RSI Applies for Prediction Market License

(AsiaGameHub) –   Rush Street Interactive has submitted an application for a Designated Contract Market license, opening up a potential path for the parent company of BetRivers and PlaySugarHouse to enter the U.S. prediction markets space.

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Good to Know

• RSI submitted its DCM license application to the CFTC.
• Richard Schwartz played down the significance of prediction markets back in February.
• This application provides RSI with flexible options, rather than representing a confirmed launch roadmap.

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For months, Rush Street Interactive has kept prediction markets at arm’s length. Now the firm has taken the first official regulatory step required to operate an event contract exchange within the United States.

A DCM license would allow RSI to run a federally supervised prediction market. However, the application does not obligate the company to construct an exchange, acquire an existing one, or roll out a product. It may simply provide RSI with the flexibility to move forward at a later date should the regulatory landscape become more defined.

RSI Falls Between Two Factions in the Gambling Industry

This application puts RSI in an awkward position. DraftKings, FanDuel, and Fanatics have already expressed interest in prediction markets, in part because their business models are rooted in large-scale digital operations. MGM Resorts and Caesars have taken a more cautious approach, as their land-based casino licenses and existing relationships with state regulators expose them to additional risk.

RSI falls right between these two groups. It was spun off as an independent digital business in 2020, though the Rush Street brand remains closely associated with Rush Street Gaming and the Rivers casino portfolio.

This middle ground makes the application even more notable. Back in February, CEO Richard Schwartz told analysts that prediction markets were not a top priority and were not a core part of the company’s sports betting offering. That said, he also noted that RSI was “continuously evaluating” the space and could leverage its existing technology for the segment if it made sense to do so.

That potential pathway is now open to the company. Susquehanna analyst Joseph Stauff has posited that the application may be a move to keep options open, rather than a concrete decision to launch. This lines up with the low-commitment nature of a CFTC application, especially when compared to the costs of securing iGaming or sportsbook licenses on a state-by-state basis.

Investors have not shown a strong reaction to the news. RSI’s share price is down 3.5% week-over-week, but remains up 9.8% month-over-month. Over the last 12 months, the company’s stock has more than doubled in value, while DraftKings’ share price has dropped 29% over the same period.

Regulatory risk remains a key concern. A number of state gambling regulators have warned operators that engaging in prediction market activity could put their casino licenses at risk. Nevada’s regulators issued that exact warning in October, and the broader debate over sports event contracts remains unresolved.

RSI now has a clear choice to make. It can hold onto the application as a safeguard, or it can follow its digital competitors into the prediction markets space. Either way, it appears BetRivers is no longer satisfied with observing the segment from the sidelines.