Chicago Billionaire Neil Bluhm Doubles Down On Gambling Empire As More States Legalize Sports Betting
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As more states seek to legalizing online betting to raise earnings, one Chicago billionaire is currently capitalizing the quick growing market. Realty tycoon Neil Bluhm, who cofounded online gambling establishment and sports betting attire Rush Street Interactive (RSI), got more than $1 billion richer when his firm closed on its merger with the blank check business dMY Technology Group on December 30.
Bluhm, 83, founded RSI in 2012 with his long time business partner Greg Carlin as an offshoot of his Rush Street Gaming, which owns casinos in Illinois, New York City and Pennsylvania. RSI provides sports wagering, where clients bank on sports video games online, and online betting, where consumers play numerous casino games such as blackjack and slots digitally. RSI tape-recorded a $90 million loss on $178 million sales in the first nine months of 2020, with expected profits of about $270 million for the year. RSI anticipates sales to grow to $320 million in 2021. "We're growing like a weed and we're adding states all the time," Bluhm told Forbes in a . "The development potential is significant."
He owns a 54% stake in RSI worth $2.3 billion, part of his approximated $6.3 billion net worth, which consists of Rush Street Gaming as well as a realty portfolio covering from California to Chicago and small stakes in the Chicago Bulls and the Chicago White Sox. Carlin's 17% stake in RSI deserves about $720 million. The value of RSI has more than doubled because July, when the company initially announced its strategies to go public.
RSI went public by combining with a special purpose acquisition business, or SPAC, a financial investment automobile with no operations which goes public to raise funds to obtain a privately-owned company. It's the most recent to join the SPAC boom after RSI's main rival, DraftKings, went public via SPAC in April and Texas billionaire Tilman Fertitta's Golden Nugget Online Gaming finished its own reverse merger on December 30. The DraftKings IPO minted a brand-new billionaire, Israeli business owner Shalom Meckenzie, whose 6% stake in the business is now worth about $1.2 billion.
RSI is currently active in nine U.S. states - Colorado, Illinois, Indiana, Iowa, Michigan, New Jersey, New York and Pennsylvania - and the country of Colombia, while DraftKings runs in 11 states as well as the U.K. and Canada. DraftKings is one of the leaders in the sports wagering market, however RSI is a bigger player in the online gambling establishment market. According to Macquarie Group analyst Chad Beynon, RSI manages about 15% of the U.S. online gambling establishment market, equivalent to privately-owned FanDuel and more than DraftKings, MGM and Golden Nugget, which each have 10% market share. In sports wagering, FanDuel and DraftKings together have about 60% of the market, with RSI in the low single digits.
"You actually need to look out a couple of years and say, 'what will the marketplace share be for a few of these winners in the market?' Unfortunately this is a time where we're believing like software application analysts, where we put a numerous on 2025 or 2030 numbers," said Beynon. "The next question is what does Rush Street do between 2021 and 2030? DraftKings is out there and they have the market access, and Rush Street has actually done very well in the markets that they remain in.
While online sports wagering is currently legal in 13 states and Washington D.C. - seven extra states allow only in-person sports wagering - the legal market for online gambling establishments is much smaller sized. Since early January 2021, online casino video games are only running in Delaware, New Jersey, Nevada, Pennsylvania and West Virginia. But the landscape is quickly changing: Michigan is introducing both online casinos and sports betting later this month and Nebraska voters approved the legalization of betting by a wide margin in November, although the state legislature still needs to enact laws to regulate the market. Facing a money crunch from the Covid-19 pandemic, more states might be convinced to legalize either sports wagering or online gaming in the coming years.
"Very few states have enabled [online gambling establishments] so far, but they need income now, numerous states are considering it. They're all looking at it because they're desperate for profits and jobs," said Bluhm. "Sports wagering is getting all the attention, however we're projecting that online casinos will be better."
According to BofA Securities analyst Shaun Kelley, the combined market for sports betting and online betting is anticipated to swell from about $5 billion in yearly sales today to $22 billion a decade from now as more states join the map. On January 6, New York Governor Andrew Cuomo revealed he would push to legislate mobile and online sports betting in the state, a significant increase for the industry. The next largest states to sign up with could be Florida, where legislators have submitted a costs to legislate sports wagering, and Massachusetts, where a sports betting bill was gone by the state House but is still held up in the Senate.
"We're in the very early innings of what development might appear like," said Kelley. "The industry is in such a nascent phase. The huge driver of development is that there's a lot of states and apps that are offered that just weren't there a year back."
Forbs Giacomo Tognini