Poker legend Phil Galfond and his poker site Run It Once are starting a new chapter.
On Wednesday, Galfond announced on Twitter that the company he founded in 2012 reached a deal to be acquired by Chicago-based Rush Street Interactive, one of the leading operators in the nascent U.S. sports betting and online casino gaming market.
Galfond issued a lengthy statement on his social media account explaining the deal:
When I mentioned that Run it Once was headed down a path towards the US market, I told you that I’d have more details to share with you in the near future. Today is the future.
Run It Once Poker’s platform and team, myself included, were acquired by Rush Street Interactive (RSI), with the plan to solidify, enhance, and integrate our software into their platform.
We spoke with many potential partners over the last 18 months and are very excited to be on team RSI! They share our values: Honesty, integrity, fairness, and transparency – and not only with their players. They stood out to me in the fair and honest way they dealt with us.
RIO Poker created a platform that people loved, with features and innovations that the poker world was excited about, but we also heard things like “if only they could iterate on their software faster” or “I’d move all my volume to RIO if they were bigger.”
Well, now we are bigger – much bigger. And now we add to our existing tech team the expertise and experience of those who have built huge poker platforms in the past. I’m extremely excited about what we’ll be able to accomplish together!
Galfond added that there is no set timeline for when RIO might launch an online poker product in one of the handful of states that licenses and regulates the activity. Pennsylvania, Michigan, or New Jersey are likely entry points for the product, markets where RSI already does business.
RIO will have some competition in the online poker space against the likes of BetMGM Poker, PokerStars, and WSOP Online Poker.
RSI is behind the BetRivers online sports betting brand.
RSI agreed to acquire Galfond’s RIO for $5.8 million in total, with $3.3 million coming in cash and $2.5 million in the form of stock. The transaction was mentioned in RSI’s earnings report for calendar year 2021 that was released on March 2.
RSI went public in 2020, hitting a high of about $24 a share in early 2021. The stock struggled in late 2021 amid broader volatility in the stock market and apparent investor concern with profitability across the entire sports betting sector. Companies like DraftKings have also seen their stock fall dramatically, and the online gambling division of Wynn Resorts, a entity called Wynn Interactive, is reportedly on the market for $500 million after an earlier valuation of $3 billion.
Some observers point to the need for further consolidation in the regulated iGaming sector. RSI could itself be acquired by a larger online gambling operator or even a conglomerate like Disney, which owns ESPN and has indicated it is eyeing some kind of entry into sports betting.
Despite the acquisition of Run It Once, RSI stock fell about 19% during the week ended Mar. 4, due to lingering concerns over profitability in online sports betting.
RSI declared a net loss of $38.1 million during Q4 of last year.
“We are continuing our disciplined approach of balancing profitability from existing markets and investing in new market launches,” Richard Schwartz, Chief Executive Officer of RSI, said in a statement. “RSI’s consumer experience leverages our best-in-class technology and now operates successfully in 14 total markets compared to only 6 at the end of 2020. Our track record demonstrates that we have been highly successful stewards of capital for our investors. Delivering strong shareholder returns remains our priority.”
Despite some concerns about the online gambling sector, Poker Hall of Famer Phil Hellmuth was bullish on the company after the RIO acquisition. Hellmuth said on Twitter he owns a significant chunk of RSI, which, like Run It Once, was founded a decade ago in 2012.
“Congrats to Phil Galfond and team,” Hellmuth said. “Hard work pays off!! As someone that holds 165,000 shares of Rush Street Interactive: nice acquisition Greg, Richard, and team!”
Hellmuth’s stake was worth about $1,320,000 based on RSI’s closing price Mar. 4.