10-Q 1 rsi-20220630.htm 10-Q rsi-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_______to_______
Commission file number: 001-39232
Rush Street Interactive, Inc.
(Exact name of registrant as specified in its charter)
Delaware84-3626708
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
900 N. Michigan Avenue, Suite 950
Chicago, Illinois 60611
(312) 915-2815
(Address of principal executive offices, including zip code)(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par value per shareRSIThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filerx
Non-accelerated filer¨Smaller reporting company¨
Emerging growth companyx
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of August 4, 2022, there were 64,056,803 shares outstanding of the registrant’s Class A common stock, $0.0001 par value per share, and 156,373,584 shares outstanding of the registrant’s Class V common stock, $0.0001 per value per share.


TABLE OF CONTENTS
Rush Street Interactive, Inc.


Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, as amended, that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements depend upon events, risks and uncertainties that may be outside of our control. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Any statements contained herein that are not statements of historical fact may be forward-looking statements.
Our projections, including for revenues, market share, expenses and profitability, are subject to significant risks, assumptions, estimates and uncertainties. You are cautioned that our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control, and, consequently, our actual results may differ materially from those projected.
Factors that could cause or contribute to such differences include, but are not limited to, the following:
competition in the online casino, online sports betting and retail sports betting (i.e., such as within a bricks-and-mortar casino) industries is intense and, as a result, we may fail to attract and retain customers, which may negatively impact our operations, growth prospects and financial condition;
economic downturns, such as recessions, and political and market conditions beyond our control, including a reduction in consumer discretionary spending and sports leagues shortening, delaying or cancelling parts of their seasons or certain events due to COVID-19, could adversely affect our business, financial condition, results of operations and prospects;
our growth prospects may suffer if we are unable to develop or maintain successful offerings, if we fail to pursue additional offerings or if we lose any of our executives or other key employees;
our business is subject to a variety of U.S. and foreign laws (including the laws of Colombia, Canada and Mexico, where we have business operations), many of which are unsettled and still developing, and our growth prospects depend on the legal status of real-money gaming in various jurisdictions;
failure to comply with regulatory requirements or to successfully obtain a license or permit applied for could adversely impact our ability to comply with licensing and regulatory requirements or to obtain or maintain licenses in other jurisdictions, or could cause financial institutions, online platforms and distributors to stop providing services to us;
we rely on information technology and other systems and platforms (including reliance on third-party providers to validate the identity and location of our customers and to process customer deposits and withdrawals), and any breach or disruption of such information technology could compromise our networks and the information stored there could be accessed, disclosed, lost, corrupted or stolen;
we have a history of losses and may continue to incur losses in the future;
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business;
the requirements of being a public company, including compliance with the U.S. Securities and Exchange Commission (“SEC”) requirements regarding internal controls over financial reporting, may strain our resources and divert management’s attention, and the increases in legal, accounting and compliance expenses that may continue to arise as a result of us being a publicly listed company may be greater than we anticipate;
we license certain trademarks and domain names to Rush Street Gaming, LLC (“RSG”) and its affiliates, and RSG’s and its affiliates’ use of such trademarks and domain names, or failure to protect or enforce our intellectual property rights, could harm our business, financial condition, results of operations and prospects;
we currently and will likely continue to rely on licenses and service agreements to use the intellectual property rights and technology of related or third parties that are incorporated into or used in our products and services; and
i

other factors described in our Annual Report on Form 10-K for our most recently completed fiscal year, including the “Business”, “Risk Factors,” “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures about Market Risk” sections, as well as described in our other filings with the SEC, such as this Report, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K.
Due to the uncertain nature of these factors, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any of these statements to reflect events or circumstances occurring after the date of this Report, unless required by law. New factors may emerge, and it is not possible to predict all factors that may affect our business and prospects.
Limitations of Key Metrics and Other Data
Our key metrics, which include monthly active users (“MAUs”) and average revenue per MAU (“ARPMAU”), are calculated using internal company data and numbers based on the activity of our users’ accounts. While these data and numbers are based on what we believe to be reasonable estimates of our user base and activity levels for the applicable period of measurement, there are inherent challenges in measuring usage of our offerings across large online and mobile populations based in numerous jurisdictions. In addition, we continuously seek to improve our estimates of our user base and user activity, and such estimates may change due to improvements or changes in our methodology.
We regularly evaluate these metrics to estimate the number of “duplicate” accounts among our MAUs and remove the effects of such duplicate accounts on our key metrics. A duplicate account is one that a user maintains in addition to his or her principal account. Generally, duplicate accounts arise as a result of users signing up to use more than one of our brands (i.e., BetRivers, PlaySugarHouse and RushBet) or to use our offerings in more than one jurisdiction, for instance when a user lives in New Jersey but works in New York. Our estimates of duplicate accounts are based on an internal review of a limited sample of accounts, and we apply significant judgment in making this determination. For example, to identify duplicate accounts we use data signals such as similar IP addresses or usernames. Our estimates may change as our methodologies evolve, including through the application of new data signals or technologies, which may allow us to identify previously undetected duplicate accounts and may improve our ability to evaluate a broader population of our users. Duplicate accounts are very difficult to measure, and it is possible that the actual number of duplicate accounts may vary significantly from our estimates.
Our data limitations may affect our understanding of certain details of our business. We regularly review our processes for calculating these metrics, and from time to time we may discover inaccuracies in our metrics or make adjustments to improve their accuracy, including adjustments that may result in the recalculation of our historical metrics. We believe that any such inaccuracies or adjustments are immaterial unless otherwise stated. In addition, our key metrics and related information and estimates, including the definitions and calculations of the same, may differ from those published by third parties or from similarly titled metrics of our competitors due to differences in operations, offerings, methodology and access to information.
The data and numbers used to calculate MAUs and ARPMAU discussed in this Report only include U.S. and Canada-based users of our online real-money offerings unless stated otherwise.
ii

PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements
RUSH STREET INTERACTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share and per share data)
June 30,
2022
December 31,
2021
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents$201,682 $281,030 
Restricted cash26,625 19,299 
Players’ receivables7,153 5,829 
Due from affiliates25,464 28,159 
Prepaid expenses and other current assets11,133 7,433 
Total current assets272,057 341,750 
Intangible assets, net60,223 53,380 
Property and equipment, net8,299 7,232 
Operating lease right-of-use asset, net1,416 1,562 
Other assets4,600 4,807 
Total assets$346,595 $408,731 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$3,539 $6,501 
Accrued expenses54,222 48,287 
Players’ liabilities31,568 24,160 
Deferred royalty, short-term1,495 1,415 
Operating lease liabilities, short-term548 509 
Other current liabilities1,988 3,062 
Total current liabilities93,360 83,934 
Deferred royalty, long-term14,877 15,633 
Operating lease liabilities, long-term899 1,148 
Other long-term liabilities266 315 
Total liabilities109,402 101,030 
Commitments and contingencies
Stockholders’ equity
Class A common stock, $0.0001 par value, 750,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 64,056,803 and 61,118,406 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
6 6 
Class V common stock, $0.0001 par value, 200,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 156,373,584 and 158,702,329 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
16 16 
Additional paid-in capital173,723 167,270 
Accumulated other comprehensive income (loss)(616)(475)
Accumulated deficit(104,410)(81,381)
Total stockholders’ equity attributable to Rush Street Interactive, Inc.68,719 85,436 
Non-controlling interests168,474 222,265 
Total stockholders’ equity237,193 307,701 
Total liabilities and stockholders’ equity$346,595 $408,731 
See accompanying notes to condensed consolidated financial statements.
F-1

RUSH STREET INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except for share and per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Revenue$143,736 $122,800 $278,674 $234,620 
Operating costs and expenses
Costs of revenue104,882 84,760 204,740 164,447 
Advertising and promotions44,742 37,543 111,591 79,759 
General administration and other16,610 11,768 32,150 28,332 
Depreciation and amortization3,290 914 6,027 1,588 
Total operating costs and expenses169,524 134,985 354,508 274,126 
Loss from operations(25,788)(12,185)(75,834)(39,506)
Other income (expenses)
Interest expense, net(223)(17)(445)(30)
Change in fair value of warrant liabilities   41,802 
Change in fair value of earnout interests liability   (13,740)
Total other income (expenses)(223)(17)(445)28,032 
Loss before income taxes(26,011)(12,202)(76,279)(11,474)
Income tax expense2,335 1,752 4,337 2,556 
Net loss$(28,346)$(13,954)$(80,616)$(14,030)
Net loss attributable to non-controlling interests(20,014)(10,187)(57,587)(10,246)
Net loss attributable to Rush Street Interactive, Inc.$(8,332)$(3,767)$(23,029)$(3,784)
Net loss per common share attributable to Rush Street Interactive, Inc. – basic$(0.13)$(0.06)$(0.37)$(0.07)
Weighted average common shares outstanding – basic63,976,146 59,163,547 62,889,746 53,093,129 
Net loss per common share attributable to Rush Street Interactive, Inc. – diluted$(0.13)$(0.06)$(0.37)$(0.24)
Weighted average common shares outstanding – diluted63,976,146 59,163,547 62,889,746 55,452,029 
See accompanying notes to condensed consolidated financial statements.







F-2

RUSH STREET INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Net loss$(28,346)$(13,954)$(80,616)$(14,030)
Other comprehensive loss
Foreign currency translation adjustment(1,923)(268)(409)(892)
Comprehensive loss$(30,269)$(14,222)$(81,025)$(14,922)
Comprehensive loss attributable to non-controlling interests(21,378)(10,383)(57,863)(10,923)
Comprehensive loss attributable to Rush Street Interactive, Inc.$(8,891)$(3,839)$(23,162)$(3,999)
See accompanying notes to condensed consolidated financial statements.
F-3

RUSH STREET INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
(Amounts in thousands except for share data)
Class A
Common Stock
Class V
Common Stock
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
Attributable
To RSI
Non-
Controlling
Interests
Total
Stockholders’
Equity
SharesAmountSharesAmount
Balance at December 31, 2021
61,118,406 $6 158,702,329 $16 $167,270 $(475)$(81,381)$85,436 $222,265 $307,701 
Share-based compensation— — — — 1,145 — — 1,145 2,792 3,937 
Foreign currency translation adjustment— — — — — 426 — 426 1,088 1,514 
Issuance of Class A Common Stock upon RSILP Unit Exchanges
2,808,745 — (2,808,745)— — — — — — — 
Net loss— — — — — — (14,697)(14,697)(37,573)(52,270)
Allocation of equity and non-controlling interests upon changes in RSILP ownership— — — — 3,458 (8)— 3,450 (3,450) 
Balance at March 31, 2022 (Unaudited)63,927,151 $6 155,893,584 $16 $171,873 $(57)$(96,078)$75,760 $185,122 $260,882 
Share-based compensation69,652 — — — 1,128 — — 1,128 2,752 3,880 
Foreign currency translation adjustment— — — — — (559)— (559)(1,364)(1,923)
Acquisition of trademark intangible asset60,000 — 480,000 — 786 — — 786 1,914 2,700 
Net loss— — — — — — (8,332)(8,332)(20,014)(28,346)
Allocation of equity and non-controlling interests upon changes in RSILP ownership— — — — (64)— — (64)64  
Balance at June 30, 2022 (Unaudited)
64,056,803 $6 156,373,584 $16 $173,723 $(616)$(104,410)$68,719 $168,474 $237,193 
F-4

Class A
Common Stock
Class V
Common Stock
Treasury StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
Attributable
To RSI
Non-
Controlling
Interests
Total
Stockholders’
Equity
SharesAmountSharesAmountSharesAmount
Balance at December 31, 2020
44,792,517 $4 160,000,000 $16 $ $ $ $93 $(61,892)$(61,779)$(205,550)$(267,329)
Share-based compensation571,239 — — — — — 2,557 — — 2,557 9,019 11,576 
Foreign currency translation adjustment— — — — — — — (143)— (143)(481)(624)
Issuance of Class A Common Stock upon exercise of Warrants14,014,197 2 — — — — 70,144 — — 70,146 189,749 259,895 
Repurchase of Class A Common Stock— — — — 218,589 (850)— — — (850)(2,615)(3,465)
Settlement of earnout interests liability— — — — — — 79,779 — — 79,779 285,009 364,788 
Net loss— — — — — — — — (17)(17)(59)(76)
Allocation of equity and non-controlling interests upon changes in RSILP ownership— — — — — — 8,757 — — 8,757 (8,757) 
Balance at March 31, 2021 (unaudited)59,377,953 $6 160,000,000 $16 218,589 $(850)$161,237 $(50)$(61,909)$98,450 $266,315 $364,765 
Share-based compensation18,125 — — — — — 1,259 — — 1,259 3,402 4,661 
Foreign currency translation adjustment— — — — — — — (72)— (72)(196)(268)
Distributions paid to non-controlling interest holders— — — — — — — — — — (337)(337)
Net loss— — — — — — — — (3,767)(3,767)(10,187)(13,954)
Allocation of equity and non-controlling interests upon changes in RSILP ownership— — — — — — 36 — — 36 (36) 
Balance at June 30, 2021 (Unaudited)
59,396,078 $6 160,000,000 $16 218,589 $(850)$162,532 $(122)$(65,676)$95,906 $258,961 $354,867 
See accompanying notes to condensed consolidated financial statements.
F-5

RUSH STREET INTERACTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Six Months Ended
June 30,
20222021
(Unaudited)(Unaudited)
Cash flows from operating activities
Net loss$(80,616)$(14,030)
Adjustments to reconcile net loss to net cash used in operating activities
Share-based compensation expense7,817 16,237 
Depreciation and amortization expense6,027 1,588 
Deferred income taxes46 (437)
Noncash lease expense241 139 
Change in fair value of earnout interests liability 13,740 
Change in fair value of warrant liabilities (41,802)
Changes in operating assets and liabilities:
Players’ receivables(1,324)(3,931)
Due from affiliates2,695 14,133 
Prepaid expenses and other current assets(3,700)263 
Other assets161 (491)
Accounts payable(3,049)(6,693)
Accrued expenses and other current liabilities4,008 3,521 
Players’ liabilities7,408 7,310 
Deferred royalty(676)(41)
Lease liabilities(302)71 
Net cash used in operating activities(61,264)(10,423)
Cash flows from investing activities
Purchases of property and equipment(1,769)(844)
Acquisition of gaming licenses(1,027)(2,349)
Internally developed software costs(5,578)(1,820)
Investment in long-term time deposits (250)
Acquisition of trademark intangible asset, net of cash acquired(1,540) 
Net cash used in investing activities(9,914)(5,263)
Cash flows from financing activities
Proceeds from shares issued for warrants 131,588 
Repurchase of common stock (3,465)
Principal payments of finance lease liabilities(455)(457)
Distributions paid to non-controlling interest holders (337)
Net cash (used in) provided by financing activities(455)127,329 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(389)(888)
Net change in cash, cash equivalents and restricted cash(72,022)110,755 
Cash, cash equivalents and restricted cash, at the beginning of the period (1)
300,329 262,065 
Cash, cash equivalents and restricted cash, at the end of the period (1)
$228,307 $372,820 

F-6

Six Months Ended
June 30,
20222021
(Unaudited)(Unaudited)
Supplemental disclosure of noncash investing and financing activities:
Right-of-use assets obtained in exchange for new or modified finance lease liabilities$410 $1,374 
Right-of-use assets obtained in exchange for new or modified operating lease liabilities$196 $ 
Non-cash redemption of Private Placement and Working Capital Warrants$ $50,798 
Non-cash settlement of Public Warrants$ $77,509 
Non-cash settlement of Earnout Interests Liability$ $364,788 
Allocation of equity and non-controlling interests upon changes in RSILP ownership$3,386 $8,793 
Class V Common stock issued to acquire trademark intangible asset$2,400 $ 
Class A Common stock issued to acquired trademark intangible asset$300 $ 
Increase in accounts payable for property and equipment purchases$87 $17 
Supplemental disclosure of cash flow information:
Cash paid for income taxes$5,025 $2,313 
Cash paid for interest$476 $14 
____________________________________
(1)Cash and cash equivalents and Restricted cash are each presented separately on the condensed consolidated balance sheets.
See accompanying notes to condensed consolidated financial statements.
F-7

RUSH STREET INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.Description of Business
Rush Street Interactive, Inc. is a holding company organized under the laws of the State of Delaware and, through its main operating subsidiary, Rush Street Interactive, LP and its subsidiaries (collectively, “RSILP”), is a leading online gaming company that provides online casino and sports betting in the U.S., Canadian and Latin American markets. Rush Street Interactive, Inc. and its subsidiaries (including RSILP) are collectively referred to as “RSI” or the “Company.” The Company is headquartered in Chicago, IL.
Impact of COVID-19
The COVID-19 pandemic has adversely impacted global commercial activity, disrupted supply chains and contributed to significant volatility in financial markets. The ongoing COVID-19 pandemic could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown such as a recession. The COVID-19 pandemic therefore presents material uncertainty and risk with respect to the Company and its performance and could affect its financial results in a materially adverse way.
The COVID-19 pandemic has significantly impacted RSI. Beyond disruptions in normal business operations, the COVID-19 pandemic has had a continued impact on consumer habits and preferences, with many consumers opting to avoid crowded public places such as land-based casinos. COVID-19 has also impacted sports betting due to the rescheduling, reconfiguring, suspension, postponement and cancellation of sports seasons and sporting events or exclusion of certain players or teams from sporting events, which has tended to reduce customers’ use of, and spending on, our sports betting offerings.
Most major professional sports leagues have largely resumed their activities in accordance with their planned schedules. The continued return of major sports and sporting events has generated significant interest and user activity in our sports betting product offerings. However, the possibility remains that sports seasons and sporting events may be rescheduled, reconfigured, suspended, postponed and/or cancelled due to COVID-19 outbreaks.

The Company’s revenues vary based on sports seasons and sporting events, among other factors, and cancellations, suspensions or alterations resulting from COVID-19 may adversely affect the Company’s revenue, possibly materially. However, the Company’s online casino offerings do not rely on sports seasons and sporting events, thus, they may partially offset this adverse impact on revenue.
The future effects of COVID-19 and the related impacts on consumer behavior is currently unknown. A significant or prolonged decrease in consumer spending on entertainment or leisure activities would likely have an adverse effect on demand for RSI offerings, reducing cash flows and revenues, thus materially harming the business, financial condition and results of operations. In addition, a significant uptick in COVID-19 cases or an emergence of additional variants or strains could cause other widespread or more severe impacts depending on where infection rates are highest. As steps taken to mitigate the spread of COVID-19 have necessitated a shift away from a traditional office environment for many employees, the Company has implemented business continuity programs to help ensure that our personnel were safe and that the business continues to function with minimal disruptions to normal work operations while personnel worked remotely. The Company will continue to monitor developments relating to disruptions and uncertainties caused by COVID-19.
2.Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and the applicable regulations of the SEC regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 7, 2022.
These unaudited condensed consolidated financial statements include the accounts of the Company, its directly and indirectly wholly owned subsidiaries, and all entities in which the Company has a controlling interest. RSI is deemed to have a controlling interest of RSILP through its wholly owned subsidiary RSI GP, which is the sole general partner of
F-8

RUSH STREET INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
RSILP. For consolidated entities that are less than wholly owned, third party holdings of equity interests are presented as Non-controlling interests in the Company’s condensed consolidated balance sheets and condensed consolidated statements of changes in equity (deficit). The portion of net earnings attributable to the non-controlling interests is presented as Net loss attributable to non-controlling interests and Comprehensive loss attributable to non-controlling interests in the Company’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss. All intercompany accounts and transactions have been eliminated upon consolidation.
The Company is organized as an umbrella partnership-C corporation, or UP-C, structure, as a result of the transactions contemplated in the Business Combination Agreement, dated as of July 27, 2020, among RSILP, the sellers set forth on the signature pages thereto (collectively, the “Sellers” and each, a “Seller”), dMY Sponsor, LLC (the “Sponsor”) and Rush Street Interactive GP, LLC (as amended and/or restated from time to time, the “Business Combination Agreement” and the transactions contemplated thereby, the “Business Combination”). As an UP-C, substantially all of the combined company’s assets are held by RSILP and the Company’s primary assets are its equity interests in RSILP (which are held indirectly through wholly owned subsidiaries of the Company – RSI ASLP, Inc. (the “Special Limited Partner”) and RSI GP, LLC (“RSI GP”), which is the general partner of RSILP). The Company controls RSILP through RSI GP, the general partner of RSILP. The non-controlling interest represents the Class A Common Units of RSILP (“RSILP Units”) held by holders other than the Company. As of June 30, 2022, the Company owned 29.06% of the RSILP Units and the holders of the non-controlling interest owned 70.94% of the RSILP Units.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on the Company’s reported total revenues, expenses, net loss, current assets, total assets, current liabilities, total liabilities, stockholders’ equity, non-controlling interests or cash flows. No reclassifications of prior period balances were material to the condensed consolidated financial statements.
Interim Unaudited Condensed Consolidated Financial Statements
The accompanying condensed consolidated balance sheet as of June 30, 2022, the condensed consolidated statements of operations, comprehensive loss, changes in equity for the three and six months ended June 30, 2022 and 2021, and the condensed consolidated statement of cash flows for the six months ended June 30, 2022 and 2021 are unaudited. The condensed consolidated balance sheet as of December 31, 2021 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The interim unaudited condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial condition, its operations and cash flows for the periods presented. The historical results are not necessarily indicative of future results, and the results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions reflected in the condensed consolidated financial statements relate to and include, but are not limited to: the valuation of share-based awards; long-lived assets and investments in equity; the estimated useful lives of property, equipment, and intangible assets; redemption rate assumptions associated with the Company’s player loyalty program and other discretionary player bonuses; deferred revenue relating to the Company’s social gaming revenue stream; accrued expenses; determination of the incremental borrowing rate to calculate operating lease liabilities and finance lease liabilities; valuation of the earnout interests liability; valuation of the warrant liabilities; and deferred taxes and amounts associated with the tax receivable agreement (the “Tax Receivable Agreement”) entered into in connection with the closing on December 29, 2020 of the transactions contemplated in the Business Combination Agreement (the “Closing”).

F-9

RUSH STREET INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Intangible Assets, Net
Trademark Asset
On June 10, 2022, the Company entered into an agreement to purchase all of the equity interests of Rush Street Productions, LLC, a Delaware limited liability company (“RSP”), in exchange for $1.5 million cash (net of $0.7 million cash acquired), 480,000 RSILP Units and the same number of newly issued Class V Common Stock, par value $0.0001 per share of the Company (the “Class V Common Stock”), valued at $2.4 million and 60,000 Class A Common Stock of the Company valued at $0.3 million. The Company also assumed $0.5 million of outstanding liabilities and incurred $0.4 million of transaction costs directly attributable to the acquisition.
To account for the transaction, the Company applied the definition of a business in ASC 805-10, Business Combinations – Overall and concluded that the asset set acquired does not constitute a business as substantially all of the fair value of the acquired assets was concentrated in a single asset. Therefore, the transaction has been accounted for as an asset acquisition in accordance with ASC 805-50, Business Combinations — Related Issues.

The acquired trademark asset represents an intangible assets that is recognized at its relative fair value in accordance with ASC 350-30, General Intangibles Other Than Goodwill. Goodwill is not recognized in an asset acquisition and, as such, any consideration that exceeds the fair value of the net assets acquired is allocated to the identifiable assets based on relative fair values.

The Company capitalized a $5.1 million trademark intangible asset representing the total consideration paid of $4.2 million, assumed liabilities of $0.5 million, and legal and consulting fees incurred that were directly attributable to the asset acquisition of $0.4 million. The asset is recognized in Intangible Assets, Net on the Company’s condensed consolidated balance sheet as of June 30, 2022 and is amortized over the estimated useful life of five years using the straight-line method. The asset acquisition is presented on the condensed consolidated statement of cash flows as Net cash used in investing activities.
Foreign Currency Gains and Losses
The financial statements of foreign subsidiaries are translated into U.S. dollars in accordance with ASC 830, Foreign Currency Matters, using period-end exchange rates for assets and liabilities, and average exchange rates for the period for revenues, costs and expenses. The U.S. dollar effects that arise from translating the net assets of these subsidiaries at changing rates are recorded in the foreign currency translation adjustment account, which is included in equity as a component of Accumulated other comprehensive income (loss).
If transactions are recorded in a currency other than the subsidiary’s functional currency, remeasurement into the functional currency is required and may result in transaction gains or losses. Transaction losses were $0.5 million and $0.6 million for the three and six months ended June 30, 2022, respectively, as compared to less than $0.1 million for the same periods in 2021. Amounts are recorded in General administrative and other on the Company’s condensed consolidated statement of operations.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326). Together with subsequent amendments, this ASU sets forth a “current expected credit loss” model, which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This ASU replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost, available-for-sale debt securities and applies to certain off-balance sheet credit exposures. This ASU is effective for the Company in calendar year 2023. The Company is currently assessing the impact of the adoption of this ASU on its condensed consolidated financial statements.
In August 2020, the FASB issued ASU 2020-6, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. This ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for the Company for fiscal years beginning after December 15, 2023,
F-10

RUSH STREET INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2021 and adoption must be as of the beginning of the Company’s annual fiscal year. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements and related disclosures.
3.Revenue Recognition
The Company’s revenue from contracts with customers is derived from online casino, online sports betting, retail sports betting and social gaming.
Online casino and online sports betting
Online casino offerings typically include the full suite of games available in land-based casinos, such as blackjack, roulette and slot machines. For these offerings, the Company generates revenue through hold, or gross winnings, as customers play against the house. Online casino revenue is generated based on total customer bets less amounts paid to customers for winning bets, less other incentives awarded to customers, plus or minus the change in the progressive jackpot liability.
Online sports betting involves a user placing a bet on the outcome of a sporting event, a series of sporting events, a sports-related activity or a series of sports-related activities, with the chance to win a pre-determined amount, often referred to as fixed odds. Online sports betting revenue is generated by setting odds such that there is a built-in theoretical margin in each bet offered to customers. Online sports betting revenue is generated based on total customer bets less amounts paid to customers for winning bets, less other incentives awarded to customers, plus or minus the change in unsettled bets, plus or minus the change in unclaimed tickets for settled retail bets.
Retail sports betting
The Company provides retail sports services to land-based partners in exchange for a monthly commission based on the land-based partner’s retail sportsbook revenue. Services generally include ongoing management and oversight of the retail sportsbook, technical support for the land-based partner’s customers, risk management, advertising and promotion, and support for the third-party vendor’s sports betting equipment. The Company has a single performance obligation to provide retail sports services and records the revenue as services are performed and when the commission amounts are no longer constrained (i.e., the amount is known).
Certain relationships with business partners provide the Company the ability to operate the retail sportsbook. In this scenario, revenue is generated based on total customer bets less amounts paid to customers for winning bets, less other incentives awarded to customers, plus or minus the change in unsettled retail sports bets.
Social gaming
The Company provides a social gaming platform for users to enjoy free-to-play games that use virtual credits. While virtual credits are issued to users for free, some users may choose to purchase additional virtual credits through the Company’s virtual cashier. The Company has a single performance obligation associated with social gaming services, to provide social gaming services to users upon the redemption of virtual credits. Deferred revenue is recorded when users purchase virtual credits and revenue is recognized when the virtual credits are redeemed and the Company’s performance obligation has been fulfilled.
Disaggregation of revenue for the three and six months ended June 30, 2022 and 2021, is as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
($ in thousands)2022202120222021
Online casino and online sports betting$141,174 $121,207 $272,832 $231,185 
Retail sports betting1,679 572 4,009 1,199 
Social gaming883 1,021 1,833 2,236 
Total revenue$143,736 $122,800 $278,674 $234,620 
F-11

RUSH STREET INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Revenue by geographic region for the three and six months ended June 30, 2022 and 2021, is as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
($ in thousands)2022202120222021
United States and Canada$130,546$111,756$253,080$217,059
Latin America, including Mexico13,19011,04425,59417,561
Total revenue$143,736 $122,800 $278,674 $234,620 
Deferred revenue associated with online casino and online sports betting revenue and retail sports betting revenue includes unsettled customer bets and unredeemed customer incentives, and is included within Players’ liabilities in the condensed consolidated balance sheets. Deferred revenue associated with social gaming revenue includes unredeemed social gaming virtual credits and is included within Other current liabilities in the condensed consolidated balance sheets. The deferred revenue balances as of June 30, 2022 and December 31, 2021 were as follows:
($ in thousands)
Deferred revenue balance at December 31, 2021
$4,637 
Deferred revenue balance at June 30, 2022
$4,549 
Revenue recognized in the period from amounts included in deferred revenue at December 31, 2021
$4,637 
4.Intangible Assets, Net
The Company has the following intangible assets, net as of June 30, 2022 and December 31, 2021:
($ in thousands)Weighted
Average
Remaining
Amortization
Period (years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
License Fees
June 30, 20229.65$50,070 $(8,942)$41,128
December 31, 20218.61$49,226 $(5,582)$43,644
Internally Developed Software
June 30, 20222.63$9,669 $(1,138)$8,531
December 31, 20212.96$4,091 $(286)$3,805
Developed Technology
June 30, 20227.50$5,931 $(371)$5,560
December 31, 20218.00$5,931 $$5,931
Trademark Asset
June 30, 20224.96$5,088 $(84)$5,004
December 31, 2021$ $$
Amortization expense was $2.8 million and $5.0 million for the three and six months ended June 30, 2022, respectively, compared to amortization expense of $0.6 million and $1.1 million for the same respective periods in 2021.
F-12

RUSH STREET INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5.Accrued Expenses
The Company has the following accrued expenses as of June 30, 2022 and December 31, 2021:
($ in thousands)June 30,
2022
December 31,
2021
Accrued compensation and related expenses$5,517 $6,038 
Accrued operating expenses21,477 15,955 
Accrued marketing expenses23,993 21,948 
Accrued professional fees1,657 1,753 
Due to affiliates640 1,005 
Other938 1,588 
Total accrued expenses$54,222 $48,287 
6.Warrant Liabilities
As part of the initial public offering of dMY Technology Group, Inc. (“dMY”), dMY issued to third-party investors 23.0 million units, consisting of one share of dMY’s Class A common stock (“Class A Common Stock”) and one-half of one warrant, at a price of $10.00 per unit. Each whole warrant entitled the holder to purchase one share of Class A Common Stock at an exercise price of $11.50 per share (the “Public Warrants”). Simultaneously with the dMY initial public offering, 6,600,000 private placement warrants were sold to the Sponsor (the “Private Placement Warrants”) and an additional 75,000 warrants were issued to the Sponsor upon the Closing in connection with converting certain working capital loans into warrants (the “Working Capital Warrants” and together with the Private Placement Warrants, the “Private Warrants” and the Private Warrants together with the Public Warrants, the “Warrants”). Each Private Warrant allowed the Sponsor to purchase one share of Class A Common Stock at $11.50 per share.
The Company classified the Warrants as derivative liabilities on its condensed consolidated balance sheet at fair value as of each reporting date, with subsequent changes in their respective fair values recognized in its condensed consolidated statement of operations and comprehensive loss.
Public Warrants
On February 22, 2021, the Company announced the redemption of all the Company’s Public Warrants, which were exercisable for an aggregate of approximately 11.5 million shares of Class A Common Stock at a price of $11.50 per share. During March 2021, 11,442,389 Public Warrants were exercised at a price of $11.50 per share, resulting in cash proceeds of approximately $131.6 million (of which $0.1 million was not received until April 2021) and the issuance of 11,442,389 shares of Class A Common Stock. None of the Public Warrants remained outstanding as of June 30, 2022 or December 31, 2021.
The Company determined the fair value of its Public Warrants based on the publicly listed trading price of such warrants as of the valuation date. Accordingly, the Public Warrants were classified as Level 1 financial instruments. The aggregate fair value of the Public Warrants on the dates of exercise throughout March 2021 was $77.5 million.
Private Warrants
On March 26, 2021, the Private Warrants were exercised in full on a cashless basis, resulting in the issuance of 2,571,808 shares of Class A Common Stock. None of the Private Warrants remained outstanding as of June 30, 2022 or December 31, 2021.
The estimated fair value of the Private Warrants was determined with Level 3 inputs using the Black-Scholes model. The significant inputs and assumptions in this method are the stock price, exercise price, volatility, risk-free rate, and term or maturity. The underlying stock price input is the closing stock price as of each valuation date and the exercise price is the price as stated in the warrant agreement. The volatility input was determined using the historical volatility of comparable publicly traded companies that operate in a similar industry or compete directly against the Company. Volatility for each comparable publicly traded company is calculated as the annualized standard deviation of daily continuously compounded returns. The Black-Scholes analysis is performed in a risk-neutral framework, which requires a
F-13

RUSH STREET INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
risk-free rate assumption based upon constant-maturity treasury yields, which are interpolated based on the remaining term of the Private Warrants as of each valuation date. The term/maturity is the duration between each valuation date and the maturity date, which is five years following the Closing, or December 29, 2025.
The Private Warrants were valued as of March 26, 2021 (i.e., the exercise date). The following table provides quantitative information regarding Level 3 fair value measurement inputs at their measurement dates:
March 26,
2021
Exercise price$11.50
Stock price$15.96
Volatility42.6%
Term (years)4.77
Risk-free interest rate0.76%
The fair value of the Private Warrants was $50.8 million as of March 26, 2021.
The Company recorded $41.8 million to Change in fair value of warrant liabilities on the condensed consolidated statement of operations and comprehensive loss, representing the change in fair value of the Public Warrants and Private Warrants from December 31, 2020 through the respective dates of exercise.
The following table summarizes the fair values of Warrant liabilities and change in fair value at each measurement date:
Public Warrants (Level 1)Private Warrants (Level 3)Total
Fair value of warrants at December 31, 2020$88,079 $82,030 $170,109 
Change in fair value of warrant liabilities(10,570)(31,232)(41,802)
Fair value of warrants at redemption(1)
(77,509)(50,798)(128,307)
Fair value of warrants at June 30, 2021
$ $ $ 
(1) This amount represents the change in fair value of warrant liabilities, excluding the effect of $4.0 million of transactions costs incurred in connection with the issuance of the Warrants.
7.Earnout Interests Liability
The earnout interests were subject to certain restrictions on transfer and voting and potential forfeiture pending the achievement of certain earnout targets. The earnout targets included (a) a change of control within three years of the Closing, (b) achieving certain revenue targets for the 2021 fiscal year, and (c) achieving certain volume weighted average share prices (“VWAPs”) within three years of the Closing.
Earnout interests represented a freestanding financial instrument initially classified as liabilities on the accompanying condensed consolidated balance sheet as the Company determined that these financial instruments were not indexed to the Company’s own equity in accordance with ASC 815, Derivatives and Hedging. Earnout interests were initially recorded at fair value and were adjusted to fair value at each reporting date with changes in fair value recorded in Change in fair value of earnout interests liability in the consolidated statement of operations and comprehensive loss.
On January 13, 2021, the earnout interests were fully earned and no longer subject to the applicable restrictions on transfer and voting because the VWAP exceeded $14.00 per share for 10 trading days within a 20 consecutive trading day period following the Closing. As a result, the earnout interests liability was reclassed to equity resulting in 1,212,813 shares of Class A Common Stock held by Darla Anderson, Francesca Luthi, Charles E. Wert and Sponsor and 15,000,000 shares of Class V Common Stock and RSILP Units issued to the Sellers (i.e., non-controlling interests) that were no longer subject to the applicable restrictions.
F-14

RUSH STREET INTERACTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company recorded $13.7 million to Change in fair value of earnout interests liability on the condensed consolidated statements of operations, representing the change in fair value of the earnout interests from December 31, 2020 through January 13, 2021 when the earnout interests were no longer subject to the restrictions.
Earnout Interests Liability
Total
December 31, 2020$351,048 
Change in fair value of earnout interests liability13,740 
Settlement of earnout interests liability
(364,788)
June 30, 2021
$ 
8.Equity
Non-Controlling Interest
The non-controlling interest represents the RSILP Units held by holders other than the Company.
The non-controlling interests owned 70.94% and 72.20% of the RSILP Units outstanding as of June 30, 2022 and December 31, 2021, respectively. The table below illustrates a rollforward of the non-controlling interest percentages during the six months ended June 30, 2022:
Non-Controlling Interest %
Non-controlling interest % as of December 31, 2021:
72.20 %
Issuance of Class A Common Stock upon RSILP Unit Exchanges
(1.28)%
Issuance of Class A Common Stock to acquire trademark intangible asset(0.02)%
Issuance of Class V Common Stock to acquire trademark intangible assets0.06 %
Issuance of Class A Common Stock in connection with the vesting of certain share-based equity grants(0.02)%
Non-controlling interest % as of June 30, 2022:
70.94 %
The non-controlling interests owned 73.00% and 76.89% (which excluded the earnout interests that did not vest until January 2021) of the RSILP Units outstanding, as of June 30, 2021 and December 31, 2020, respectively. The table below illustrates a rollforward of the non-controlling interest percentages during the six months ended June 30, 2021:
Non-Controlling Interest %
Non-controlling interest % as of December 31, 2020:
76.89 %
Issuance of RSILP units in connection with the vesting of earnout interest in January 20211.24 %
Issuance of Class A Common Stock in connection with the exercise of the Warrants(4.98)%
Repurchases of Class A Common Stock
0.08 %
Issuance of Class A Common Stock in connection with the vesting of certain share-based equity grants(0.23)%
Non-controlling interest % as of June 30, 2021:
73.00