The Connecticut Lottery Corporation finally has a sports betting partner. After several delays, the CLC named Rush Street Interactive as its retail and online sports betting partner Thursday.
The parties reached a 10-year agreement that includes a $170 million minimum revenue share guarantee to the lottery. Rush Street Interactive (RSI) will serve as the Connecticut Lottery’s exclusive provider of a sports betting system for mobile, online, and retail channels.
“We look forward to working with the team at Rush Street Interactive,” said Greg Smith, CLC President & CEO. “We had 15 quality proposals from well-established gaming companies, and RSI rose to the top through the combination of its experience and commitment to quality products, customer service, and responsible gaming safeguards. We’re excited about this partnership and know our players will be getting an excellent product and customer service.”
The CLC also announced an agreement with Connecticut-based Sportech to offer sports betting at 10 retail locations.
Why Connecticut chose Rush Street Interactive
Connecticut Lottery Chairman Rob Simmelkjaer named several reasons for selecting RSI, including its success online in New Jersey and through retail in New York.
Other factors listed by Simmelkjaer:
- RSI’s track record of competing effectively
- Financial offer based both on guarantee and revenue share percentage
- Demonstrated history of integrity
- A grasp of the state gaming landscape
- Experience in retail sports betting
“We believe that our retail footprint is a huge advantage that we have in this competition we’re going to be entering into with our friends, the tribal nations, and we wanted somebody who has a strong track record in operating and succeeding in retail,” Simmelkjaer said.
The CLC needed an operator who could compete with the two formidable tribal partners, DraftKings (Mashantucket Pequot) and FanDuel (Mohegan).
Richard Schwartz, recently named CEO of Rush Street Interactive, pointed out that RSI was No. 1 in online gambling revenue in Illinois and Pennsylvania in the last calendar year. Eilers & Krejcik recently ranked RSI’s sports betting app fourth among 31 tested. Schwartz stressed their in-game betting feature, customer service, and quick payouts as particular strengths.
“We expect to be very competitive on a market-share basis with FanDuel and DraftKings, the partners of both of the tribal nations,” Simmelkjaer said. “Some of the advantages we have we think are the retail footprint, and we believe our lottery retail network can also be very helpful in terms of helping us bring in users and customers.”
Terms of Connecticut Lottery sports betting partnership
Simmelkjaer previously made public his desire for the lottery to receive at last 50% of gaming revenue.
He said the terms of the agreement with Rush Street Interactive achieve that goal. However, the exact revenue percentage is difficult to determine.
That is because RSI will be able to deduct marketing and player bonuses from gross revenue. Then the CLC will receive the majority of net revenue. Simmelkjaer added that there is an annual cap to expenses RSI can claim.
“We chose RSI for a number of reasons,” Simmelkjaer said. “Purely from a financial point of view, we graded and deemed it to be the best offer both in terms of minimum revenue guarantee and revenue share.”
Simmelkjaer expects to eclipse the $170 million guarantee.
“Our estimates are that we’ll do certainly more substantial revenue than that over the course of the term.”
It’s unclear what brand name the Connecticut Lottery and RSI will use for the sports betting app. Rush Street Interactive operates under PlaySugarHouse in New Jersey and BetRivers in other states. However, a weird quirk in the Connecticut law prevents the lottery from using a casino brand, seemingly ruling out BetRivers.
Legal issues with Sportech avoided
Simmelkjaer noted that the agreement with Sportech includes a clause not to take legal action against the state. Sportech threatened a lawsuit after not having a specific role carved out in Connecticut sports betting legislation.
“Any talk of legal action or litigation between Sportech and the state can now be put to bed, and Sportech is excited to join us as our partner as we open sports betting in the state of Connecticut,” Simmelkjaer said.
As the licensed pari-mutuel operator in the state, Sportech already has retail betting facilities throughout the state. The law permits the CLC to put sports betting at 15 retail locations.
As part of the agreement, RSI kiosks and over-the-counter computer terminals will be placed at 10 Sportech OTBs. Those include the popular Bobby V’s, Sports Haven, and Winners locations in Hartford and six other cities. They will use the same RSI betting odds as the mobile app.
The CLC will still name five more retail locations. Simmelkjaer said one would be in Bridgeport, and acknowledged that the lottery is looking at the XL Center in Hartford as a potential location. The Connecticut Lottery retained the option to contract with Sportech to help operate those other locations.
Timetable for Connecticut sports betting launch
Smith explained that many factors in when sports betting will launch are out of the CLC’s hands. These include promulgating regulations, legislative approval of regulations, licensing, and federal approval of the tribal compact amendments.
However, he thinks the lottery got the right partners to be ready to go on day one of sports betting in Connecticut.
“RSI has significant experience setting up online and retail sportsbook and has been working on a CT plan for over a month,” Smith said. “Sportech locations already exist and have ongoing pari-mutuel operations continuing, and the CLC has been engaged with these two highly qualified and accomplished companies for a few months now. So we expect to be ready when the starting date is set.”
Gov. Ned Lamont set the goal as the beginning of the NFL season. Simmelkjaer said that was optimistic, but not far off.
“We are confident we will be taking sports bets this NFL season in the early part of it,” Simmelkjaer said. “It’s just a matter of what exactly that date would be is still a bit open to consideration. We’re not sure.”
He added that it’s possible that retail could launch before online, as has happened in other states. But Schwartz pointed out RSI’s history of being first to market.
“Our focus is to be ready whenever the Connecticut opportunity presents itself,” Schwartz said. “We have a track record of being first to launch in a wide range of markets. We were first to launch sports betting in Illinois, Indiana, Colorado, first day in Michigan. And so our goal is to be prepared to launch as soon as it’s viable in Connecticut.”
Online lottery operator still to come
Now that the Connecticut Lottery has its sports betting partner, it can focus on finding one for the CT online lottery.
The new law and compact amendments also permit the CLC to offer online lottery products.
Smith said the CLC would be putting out request for proposals for an online lottery partner within the week.
“Our expectations on that right now are that it would be operational in the first quarter of 2022,” Smith said.
