US online casino and sports betting operator Rush Street Interactive is set to go public via a merger with a blank check company, according to recent reports.
The deal, which will value Rush Street Interactive at around $1.8 billion, is expected to be confirmed by the involved parties as early as today.
A special purpose acquisition company (SPAC), dMY is managed by former EMC Corp. executive Harry You and former Glu Mobile Inc. CEO Niccolo de Masi. As part of its planned takeover of Rush Street Interactive, the company seeks to raise additional equity. It has reportedly engaged with potential investors to raise more than $150 million. dMY went public this past February to raise $230 million in its initial public offering.
Rush Street Interactive was founded in 2012 as the digital gambling arm of Chicago-based major regional casino operator Rush Street Gaming. Rush Street Interactive operates casino and sports betting websites and apps in multiple US states and Latin America.
According to people familiar with the ongoing merger talks, a deal could be announced in the coming days. However, sources said that as with any deal that has not been closed, it is possible that talks could collapse and a transaction could not occur.
Representatives for the two companies have not commented on the matter.
Latest in a Host of Similar Deals
A merger between Rush Street Interactive and dMY could be the latest in flurry of similar deals since the start of the coronavirus pandemic and the ensuing market volatility and global economic uncertainty.
Merging with a SPAC has quickly became a popular way for closely held companies operating in different industries to go public in the past several months. At a time of economic tumult, SPACs can offer liquidity. In addition, traditional IPOs can take much longer – from several months up to a year – while there have been SPAC deals to have taken only a couple of weeks to close and have offered much better price support.
Businesses from electric car ventures Nikola Corp. and Fisker Inc. to potato chip maker Utz Quality Foods have announced similar deals with blank check companies in a bid to offset some of the losses caused by the worst global health panic in many years.
And it should be noted that a similar merger occurred within the online gambling space not long ago. In April, daily fantasy sports and sports betting operator DraftKings closed a $3.3 billion three-way merger with special purpose acquisition company Diamond Eagle Acquisition Corp. and betting technology provider SBTech to go public on NASDAQ and form “the only vertically integrated pure-play sports betting and online gaming company based in the United States.”
News also emerged in June that blank check company Landcadia II would acquire Tilman Fertitta-owned Golden Nugget Online Gaming, Inc. in a deal that would see the online casino operator go public on NASDAQ and become “only the second pure publicly traded online casino company in the US.” The deal is expected to close in the third quarter of the year.
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