NJ’s ~$145 GGR per capita could imply upside to long-term US TAM targets. That said, NJ online gross gaming revenue (GGR) already reached $1.3 billion in 2020. Applying similar consumption rates for the entire US population implies a $36 billion total addressable market however, we don’t expect every state to fully deregulate iGaming by 2025. Europe’s online gambling industry already generates $30 billion annually and is highly prevalent in nations such as the U.K. The market opportunity for online gambling in the US could reach $25 billion annual revenues by 2025 if 25-30 states deregulate online gambling. Since then, 16 states have deregulated some form of online gambling and several more are taking steps towards legalization. In 2018, the US Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) which enabled states to deregulate sports betting on a state-by-state basis. RSI has operated in NJ since 2016, where NJ was the first state to deregulate online casinos. Rush Street Interactive is an early entrant in the nascent US online gaming and sports betting industry. Intense competition leading to low market share and high marketing costs.Slow state-by-state legalization of iGaming and sports betting.We forecast revenue growth at a 26% CAGR from 2020 to 2025 after 338% revenue growth in 2020.RSI is among the few US iGaming companies with a vertically integrated technology stack, where its proprietary back-end iGaming platform enables it to more quickly enter new states and customize wagering options and user experiences. RSI also has market access rights in NY, OH, MO and plans to launch in additional states as more markets deregulate. The company offers online wagering in NJ, PA, MI, IL, IA, CO, IN and VA and we expect RSI to launch in WV and MD this year. RSI maintains a #1 market share position in the US iCasino industry and the #3 or #4 position in sports betting for most states. We believe online betting offers a $20 – $ 25 billion market opportunity in the US by 2025. Today 15 states currently offer some form of online wagering (includes Washington D.C.) and at least one more state will roll out iGaming in 2021. After the Professional and Amateur Sports Protection Act (PASPA) was repealed in 2018, deregulation for online gaming and sports betting has accelerated. RSI is an early entrant in the US online gaming industry, where the company has operated iCasino in NJ since 2016.We are initiating coverage with a BUY rating. It's taking market share across newly regulated markets. Rush Street Interactive ( NYSE: RSI) operates online casinos and sportsbooks in the nascent US online gaming industry.
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