Michigan’s appeal as an online wagering haven has only grown with the recent news that Rush Street Interactive is exploring potential sale opportunities.
Early reports from Bloomberg suggested DraftKings had its eye on the highly-coveted license. The iGaming giant somewhat addressed the rumors with a vague response that neither confirmed nor denied its reported interest. But, that was last week.
This week, another possible suitor emerged, one that hasn’t yet landed in Michigan.
According to gambling industry analyst Steve Ruddock, the iconic Hard Rock could be the one expanding into Michigan. Ruddock specifically cited a finding of the same nature by Eilers & Krejcik Gaming in his weekly Straight to the Point newsletter.
Right now, it appears a deal between RSI and Hard Rock is more likely than a deal between the former and DraftKings. Per Ruddock, there are two possible avenues for making this happen.
Avenue #1: Fill the vacancy left by SI Casino
While a straight-up buy-in seems like the obvious answer, it’s not always the most feasible. This is simply because of the fact that the opportunity is quite rare. There are only 15 Michigan online casino and sportsbook operator licenses to go around, meaning they come at a premium.
So, when 888 Holdings announced its split with Sports Illustrated on Mar. 6, signaling the end of SI’s casino and sportsbook product in Michigan, one of those highly sought-after licenses went up for grabs.
As alluded to earlier, Hard Rock is supposedly “angling for the rights” to the vacant license. That said, Ruddock shared a note from EKG saying there will be no shortage of suitors.
In that case, Hard Rock could pivot to avenue number two to increase its chances of entry.
Avenue #2: Acquire RSI and assume its holdings
Undoubtedly the more expensive option, acquiring RSI would at least give Hard Rock a strong foundation heading in. If Hard Rock opts for this route, it would inherit BetRivers’ online casino and sports betting product.
The former’s lifetime revenue of $316.3 million ranks fourth amongst 15 competitors, trailing only the big three of BetMGM, FanDuel, and DraftKings. Per PlayMichigan data, BetRivers Casino Michigan owns a 6.3% share of the state’s online casino market.
Ruddock says that adding a Hard Rock brand, plus additional cross-sell from a Hard Rock sports betting app would boost that number.
Although not as prosperous on the sports betting side, that’s not uncommon in Michigan. BetRivers online sportsbook ranks seventh out of 15 by lifetime handle at $304.6 million.
However, that shouldn’t be much of a deterrent for Hard Rock, which excels on the sports betting side. The Seminole Tribe’s Hard Rock Bet is the only legal online sportsbook in Florida. Ruddock said that state accounts for about 5% of the US sports betting market.
Hard Rock’s position in The Sunshine State remains unchallenged, for now.
DK could use growth opportunity for Hard Rock as leverage
Hard Rock, a world-renowned entertainment company, could view RSI’s situation as an opportunity to diversify its options.
For that same reason, however, Ruddock says DraftKings may make an offer of its own. Perhaps preventing Hard Rock from growing its and BetRivers’ market share is reason enough to engage with RSI. Ruddock reminded readers that this isn’t a foreign concept for DraftKings.
“Remember, DraftKings bid on PointsBet to keep Fanatics from acquiring the platform or, as it turned out, to increase the price it paid,” said Ruddock.
Should Hard Rock and RSI sides reach an agreement, Michigan would become the second state to house a Hard Rock online casino offering, joining New Jersey. Hard Rock currently operates an online sportsbook in Arizona, New Jersey, Ohio, Indiana, Tennessee, Virginia, and Florida.
