Rush Street Interactive Files for Prediction Market License Despite Earlier Caution
BetRivers dangles a line in the water
Rush Street Interactive (RSI), owner of the BetRivers and PlaySugarHouse brands, has taken its first concrete steps toward launching a prediction market business.
In doing so, it has joined a club that has spent the better part of a year insisting it wanted no part of.
The company filed last week for a Designated Contract Market (DCM) license. Firms need this federal authorization to operate a prediction market or event contract exchange in the US. The filing goes against public comments from the company’s management team in February that it had no intention of entering the space.
Rush Street Joins Pure Play Digital Companies in Predictions Pivot
During Rush Street’s Q4 earnings call in February, Chief Executive Richard Schwartz fielded a range of questions from analysts about whether the company would enter prediction markets. His answer at the time amounted to a polite brush-off, as he said the markets were minimal and did not go to the core of sports betting.
He said prediction markets weren’t a priority for RSI. However, he did note that the matter was under “constant evaluation” and noted that the company could leverage the technology for prediction markets. The overall picture showed watchful distance.
That stance seemed more in line with that of retail operators like MGM and Caesars than pure-play digital companies like DraftKings and FanDuel, both of which had already dipped their toes into the world of predictions. As a company, RSI inhabits a middleground between those camps—it is still closely associated with Rush Street Gaming, which operates the Rivers chain of retail casinos, yet it spun off in 2020 and is an independent company focused on the digital channel.
That may explain its ambivalence about how it will approach this new opportunity.
Now, the question is how investors will react. They seemed to approve of the cautious stance, with RSI’s share price having more than doubled over the past 12 months. This is even more impressive as it came during a time when DraftKings dropped 29%. So far, news of the licensing decision doesn’t seem to have moved the needle much. Shares are down 3.5% week-over-week, yet still up 9.8% month-over-month.
A License Isn’t a Commitment to Launch
Getting a DCM license doesn’t mean that RSI must build or buy an exchange. The license simply acts as a regulatory gateway. Susquehanna analyst Joseph Stauff has suggested that the filing may be nothing more than a way for the company to keep its options open, rather than make a declaration of intent.
Building a compliant DCM is an expensive proposition, but applying with the CFTC is not. That’s in stark contrast to the iGaming space, where white-label casino and sportsbooks solutions are readily available, but many states’ licensing policies require a multimillion-dollar commitment.
The license application comes at a time when the Trump Administration is increasingly bullish on prediction markets. President Trump posted a message on social media last week, making it clear that he wants the CFTC to retain control over the oversight of prediction sites and not give control over to state regulators. He praised CFTC Chairman Michael Selig in the post and criticized Democratic lawmakers, who he accused of opposing the sector’s growth.
A Test of BetRivers’ Ties to the Retail Sector
What makes Rush Street’s step toward prediction markets stand out is the company that it keeps. The traditional sportsbook operators that have jumped on the prediction markets bandwagon for fear of missing out have largely been purely digitally focused companies like FanDuel, DraftKings, and Fanatics. They were born online, and their retail operations make up only a very small percentage of their overall handle and revenue.
The big retail casino companies, by contrast, have mostly kept their distance. Companies like MGM Resorts and Caesars, with significant land-based casinos in the US and close relationships with state gambling regulators, have shown reluctance to wade into the sector while so much remains up in the air legally.
The fear is that pursuing prediction market exposure could put their casino licenses at risk, with some regulators, such as the Nevada Gaming Control Board in October, explicitly cautioning operators that this is a possible consequence.
RSI’s middle position is unusual. What it does next will signal whether it still sees itself as the now-independent digital wing of a retail gambling chain, or as something more akin to what Golden Nugget Online Gaming has become since its acquisition by DraftKings — an online entity with a retail branding tie-in that’s more about marketing than identity.
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