As more states seek to legislating online wagering to raise revenue, one Chicago billionaire is currently cashing in on the quick growing market. Property mogul Neil Bluhm, who cofounded online gambling establishment and sports wagering outfit 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, established RSI in 2012 with his longtime business partner Greg Carlin as a spin-off of his Rush Street Gaming, which owns casinos in Illinois, New York and Pennsylvania. RSI provides sports wagering, where clients wager on sports video games online, and online gaming, where clients play various casino video games such as blackjack and fruit machine digitally. RSI recorded a $90 million loss on $178 million sales in the very first nine months of 2020, with anticipated earnings 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 informed Forbes in a phone interview. "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, that includes Rush Street Gaming in addition to a genuine estate portfolio covering from California to Chicago and little stakes in the Chicago Bulls and the Chicago White Sox. Carlin's 17% stake in RSI is worth about $720 million. The value of RSI has more than doubled considering that July, when the firm initially revealed its plans to go public.

RSI went public by combining with an unique function acquisition company, or SPAC, a financial investment automobile with no operations which goes public to raise funds to obtain a privately-owned firm. It's the most current to join the SPAC boom after RSI's main rival, DraftKings, went public through 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 company is now worth about $1.2 billion.

RSI is presently active in 9 U.S. states - Colorado, Illinois, Indiana, Iowa, Michigan, New Jersey, New York City and Pennsylvania - and the country of Colombia, while DraftKings operates in 11 states along with the U.K. and Canada. DraftKings is one of the leaders in the sports betting market, however RSI is a bigger gamer in the online casino industry. 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 betting, FanDuel and DraftKings together have about 60% of the market, with RSI in the low single digits.

"You actually have to look out a couple of years and state, 'what will the market share be for some of these winners in the market?' Unfortunately this is a time where we're thinking like software application experts, where we put a several on 2025 or 2030 numbers," stated Beynon. "The next question is what does Rush Street do between 2021 and 2030? DraftKings is out there and they have the market gain access to, and Rush Street has actually done really well in the markets that they're in.

While online sports wagering is currently legal in 13 states and Washington D.C. - seven additional states allow only in-person sports wagering - the legal market for online casinos is much smaller sized. As of early January 2021, online gambling establishment games are just operating in Delaware, New Jersey, Nevada, Pennsylvania and West Virginia. But the landscape is quickly changing: Michigan is releasing both online gambling establishments and sports wagering later this month and Nebraska citizens approved the legalization of gambling by a wide margin in November, although the state legislature still needs to enact laws to control the market. Facing a cash crunch from the Covid-19 pandemic, more states could be persuaded to legislate either sports betting or online gaming in the coming years.

"Very couple of states have actually enabled [online gambling establishments] up until now, however they require income now, many states are considering it. They're all looking at it since they're desperate for profits and tasks," stated Bluhm. "Sports wagering is getting all the attention, but we're predicting that online casinos will be more important."

According to BofA Securities expert Shaun Kelley, the combined market for sports betting and online gaming is anticipated to balloon from about $5 billion in annual sales today to $22 billion a years from now as more states join the map. On January 6, New York Governor Andrew Cuomo announced he would press to legalize mobile and online sports wagering in the state, a significant boost for the market. The next biggest states to sign up with might be Florida, where legislators have actually submitted an expense to legislate sports wagering, and Massachusetts, where a sports betting bill was passed by the state House however is still held up in the Senate.

"We're in the extremely early innings of what growth might appear like," stated Kelley. "The market is in such a nascent phase. The huge driver of growth is that there's a great deal of states and apps that are readily available that just weren't there a year back."

Forbs Giacomo Tognini