Rush Street Interactive (RSI) risk factors, FY2025 10-K

Other

1. 01Summary of the Material Risks Associated with Our Business

Risks Related to Our Business and Industry

1. 02Competition in the online and retail sports betting and online gaming industry is intense and, as a result, we may fail to attract and retain customers, which may negatively impact our operations and growth prospects
2. 03Our projections, including for revenues, market share, expenses and profitability, are subject to significant risks, assumptions, estimates and uncertainties and may therefore differ materially from our expectations
3. 04Our operating results may vary, which may make future results difficult to predict with certainty23% rewritten
4. 05Recruitment and retention of our employees, including certain key employees, is vital to growing our business and meeting our business plans. Losing any of our executives or other key employees could harm our business
5. 06We follow the industry practice of restricting and managing betting limits at the individual customer level based on individual customer profiles and risk level; however, there is no guarantee that regulating bodies will allow operators such as us to impose limits at the individual customer level
6. 07The success of existing or future online offerings, including win or hold rates, depends on a variety of factors and is not completely controlled by us
7. 08If we fail to detect fraud or theft, including by our customers, employees or vendors, our reputation may suffer, which could harm our brand and reputation and negatively impact our business, financial condition, results of operations and prospects, and can subject us to investigations and litigation
8. 09Our business depends on a strong brand, and if we are not able to maintain, develop, and enhance our brand, our business and operating results may be negatively impacted. Moreover, our brand and reputation could be harmed if we were to experience significant negative publicity
9. 10We rely on many different marketing channels to acquire and retain customers and to promote our brands and our products. If we are not able to effectively acquire and retain customers via such channels then our business, financial condition, results of operations and prospects could be harmed
10. 11Our failure to maintain adequate financial, information technology and management processes and controls has in the past resulted in, and could in the future result in, material weaknesses that could lead to errors in our financial reporting, which in turn could adversely affect our business28% rewritten
11. 12We operate internationally, which subjects us to additional costs, complexities and risks that could adversely affect our operating results
12. 13Negative publicity about us or an adverse shift in public opinion regarding sports betting or online casino may adversely impact our business and customer retention38% rewritten
13. 14The success of our online poker offerings depends largely upon maintaining sufficient player liquidity
14. 15Until fairly recently, we had a history of losses and we could incur losses in the future33% rewritten

Risks Related to Government Regulation

1. 16Privacy and data protection regulations are complex and rapidly evolving areas. Any failure or alleged failure to comply with these laws could harm our business, reputation, financial condition and operating results

Risks Related to Intellectual Property and Data Security

1. 17Damage and claims arising from a breach may not be completely covered by our applicable insurance, if at all, or may exceed the amount of any insurance available
2. 18Failure to protect or enforce our intellectual property rights or the costs involved in such enforcement could harm our business, financial condition, results of operations and prospects
3. 19We license certain trademarks and domain names to RSG and its affiliates, and RSG’s and its affiliates’ use of such trademarks and domain names may harm our business
4. 20Failure to maintain the integrity of our computer systems and customer and/or employee data (wherever it resides) could result in damage to our reputation and subject us to fines, payment of damages, lawsuits and restrictions on our use of data
5. 21Use of artificial intelligence in our products or services may result in operational challenges, legal liability, reputational concerns and competitive risks28% rewritten
6. 22Changes to consumer privacy laws could adversely affect our ability to market our offerings effectively and may require us to change our business practices or expend significant amounts on compliance with such laws
7. 23Our technology transformation strategy places a significant strain on our management, operational, financial and other limited resources

Risks Related to our Third-Party Vendor Relationships

1. 24We rely on third-party cloud infrastructure, hosting and data center providers and server rooms hosted by certain of our land-based casino partners. Disruption or interference with this infrastructure or server rooms could adversely affect our business, financial condition, results of operations and prospects
2. 25Our platform contains third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to provide our offerings
3. 26We rely on third-party payment processors to process customer deposits and withdrawals made on our platform, and if we cannot manage our relationships with such third parties and other payment-related risks, our business, financial condition, results of operations and prospects could be adversely affected
4. 27If Internet or other technology-based service providers experience service interruptions, our ability to conduct our business may be impaired and our business, financial condition, results of operations and prospects could be adversely affected
5. 28Our growth will depend, in part, on the success of our strategic third-party relationships. Overreliance on certain third parties or our inability to extend existing relationships or agree to new relationships may cause unanticipated costs for us and impact our future financial performance

Risks Related to Our Arrangements with Affiliates

1. 29We are a “controlled” company within the meaning of the NYSE rules and, as a result, we qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections as those afforded to stockholders of companies that are subject to such governance requirements
2. 30The Controlling Holders control us, and their interests may conflict with ours or yours in the future
3. 31We have arrangements with our affiliates that impact our operations

Risks Related to our Liquidity and Capital Resources

1. 32We may require additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business
2. 33As part of our strategy, we have engaged and may continue to engage in transactions such as acquisitions, investments or partnerships as opportunities arise to add new or complementary businesses, products, brands, markets or technologiesNew

Risks Related to our Securities, Corporate Structure, Governing Documents and Tax Receivable Agreement

1. 34Our principal asset is our interests in RSILP (held through our wholly owned subsidiaries), and accordingly we depend on distributions from RSILP to pay taxes and expenses
2. 35In certain cases, payments under the TRA may exceed the actual tax benefits we and our consolidated subsidiaries (including the Special Limited Partner) realize or be accelerated
3. 36The trading price of our securities could be volatile and subject to wide fluctuations in response to various factors, and the market price of our securities may decline
4. 37There can be no assurance that we will be able to comply with the NYSE’s continued listing standards
5. 38Our Charter’s exclusive forum provision may have the effect of discouraging lawsuits against our directors and officers
6. 39Provisions in our Charter may inhibit a takeover of the Company, which could limit the price investors might be willing to pay in the future for securities and could entrench management

General Risk Factors

1. 40Economic downturns and political and market conditions beyond our control, including reduced consumer discretionary spending, and adverse developments with respect to financial institutions and associated liquidity risk could adversely affect our business, financial condition, results of operations and prospects53% rewritten
2. 41We may be subject to litigation in the operation of our business, and an adverse outcome in one or more proceedings could adversely affect our business
3. 42We could be subject to future governmental investigations and inquiries, legal proceedings and enforcement actions. Any such investigation, inquiry, proceeding or action could adversely affect our business
4. 43Our insurance may not provide adequate levels of coverage against claims
5. 44We may have difficulty accessing the service of banks, credit card issuers and payment processing providers, which may make it difficult to provide our offerings
6. 45Emerging technologies and products, such as sports-based prediction markets, blockchain and cryptocurrency, may disrupt traditional gaming models and create new competitive threats for us53% rewritten
7. 46Catastrophic events or geopolitical conditions may disrupt our business