Good day, ladies and gentlemen. Thank you for standing by. Welcome to the RSI Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Please note that this conference call is being recorded today, August 12, 2021. I will now turn the call over to Warren Seiler, Associate Vice President of Investor Relations and Development.
Thank you, operator, and good afternoon. By now, everyone should have access to our Q2 2021 earnings release. It can be found under the heading Financials Quarterly Results in the Investors section of the RSI website atrushstreetinteractive.com. Some of our comments today will be forward looking statements within the meaning of the federal securities laws. Forward looking statements are not statements of historical facts and are usually identified by the use of words such as will, expect, should or other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.
We assume no responsibility for updating any forward looking statements. Therefore, you should exercise caution in interpreting them and relying upon them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. During the call, we will discuss our non GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
A reconciliation of these measures The most directly comparable GAAP measures are available in our Q2 2021 earnings release, which is available in the Investors section of the RSI website at restriainteractivedot With me on the call today, we have Greg Carlin, Vice Chairman Richard Schwartz, CEO and Kyle Sowers, Chief Financial Officer. We will first provide some opening remarks and then open the call to questions. With that, I'll turn the call over to Greg. Thanks, Lauren, and good afternoon, everyone. Thank you
for joining the call today. Before we get into our quarterly results, I'm excited to announce that RSI has named Richard Schwartz, We co founded the business with me and Neil as CEO. I will become Vice Chairman of the Board and I will continue in my role as CEO of Rush Street Gaming, which as most of you know is a separately owned private company. It was obvious to me back in 2012 when we started RSI That the U. S.
Casino industry would expand to the digital channel. And I'm very proud of all that we've accomplished during my tenure as CEO. Since we launched our first online casino in New Jersey, RSI has been at the forefront of the online gaming industry. Richard has been a key partner to me and Neil in building RSI from the very beginning. His extensive knowledge of online gaming space and his understanding of the customer has been integral in establishing RSI as a leader in our industry.
Now that we're operating in 11 jurisdictions and we've successfully transitioned to a public company, the And Vice Chairman of the Board, I'm confident there is no one better suited to execute RSI's business plan. I'm excited to continue working with Richard and our With that, I'll turn the call over to Richard to discuss our Q2 results.
Thank you, Greg, and good afternoon, everyone. To kick things off, I'd like to acknowledge Greg's partnership and leadership in establishing RSI as an industry leader. Together, over nearly a decade, He and Neil set forth a bold path for our side right from the outset and have a vision to support developing our own platform in house At a time when it was uncommon to do so. I'm grateful for the trust and confidence of the Board and I'm honored to lead our side during this time of tremendous growth for both our I'm further excited about all the prospects of why I have for RSI, not only in Icasino and online sports wagering, but also into new and expanded product verticals. I have several key topics I'd like to cover today.
First, I'll highlight another quarter of record revenues and the raising of our full year revenue guidance. Next, I'll give an update on our market access initiatives and some exciting recent developments. Then I'll talk about our operational and marketing excellence. And finally, I'll walk through product and technology rollouts are helping to drive our differentiated user experience before handing it over to Kyle to dive deeper into our financials. Turning to our results.
Our team delivered another solid quarter of year over year and sequential revenue growth, Demonstrating our continued ability to grow the top line, while prudently investing in the marketing and technology needed to do so. Revenue was $122,800,000 during the quarter, representing a year over year increase of 89%. Just as impressive as our overall revenue growth was a balance in that growth. Not only did we grow casino revenue sequentially during the period, but also sportsbook revenues despite a lighter sports calendar. With this continued success and growth in our business, We are once again raising our guidance.
We now expect our 2021 full year guidance to be between 465,000,000 and $495,000,000 implying 72% year over year top line growth at the midpoint. This is up from the previous estimated revenue growth of 65% at the midpoint of our prior guidance range. Kyle will provide some additional details in his remarks. In terms of market launch, during the Q2, We went live in West Virginia with our BetRivers online casino. This was on the heels of successful launches in Michigan, Virginia and Iowa during quarter 1.
We now operate in 11 jurisdictions, 8 that have online sports betting, 5 with retail sports betting, 4 have online casino and Columbia with both online casino and sports betting. Following the launch in several new states during the first half of the year and since our last earnings update, we have continued to make significant progress in our market Access Initiatives. To start, we are very excited to announce earlier this afternoon that we have been selected by the Connecticut Lottery to be their exclusive sports betting partner, making RSI one of only 3 Sportsbook operators will be authorized to operate in the state. This partnership will be inclusive of not only the operation of up to 15 retail sportsbook locations across the state of Connecticut, but also a statewide mobile sportsbook. The selection was a very significant milestone for us as it validated strength of our product, services and organization in what was a very competitive process.
In fact, the Connecticut Lottery has disclosed that we were selected from a pool of 15 other High quality competitors. Although the state is currently working to finalize the sports betting regulations, we expect to launch Connecticut this fall during football It is also worth noting that we believe our recognition for operational excellence by the Connecticut Lottery will open future doors to compete for opportunities in other lottery markets. As many of you are also aware, New York has recently accepted bids from mobile sports betting And on Monday of this week, we formally submitted our bid as part of our process. We are excited about the opportunity to offer our online sports book in the state of New York. We also have recently applied for our mobile sports betting license in Arizona alongside our partner there and are looking forward to the opportunity to launch that market during the NFL season.
Another exciting development in yesterday's announcement was with Boom Entertainment. In addition to a minor equity investment in Boom, We have gained market access opportunities in Louisiana, Mississippi and New Mexico for both sports and casino, Subject to legislation and licensing approvals, Louisiana is the most imminent opportunity as enabling legislation passed in June And should go live soon after the mobile sports betting regulations are finalized. Lastly, we are continuing to plan our market entry into Ontario, which has an open market access structure and will be moving ahead with both casino and sportsbook. The RSI team has fantastic experience and relationships in that province And we are really excited about the opportunity given the size of the Ontario market. As you can see, we have no shortage of near term opportunities And expected state launches coming over the next couple of quarters and our business development team is hard at work to continue the strong momentum to secure partnerships in many new jurisdictions.
We also continue to be very encouraged by the legislative momentum for online sports betting And the addition of Online Casino to many states already have improved sports betting. It's become very clear when looking at the numbers in New Jersey, Pennsylvania and Michigan An online casino is a greater generator of tax revenue and many state legislators are recognizing this opportunity. I now want to turn to some specific highlights from the quarter and exciting trends we are seeing. As I mentioned previously, We grew both online sports betting and online casinos sequentially from quarter 1 and quarter 2, including in each of our newly launched markets of Michigan, Virginia, Iowa and West Virginia. Thus far into Q3, each of these states are continuing to see growth With our per day net revenue trending higher quarter over quarter.
In Michigan, which is a highly competitive market In West Virginia, where we entered a little later than some of our peers, we have seen a nice progression of market share gain since launch. In fact, we grew our market share in West Virginia from 2.6% when we first entered the market in April to over 8% in July despite strong competition. This is just further evidence that once we introduce new players to the Betrivers platform and our superior user experience, we are able to win them over and retain their loyalty. I also think it's important to point out that we are now profitable in 4 of our markets. We talk a lot about marketing investments, payback period And the retention of our customers.
That positive contribution is strong evidence that as markets continue to mature, we can and we will drive strong Profitability over time. As I discussed earlier, there will be plenty of new markets to invest in over the coming quarters, which will put us in investment mode for the time being. But we are proud of our ability to be disciplined and calculated in the way we invest and ultimately generate substantial profitability for markets as they mature. Now I'd like to switch gears to talk about some of our marketing initiatives, Investments and the results we are seeing from them. First, I'd like to highlight a very exciting partnership that we announced earlier this week with NFL legend, Mike Ditka.
We couldn't be more excited to have Mr. Dibka on our team as a Betrivers brand ambassador and look forward to working alongside him and our other ambassadors to create new and exciting content for our players to enjoy. From a marketing spend perspective, After going public, we accelerated our spend significantly in Q1, which was impacted by investments in new state launches, particularly in Michigan. In Q2, our spend decreased modestly compared to the Q1 As the sports calendar was a little lighter and we found ways to target our marketing spend more efficiently. As we head into football season And leading up to what we expect to be several notable state launches later this year and into early 2022, We expect our marketing spend to increase again as we see a lot of opportunities to add players to the platform.
Our build to market effectively is critical to our success. We remain a data driven organization using dynamic learnings and analytics to acquire, convert, retain and reengage customers. Real time insights from our business intelligence team allow us to continuously Optimize our marketing spend based on a return on investment focused model. This model considers a variety of factors including the products offered in The performance of diversified marketing channels, predicted lifetime value, marginal costs and expenses And behavior of customers across various product offerings. When it comes to the efficiency of our marketing, we continue to see great results.
We still have an average payback period of 6 months for all of our cohorts since inception with 1 year and 3 year payback of 4 times and nearly 5.5 times respectively. Our marketing spend during the first half of the year was 33% of our revenue, further demonstrating our ability to convert marketing investment dollars into top line revenue. Given the strong results, We are willing and able to increase the time period over which our cohorts pay back, but we'll only do so prudently and with an eye towards long term profitability. These marketing efforts continue to pay off in terms of attracting new players As our monthly active users or MAUs were up 128% year on year, our average revenue per MAU was up 25% sequentially to $3.77 during the quarter. Shifting gears a bit, also want to take a moment to congratulate all the employees of Rush Free Interactive for being named customer service operator of the year, Casino Operator of the Year and Social Gaming Operator of the Year had a 2021 EGR North America Awards.
EGR is a highly respected organization that celebrates excellence in the industry by recognizing leading operators. These awards As voted on by industry experts are a testament to the efforts of the whole RSI team and a further recognition of our industry leading player experience. Now for one of my favorite topics, product and technology. It's been quite a busy quarter from a technology perspective here at RSI, as we continue to strive to offer a best in class user experience. Our customers are loving many of the new features and content that we've gone live in recent updates.
For example, in the casino category, we see a very strong early Our live dealer offering in Michigan. With live dealer already offered in New Jersey and Pennsylvania, we expect the product to drive similar excitement amongst players in Michigan. In fact, Live Dealer represents over 1 third of Blackjack Candle in New Jersey and Pennsylvania, and we believe Michigan will trend towards similar results over time. We are also excited to soon be rolling out a slot tournament feature in our casino markets. In addition to those features, we launched Several exciting new titles during the quarter with the biggest being all aboard Dynamite Dash in New Jersey, Pennsylvania and Michigan, A very successful land based game that was brought online.
We also launched IGT's Mega Jackpot Games in New Jersey And both AGS' Red Silk and Saipemagomez' endless treasure in Pennsylvania. Finally, In Michigan, we went live with several economic games including China Shores, Dragon's Law: Twin Fever and Solstice Celebration. On the sports wagering front, we've added a wide array of new functionality to enhance our user experience, including A live match clock, live score updates, embedded betting tips, a stats center, enhanced player search capabilities, Improved in app game streaming capabilities and a greater volume of streamed content. We also doubled our inactivity logout period saving over 200,000 logins and re logins a month, further reducing player friction. These improvements are all incremental to those made in Q1, where we improved site navigation, usability and performance with less remoting And dramatically shortened transition times between screens.
Looking forward, we are on track to launch our single game parlay product ahead of football season, which we expect to be very well received by our player base. A recent partnership that I want to mention here as it relates to enhanced online sportsbook content is with GTG for their best in class I Sports Genius product, which is now live in every state where RSI operates in mobile sportsbook. We are very excited to partner with GTG in bringing co exclusive customer education, sports data insights to our betters. With facts covered in all major sports, including the NBA, MLB, NFL, PGA, NHL, UFC and NASCAR. Speaking of our sports betting improvements, Islanders and Kreiszuk recently released their sportsbook app ranking and our new Petrievers app moved up 2 And our app is real.
As we continue to launch in New Sportsman markets, we are excited to see the reception From first time Vetrivers users when they experience our significantly upgraded app in conjunction with new features and our award winning customer service. As previously shared, we also remain committed to launching our combined Sportsbook and iCasino iOS app in Pennsylvania And Michigan in the back half of twenty twenty one. While we've seen significant success in both markets, an iOS app in these two markets, In addition to existing desktop, mobile, web and Android app options will help expand our reach to additional players. With that, I'll turn the call over to Kyle.
Thanks. As Richard mentioned, 2nd quarter revenue was $122,800,000 an increase of 89% year over year and the adjusted EBITDA loss for the Q2 of 2021 was $6,600,000 which is less than half of the loss in the Q1 despite the sequential revenue growth this quarter. Our adjusted advertising and promotions expense was $36,900,000 during the Q2 of 2021 compared to $7,400,000 in the prior year quarter and $40,500,000 during the Q1 of 2021. This reflects our year over year commitment to accelerating our marketing And to take advantage of strong returns, but also our rational approach to ensuring we put our marketing investments to good use. We expect marketing investments to increase Into the 3rd and 4th quarters as we enter the football season and execute on the expected launches in new markets that Richard referred to earlier.
Our G and A grew modestly from Q1 to Q2 moving up to $8,000,000 from $7,600,000 We continue to build out our development teams and corporate structure to support the substantial growth we're expecting over the coming years. We expect this line item to continue to grow in the coming quarters. As a reminder, our adjusted EBITDA for the quarter removes the effects of share based compensation, which was $4,700,000 during the Q2, while our year to date results Remove the effects of share based compensation, the change in fair value of earn outs interest liability and the change in fair value of our outstanding warrants, which were all redeemed or expired during the Q1 of this year. We continue to be in great position with $361,000,000 in cash on the balance sheet And no debt. This allows us to continue to increase our investment in marketing, launch in new markets quickly and remain with regards to external investment opportunities.
As Richard highlighted earlier, we're increasing our 2021 revenue guidance for the full year to be between $465,000,000 $495,000,000 up from our prior range of $440,000,000 to $480,000,000 This revised range implies 72% year over year top line growth at the midpoint, which is up from our year over year revenue growth at 65 Continued strong trends we've been seeing so far during 2021. We've talked about many new market opportunities that are hopefully opening up later this year. But just as a reminder, our guidance does not include any contribution from markets that aren't live as of today. With that operator, please open the line for questions.
Certainly, We will now begin the question and answer session. The first question is from the line of Bernie MacKaren with Needham. You may proceed.
Great. Good afternoon, guys. Thanks for taking the question and congrats on the new roles. Richard, I'm sure there won't be a huge deviation from the playbook with what you guys are running now, but Are there any maybe 1 or 2 key priorities that you can lay out that you'll be focusing on over the next 6 to 12 months?
I appreciate it. Thank you. Our focus is really going to continue to be On innovation and differentiation, we're investing a lot more resources as we grow to ensure that we stay ahead of the curve And can continue to offer the user experience the players deserve. We are also planning to diversify our business as well in terms of bringing some additional product verticals Into the industry, obviously, we're strong in casino and sports betting, but it's rather product categories that are of interest to us that we're going to be looking at. And I think you also see us just continue to make sure that we have market access in the markets that matter and to be able to be ready to enter those markets when they're first But I would say we're going to continue to be prudent with our marketing spend and continue this path in the future, which I think has worked really well for us in the past.
If I could just follow-up on that market access point. You mentioned in your prepared remarks That many states are recognizing the opportunity for iGaming. It certainly makes a lot of sense from what we're seeing on the per capita side. But Is there anything that you're seeing that gets greater momentum is happening behind the scenes for legislation and how we should think about potential iGaming legislation in 2022?
Well, every time every month when a state reports the revenues and you see the markets where you have Casino and sports like Illinois sorry, excuse me, like Michigan, New Jersey, Pennsylvania, you'll see that nearly 75% or more the revenues are coming from casino, which really does convey the strength of that opportunity to raise incremental revenues for future states. Having said in terms of Specific examples, Indiana, Illinois are 2 markets that come to mind is ones that are full on basis senior groups are supportive. The online companies are lobbying for it and the states are recognizing the opportunity for increased revenues from the online gaming business. And frankly, Adding casino games is not a particularly challenging way to increase revenues in a market or in a state. So we also are hearing about Other states like Georgia, Alabama and North Carolina have potential interest as well.
But I would say that It's something that we're tracking very closely, but don't have a particular stronger insight on that as we speak to you today.
Great. And then just lastly for me, could you just review the relationship that you have with Rush Street Gaming? And can you remind us if you have access To their customer data to be able to target iGaming and OSB customers and if so how helpful that has been?
Sure. We're a supplier to the RSG, Rush Re Gaming land based casinos. There's 4 of them, one is connected, one in Illinois and 2 in Pennsylvania. We're the supplier of retail sports book services and help support the operational support of their sports books. We also Supply them with a social gaming product.
And when it comes to the online gaming, we operate and run the sites on their behalf in a way that we've described previously. When it comes to databases, yes, we are able to leverage in collaboration with those properties and That certainly helps to ensure that we have the omni channel strategy working well and we've seen a lot of success in being able to Really approach online gaming from the understanding of a land based casino, we were able to drive traffic from land based properties online, But also reciprocate that it would bring the online players back to land based property, which starts to bring greater loyalty to the brand both online and in retail environments.
Great. Thank you. Appreciate you taking the questions.
Appreciate it. Thank you, sir. Thank
you, Mr. McTiernan. The next question comes from the line of David Katz with Jefferies.
Hi, afternoon, everyone. Thanks for taking my questions. Congrats, Everyone, I wanted to just talk about content capabilities and get your updated thoughts With respect to which of those as you go forward and how you think about developing and Providing capabilities that you've developed yourselves versus B2B providers or tuck ins, etcetera. And how do you think about whether to build, buy or rent to expose this to the ultimate question?
Sure. That's something I'm really passionate about because I certainly understand the desire to always have world class products. And what I've I've seen it many times in the past with other in the past in this industry that you might buy something, but it may not be world class. And so you better off using Leveraging world class products and then owning something yourself or maybe inferior in some ways to what's available. So that's always a challenge that we look at.
And what I would tell you is that In our DNA as a company, we're unique in our space. Most of our competitors in our industry are really either marketing firms Or IT companies that leverage third party solutions. We our DNA is a gaming company. We know how to build experiences. We know how to manufacture fun.
That's a challenging thing to do because you have to have your own technology stack like we do. Engineering team is very talented and actually know the insights of what to build and to execute it on the right way. And so that's something that we've done. We've built a couple of our own games in the past in the casino category and Blackjack and they happen to be the strongest performing games that we've had In the New Jersey market, they've been with us for years. We plan to do some additional development in the future.
But what we really have as a core Strategy is not to always feel like we have to create everything ourselves though, but to take really high quality world class products from our partners and add our own spin on top of it because we have the know And the resources and the technology in house, we're able to take things that exist and build our own layer of innovation on top of them to create experiences that are unique, That a player playing those games on a different site won't have the same experience playing. So we continue we want to continue to do that because That really differentiates the way we treat our players and experience to get when they play with us. So while we are looking for some tuck in opportunities, I mean, always will be evaluating Ways to enhance content. We do continue to feel like the best resource effort is really on Taking really high quality proven content and adding our own layer, middle layer of innovation on top of it that creates an experience that's unique to the players.
So if I may follow that up because I think you sort of ended that right hand in the direction I was hoping to go, Which is what's obviously happening around you very recently is Some pretty big deals and acquisitions and big getting bigger. And is it always a content differentiation and an execution that's going to separate you or at some point Does size matter and how you're thinking about that particularly in the past 2 weeks?
If you look at the user experience, Size matters more in product categories like poker or daily fantasy where you have a liquidity where the larger volume of players you have on a single site Creates a lock in effect that makes it harder to compete. In a market like casino and sports betting, which is the majority of the revenues Being generated in the online U. S. Markets, the player experience doesn't really get impacted whether you have 5 players on a site or 5,000,000 players. So our focus is to continue to offer the best user experience.
At the end of the day, players are going to notice the way they treat it, approach that you Provides him as an operator in terms of transparency and honesty and the unique features you offer that other sites don't offer gives players a reason to stay with you. So I think that if we continue focusing on what we do really well, our products will continue to mature and improve, our user experience will advance And if we continue to have an award winning customer service to make sure players feel like we care and that we're treating them with respect and in a high quality way, We feel like we're going to continue to grow as we have been growing because of those qualities. So we don't think you have to buy your way to market share. Certainly, we are always looking at options and exploring every angle possible. And by the moment, we continue to feel like the best Course of action is to continue to do what we've done so far, which is to focus on the user experience and differentiating it.
Okay. Thank you.
Thank you, Mr. Kaik. The next question is from the line of Ryan Sigdahl with Craig Hallum. You may proceed.
Good afternoon. Richard, congrats on the new role.
Appreciate it. Thanks, Rod.
You mentioned 4 states You mentioned 4 states that are profitable. Are you able to name which 4 of those are?
Yes. So This is Kyle. Thanks for the question, Ryan. I'm not going to go into it state by state. We did want to highlight that as An example of how when markets mature, we do get to profitability.
So you could read into that a little bit about which Marcus, we've been in a little bit longer. We did specifically talk about New Jersey a couple of months ago Being profitable for the full year 2020, and that is one of those states. But I think I'll stop short of going state by state And talking about the profitability, but we thought it was instructive to make sure that you guys understand that we are getting profitable As markets mature, for sure, as new markets launch and we've got no shortage of those coming up in the next quarters here, there'll be investments involved in launching those new markets and That will outweigh those profitability we see
in
those more mature markets, but we're excited about that opportunity. No question around that.
Thanks, Kyle. And then one more for you. Just thinking about external marketing spend, I know you said increased back half. We're hearing some pretty aggressive plans from some of your competitors. Any way you can put any guidepost around that, either relative to the first half or
Yes. I'll try and give you a little bit without guiding specifically and we see those competitors as well. And as we talked about marketing spend decreased a little bit from the Q1 to the Q2, which really is probably more reflective of a lighter sports calendar getting past the new market launch in Michigan. But we expect a pretty significant step up in spend in Q3 and Q4 going into football season. And then also kind of depending on the timing of new markets that launched in the back half of the year that Richard highlighted on the call, The timing of when those launch are going to impact whether that spends bigger in Q3 or Q4.
But in any event, we said on the last few calls that we're willing to extend our payback metrics. We think we're seeing good returns from that spend. So the investments will be strong in the back half of the year.
Great. Then just great to see Connecticut license there. Any way You can quantify kind of your expectations for whether it's GGR between retail, online as well as any general commentary on profitability potential for the state?
Yes, it's probably too early to start talking about expectations for GGR and market share in the I think it was in terms of economics, it was a competitive process as everyone knows And we feel very proud that we were the ones selected in that very competitive process. But we feel good about the economics there. And I think it reflects just how big the opportunity is in the state of Connecticut, particularly with a limit of 3 operators And also in a state where we'll have 15 retail locations, where we've had a lot of proven success. I'd say like many of our market access agreements, there's nuances around minimum guarantees, how those minimum Guarantees or commitments ramp up, the credits you can take against taxes or partner revenue shares for things like marketing and promotions. In terms of the agreement with Connecticut State Lottery haven't been disclosed.
But you can imagine, we entered this partnership with the plan for it to work Well, both for the state of Connecticut and for RSI.
Great. Thanks guys. Good luck.
Thanks, Ryan.
Thank you, Mr. Sita. The next question is from the line of Chad Benoit with Macquarie, you may proceed.
Hi, good afternoon, Greg, Richard, Kyle. Thanks for taking my question. Wanted to revisit your guidance. Can you just kind of help us think about how you're viewing seasonality of online casino? Know within the guidance you said that you're not expecting any new launches and obviously some of the recent launches will contribute more in the back half of the year.
But as The average person goes back to work. Are you expecting any sequential declines in terms of ArtMop or just player behaviors? Thanks.
Sure. So there's obviously a few different things that will go into Thinking about that guidance and that can cause it to vary from high end to low end. And one of those things would be hold percentage. And I'd point out that we were had a little benefit from hold in Q2, not quite as much as we did in Q1 where we also had a little bit of benefit. On the seasonality, I think you're right that in casino, Which is a larger portion of our revenue mix.
We don't have as much seasonality like you do in online sports because of Calendar there, but we do have some modest seasonality and we expect there probably to be some impact on that in Q3 in casino And then pick back up a little bit in Q4. And then as I said on the sports side, seasonal impact is Greater in Q3 until we get to Q4 heading into football season where we'll see that pick up again. So we're obviously pretty excited about the football season here in a few weeks, Which will potentially help the end of Q3. And then I guess the last thing as you said and just to remind everyone that We don't have included in our guidance any of these new state launches that will happen here in the coming months quarters.
Great. Thanks. And then on Slide 12 in your deck, you noted the strong player retention in the And the cohorts in terms of when people came into your system, which is pretty impressive and you've just talked about lower doing this with lower promotional credits. Are those older credits sticking around as you continue to reduce the promos? Could you shed a little light on that?
Or is there a level where that needs to set a foundation to retain those players? Thank you.
Maybe just to clarify your question, are you asking if promotions need to Remain at higher levels with players that have been on the platform longer or does that The level of promotional activity dissipate over time?
Yes, please. Yes, I think that so
I think that's Fair a fair point that you see you definitely see more promotional activity In the early stages of a market launching and also in the early stages of bringing customers on a platform. But as Richard talks about frequently, We have great retention because of great user experience and great customer service. So that promotional activity does not need to Sustain at those levels as markets mature and as our players mature on the platform.
We're also very targeted where we We do a nice job of ensuring that we once the players get on the top line for a while, you're treating the players that are most valuable the right way and targeting them with I'm not a bonusing, so you might not have to bonus all players at the same levels like you might when they start with you.
Great. Thank you very much.
Thanks for the questions.
Thank you, Mr. Behnad. The next question is from the line of Jed Kelly with Oppenheimer. You may proceed.
Hey guys, this is actually Sam in for Jed. And Richard, congrats on the new role. With the strong engagement you guys saw in the quarter, Have you seen a larger mix of new online casino customers as the sports calendar softened? And then would you say that 2Q ARPU was driven by Higher online casino mix or are you just gaining stronger wallet share across all customers?
No, it's a good question. So I think You're you kind of hit it on the head with seasonality and casino players being Having a higher ARPMOW in a quarter like Q2 and probably the early parts of Q3, You're going to see a higher ARP MAU, you're going to see lower MAUs and you might see that trend the opposite direction as we head into Football season, where the reactivation of players or new player engagement increases And MAUs increased more dramatically and you might see the ARP MAU reduce a bit. And I think In addition to the football season having an impact there, you can also see an impact from new market launches, Where you're going to see more new player attraction bringing them online, likely higher growth in MAUs And that will impact your Art Mile because you're doing more promotions, you're bringing those players onto the platform, you're starting to Increased the retention over time. So hopefully that gives you a little context on the ebb and flow and it is going to change over time. But I think you hit it on the head with Q2 in the way you were describing it.
Yes. I guess What I'm trying to understand is, are you bringing in like a lot more casino customers or are you seeing higher value customers across casino and sports betting?
Well, we actually noted in our comments that we did have sequential growth in both Sportsbook and casinos, we're growing both verticals nicely. But I would say that one of the things in terms of absolute volumes, you are going to have some More of the newer markets are sports book only, so you do have some higher volume of sports book only players arriving. Having said that, a market like Michigan, which is very large for Does still have a more of a balanced item. So I think we're fairly balanced. I don't think it's extreme one way or the other.
I think it's very Market by market depending on the characteristics of what products are allowed.
And then if I could just follow-up on the CT partnership, should we think of that as a B2B2C revenue or should we think about that tuck in somewhere else or is is not disclosed.
No, it's not a B2B relationship. It's a B2C relationship where we Like other market access, we will be running the operation ourselves, obviously paying royalties and commitments to the state. As Kyle mentioned earlier, we're very excited about it because as you noted, it's only 1 of 3 operators in the market. And in particular, it plays to our strength of having these 15 retail locations spread around the state. Really, Most people living in Connecticut will be within a 30 minute drive from these retail sportsbooks.
And we see that you can sign up a lot of players online from retail locations like What you've seen in markets like Pennsylvania. So we're excited about that potential, but we will be operating the site In close coordination with the Connecticut Lottery, it's a very efficient, very professional run RFP process and we're Proud that they really liked our responsible gaming approach, liked the quality of our product, award winning customer service, the uniqueness of our user experience And all those things combined, I think made it a very attractive proposition for both of us.
All good stuff. Thank you, guys.
Thank you, Mr. Kelly. The next question is from the line of Mike Hickey with Benchmark. You may proceed.
Hey, Greg, Richard, Kyle, Warren, congrats on the quarter guys. Nice to see that raised guide too. Two questions from me. I guess the first is on the competitive Landscape, when you look at sort of some of the innovation that's happening on the OSB side and ad, Looking at sort of media, integration, streaming, in game betting, social features, Now obviously, the NFT marketplace now, I guess when you think about sort of the innovation there and Layering, how important is that to retention and ultimate share position? I have a follow-up.
Yes, it's a great question. Innovation and differentiation is critical. I think some companies might be able to acquire traffic with a brand initially And our brand is very valuable still. If you don't offer the right user experience, you're going to not sustain those players longer term, especially in a highly competitive market. So I think one of the keys is to know enough about the gambler mindset and study the psychology of players, so you understand what to build Because you can build a lot of things and they won't work right.
And so for us, it's yes, there's trendy things happening in the industry and we certainly Like to follow everything that's happening, but there's some areas where you have to find a way to implement the features in a way that players really like. And so for example, we're really pioneer Community in the online casino market and we have a lot of ideas and thoughts and interest in how we're going to do something similar In the sports book industry online. So I think while you mentioned we also mentioned in this call we have some multi player Tournaments that we've been building and developing and that's another area of innovation that we're excited about. So I think it's important you always spend time Advancing the innovation, but making sure you do it in a thoughtful way with understanding of the audience because a lot of things that a developer might think is a good idea really won't resonate with I really understand the psychology and that's something that we have a large team here of folks that really have been in the industry a long time and really Having really good grasp over what works and what doesn't work and a lot of the challenges are making sure you avoid the things that don't And make sure you invest in things that really are going to have a long term impact on the company.
So we have a couple of big things we're working on that we're excited about and In the quarters ahead, we'll be starting to release some of those
features. Nice. The second question, I think you kind of add into it. Obviously, if you're a real leader in the online casino side, I think you're probably First, maybe that's not true anymore, but certainly that's where you started. When you look at what we just sort of what we're seeing, I guess, with the Innovation on layers on the sports book side, I mean, do you expect that you'll have similar Innovation on the online casino app over time as states expand as some of the bigger sports folks look to get share in casino.
I mean, are there Streaming opportunities, other media integration within the casino side or what do you think that Customers was just different, I guess, maybe you don't need that. I guess that's the question. Thanks guys.
Yes. Well, the sports book and casino categories are surprisingly different in how you build In the sports book, it's a transaction based engine and you have the ability to The actions on the field, so it's about having the speed and ability to deliver the little things to give players the insights into making better decisions and making sure that things move at a fast pace and that you Often a fun experience to bet on it. So betting watch with the streaming is something we've invested quite a bit in and we have one of the leading libraries of We think in the market available today. And we've got in our investor deck we posted this afternoon, you can see some information about some of the Differentiated features we've been building on the sports book and I think all those features together is really one of the reasons why recently the Ios and Crytek study indicated that we moved up from I think it was number 8 to number 4 terms of the products out of 31 in the industry front line sports book, a lot of us building things that really reduce friction and enhance trust with the player.
When it comes to casino, most companies have the same library of the games as everybody else does. And a few companies might go out and buy a game studio. We certainly announced exciting deals with Booms Entertainment Earlier this week, we're going to have some exclusive games and some large quality good quality library of games and certainly that's helpful to have that. But at the end of the day, We think you have to manufacture fun in the online casino. You have to create ways to entertain players in unexpected ways They haven't felt or experienced before and that comes down to building your own game engines yourself.
So you can offer something that's unique. There's nowhere else you can really go to go get Off the shelf, it doesn't exist. It exists in the core base games. If you want to build side wide bonusing features that we've built The real time engines and things like that, you have to really build it yourself and know how to build it. So that's an area that we focused on a lot in the past and that's helped us propel ourselves to A leadership role in the online casino market, but we're continuing to invest in new ideas in that area.
And like I said, we're excited to release some of these features in the quarters ahead.
Awesome. Thanks, Dexter.
Thank you, Mr. Haki. The next question is from the line of Stephen Grambling with Goldman Sachs. You may proceed.
Hi, there. Thanks for taking the questions. I guess the first is a follow-up. So you were talking about, I think on exhibit Through Slide 12, you show kind of a yearly cohort, and it looks like the 2020 Kind of peaked and came off in Q2. Is there anything unusual there to think through or Is there anything else that you can highlight in terms of why that kind of cohort looks a little bit different than 2019 or 2016 to 2018 cohort?
Yes. I think the one thing I'd call out there is just the launch of Illinois in 2020 And the sports calendar impact on Illinois sports betting in Q2. So I think that'd be the one thing that I'd mentioned that probably impacts that a little bit differently.
Got it. And then maybe changing gears, how does the process in Connecticut and the outcome there Inform how you think about New York and your strategy to try to win there?
We don't think it really informed it very much because each state has a different Decision making process and it was different aspects being considered and what was the winning Our winning RFP submission in case of Connecticut. When it comes to New York, we obviously have submitted a response Due to request for applications by the New York Statement Commission and we're sized by the opportunity to Compete in that market. We haven't really planned to share much on the specifics of that bid on the basis that the New York Gaming Commission procurement process is still ongoing and we certainly are going to wait for direction from them before we renounce next steps there. But we certainly think that you Being strong in Northeast, though, we certainly think it's helpful.
Got it. And I know that you touched on this
a little bit before, but
I just want to make sure that I understand correctly. I guess, how do you generally think about quantifying what I described as maybe like maintenance marketing for
Yes. So we've seen that when you Market to those players that are lapsed, you have a really nice chance of reengaging. And we've seen over the last Couple of quarters as we've ramped up marketing spend compared to where we were before we were a public company that you do get those benefits of reaching those players and maybe were Active with you at some point for whatever reason sort of have stopped being an active player, you get a chance to reinvigorate that player getting back to us. Certainly, we feel very Confident that the players have a positive experience with us, but for whatever reason they decided to no longer remain active. So certainly as you increase your marketing spend as we've been doing, You do have an opportunity to reengage players that perhaps have taken a break from using your site for whatever reason and have a chance to engage them.
So we think that's one of the The increase marketing spend that we're seeing is that it does give us a chance to reconnect with players that had a maybe positive experience with us at some point if whatever reason
Great. Thanks so much.
Thank you, Mr. Grandin. There are no additional questions at this time. I would like to pass the conference back to Richard Gildos Floyd, CEO for any additional remarks.
Well, thank you for all the great questions. I'm excited to be taking the CEO role at this incredibly exciting time for Rush Street Interactive. At no time in my history at RSI have I've been more excited about how we are positioned to succeed in this rapidly evolving growing market. We have proven that we are a market access partner of choice and expect to continue to add to list of locations where we've already found market access partners. We have a proven operating model with player experience and retention, strong marketing returns and ultimately profitability that is proving out in maturing markets.
Lastly, as a few questions here raised today indicated, we are innovators. We are continuing to create experiences for players that keep to coming back to our platform for the engaging and world class experience we offer. We have proprietary technology that accelerates the development of exciting new features, while at the same time allowing speed to market and strong integrations with world class partners. Thank you again for joining us today. It was a pleasure speaking to you.
We look forward to doing so again soon.
Thank you for joining today's RSI 2nd quarter 2021 conference call. You may now disconnect your lines and have a lovely day.