced interest in the U.S. market coming from European companies that might not have thought the U.S. market was sufficiently attractive previously but are now more inclined to try to enter. I think there will be some potential suitability challenges as regulators ramp up to speed on what has been happening in this industry outside of the U.S.
Sports betting is bringing a whole other dimension; in Europe, sports betting and casinos are typically aligned categories online, generating similar volumes. There’s an expectation that it will be similar in the U.S. The big difference is there will be a learning curve in the U.S. for sports betting, which doesn’t really exist on the casino side. The majority of players will be new to sports betting and it’s going to take some time for them to feel educated and comfortable with some of the new types of wagering that will be available online.
In-game wagering, for instance?
SCHWARTZ: Yes. We think that’s a game changer for the U.S. In a football game, you might bet on who’s going to score next or if this current drive is going to lead to a touchdown. In a tennis match, you’re betting on every point, who’s going to win or lose. Nevada has limited in-game betting at the moment; in Europe you see this type of betting typically ends up dominating the category and generates 75 percent of the revenues, which is a massive change from what we’ve seen in the U.S.
So I do believe the online piece will change the whole sports betting experience here. New Jersey allows for in-game wagering subject to their investigations of the integrity of each league and confidence that outcomes are fair. In an average baseball game on our site, for instance, there are more than 50 in-game bet options. As the quality of official data improves and there is increased collaboration with the leagues, there will be an opportunity for more variety.
You partnered with Kambi for your sportsbook piece. Can you talk about what they bring?
SCHWARTZ: Kambi is a leading sportsbook supplier. They focus on their core competency which is providing what we feel is the best sports betting product on the market. They don’t provide what we have built, which is the iGaming platform. This is the foundation component from both a technical and regulatory standpoint where highly sensitive customer information, player activity and financial data is processed and stored. The combination of Kambi seamlessly integrated into our iGaming platform is a perfect partnership in that we both are leveraging key elements of the value chain together to create a better solution than either one of us could do on our own.
They are a sportsbook specialist; they don’t try to be all things for everybody. They focus on delivering solutions that deliver optimal betting results. For instance, some bettors when playing on competitive products will try to make an in-game bet but for some reason they will be too late or too slow and it won’t be accepted at the moment they try to make the bet. A good product opens up the bet sooner, and Kambi has a trading group that knows how to create in-game odds quickly so you can maximize the amount of time that a player has to decide which bet to make.
Keeping that offer open as long as possible is another important factor. We thought their technology was very strong in that area. They also do risk management on a global scale. The world is flat when it comes to sports betting; everyone knows all the games globally. The same risks occur everywhere so having a partner with extensive experience in that area is something that we thought would be very helpful.
Any other plans in the Northeast?
SCHWARTZ: We plan to be entering the Pennsylvania market. Rush Street Gaming properties, SugarHouse (Philadelphia) and Rivers (Pittsburgh), have both applied for online gaming licenses. There hasn’t been a filing yet for sportsbook but that’s something that’s being strongly considered.
How about elsewhere?
SCHWARTZ: Yes, we’re hoping to expand into other legal and regulated markets that open in the U.S. We’ve already received some interest in collaboration from other operators in other markets who are interested in using our platform and operating services, along with the Kambi sportsbook, so this is something that we’re exploring. We’re uniquely positioned to help other U.S. casino operators be successful in their markets.
Sounds like you’re in growth mode. Are you staffing up?
SCHWARTZ: We are. We’re moving to a new office in Collingswood (N.J.), near our existing Cherry Hill office, because we’re doubling the operations office. We’re also moving to a new office space in Chicago because we’re outgrowing our current space; and we opened up an expanded office in Europe last year for our development organization because that team is growing fast. Finally, we also opened a new office in Bogota earlier this year to support our regulated Colombian operations.