Rush Street Interactive, Inc. (NYSE:RSI) Q3 2024 Earnings Call Transcript

Rush Street Interactive, Inc. (NYSE:RSI) Q3 2024 Earnings Call Transcript October 31, 2024

Operator: Good afternoon. Thank you for attending today’s Rush Street Interactive Third Quarter 2024 Earnings Call. My name is Sheila and I’ll be your moderator for today. [Operator Instructions] I would now like to turn the conference over to our hosting team.

Kyle Sauers: Thank you, operator, and good afternoon. By now, everyone should have access to our third quarter 2024 earnings release. It can be found under the heading Financials Quarterly Results in the Investors section of the RSI website at rushstreetinteractive.com. Some of our comments will be forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are not statements of historical fact 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 and relying on 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. In particular, we will be discussing adjusted EBITDA, which we define as net income or loss before interest, income taxes, depreciation and amortization, share-based compensation, adjustments for certain one-time or nonrecurring items and other adjustments that are either non-cash or are not related to our underlying business performance.

A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is available in our third quarter 2024 earnings release and our investor deck, which is available in the Investors section of the RSI website at rushstreetinteractive.com. For purposes of today’s call, unless noted otherwise, when discussing profitability, EBITDA or other income statement measures other than revenue, we’re referring to those items on a non-GAAP adjusted EBITDA basis. With me on the call today, we have Richard Schwartz, Chief Executive Officer. We will first provide some opening remarks and then open the call to questions. And with that, I’ll turn the call over to Richard.

Richard Schwartz: Thanks, Kyle. Good afternoon, and welcome to our third quarter 2024 earnings call. I am pleased to report that we’ve achieved another record-breaking quarter in both revenue and adjusted EBITDA. For the third quarter, we reported revenue of $232 million, up 37% compared to last year and up sequentially for the 15th time during our 16 quarters of being a public company. Our adjusted EBITDA reached $23 million, which is the seventh consecutive quarter of improving profitability. In terms of the scale, this represents an increase of over 5x from the same period last year. Consistent with recent trends, we continue to attract new quality players at an impressive rate, doing so efficiently and maintaining high player values.

This success is a testament to our unique products and engaging user experience, which fosters loyal customers and drives growth and profitability. Additionally, our efficient marketing spend has contributed significantly to our bottom line. In light of these results, we are raising our 2024 revenue guidance by 3% and EBITDA guidance by 24% at the midpoint. It’s worth noting that the midpoint of our EBITDA guidance is now 110% higher than what was originally put forward at the beginning of the year. Kyle will offer more details in his remarks. These impressive results underscore our commitment to our long-term strategic objectives, which include being a leader in online gaming across the Americas. By continuously innovating and enhancing our product offerings, combined with expanding our market presence, we are laying a solid foundation for long-term performance and continued improvements in profitability.

Our focus on technology and product innovation, strategic partnerships and the customer experience positions us well to continue to capitalize on the growing opportunities in the online casino and sports betting industry. We remain dedicated to delivering value to our shareholders while providing a superior gaming experience to our users. To that end, we also announced today a buyback of up to $50 million of our common shares. We remain highly confident in the opportunity ahead of us for continued top line growth and improved profitability and we believe this is the right use of our consistently increasing cash generation and existing cash balance. Looking closer at the results on the quarter, it again paints a picture of broad-based growth and success.

In North America, both iCasino and sports revenues grew by over 30%. We continue to see incredible success with our launch in Delaware. Our Latin American business again produced impressive results and we experienced better-than-expected sports holders during the quarter. Underpinning all of these results are fantastic trends in player counts and player values. For the quarter, North American MAUs reached 168,000, up 28% year-over-year, marking another consecutive quarter of accelerating growth. ARPMAU in North America increased by 4% to $388, a new record for us since going public almost 4 years ago. This growth is a testament to our underlying strategic focus on user engagement and retention and ability to improve ARPMAU while quickly growing player counts.

In Latin America, we continue to experience remarkable growth with our MAUs increasing year-over-year by 122% to 329,000. This increase highlights the effectiveness of our localized strategies and teams and our ability to attract and retain users. Our ARPMAU in the region was $39, higher on a sequential basis and lower by 9% versus last year. These trends were directly influenced by the increased new player volumes from the Copa America in June and July, which drove momentum in active user accounts. With that overview, let’s talk about a few particular markets to add context on our results. Our revenues are continuing to diversify. In Latin America and in U.S. and Canadian markets launched since 2021, revenue was up 83% year-over-year in the third quarter.

The geographic diversification of our business is continuing to progress. The percentage of revenue generated from markets outside of Illinois and Pennsylvania is now 62%, up from 52% during the year ago quarter, easily the highest it’s been since going public. Our expanding margins and increased profitability is a result of this trend, where we are seeing higher growth in our more profitable markets. For the second quarter in a row, we saw 9 different markets with year-over-year growth of over 50%. One of those continued bright spots was the state of Delaware. Performance has been exceptionally strong with our GGR now running at an annual rate nearing $100 million. This run rate is the result of an increase of almost 5x the predecessor operator’s run rate in iCasino and the solid success we’re having in online sports.

The robust performance in Delaware is a real-time example of the impact of our product and operations teams delivering high-quality gaming experiences and our ability to drive substantial revenue growth in established markets. Delaware continues to be an opportunity we remain very excited about. The momentum we’ve been experiencing in Latin American operations continued and even accelerated into the third quarter. Our Latin America revenue almost doubled year-over-year, coming in just shy of 100% growth. Our partnership with Multimedios in Mexico has been instrumental in this success, providing us with valuable local insights, relationships and enhancing our market penetration. Latin America now accounts for 16% of our total revenue, demonstrating its continued importance to our long-term strategic objectives and our commitment to delivering tailored experiences that resonate with local players.

Our marketing efforts continue to yield positive results, building on the strong foundation laid in previous quarters. The great results I shared earlier around MAUs and ARPMAUs are being driven by our targeted and data-driven marketing efforts. Our campaigns have effectively leveraged a mix of traditional and digital channels, allowing us to reach a broad audience and attract new users at a very solid pace. In fact, in North America, we once again reduced our cost to acquire players, down by about one-third compared to the year ago quarter. Building on our commitment to product and tech innovation, there are a couple of recent announcements we’ve made that I wanted to call out. During the quarter, we were excited to announce the launch of our enhanced iRush Rewards loyalty program.

The new program was created based on customer feedback, aiming to deliver a more valuable and rewarding experience for our users. We extended the time for players to retain their loyalty tier and associated benefits, gave players increased access to more free promotional events such as Bingo and Slot Tournaments, complementary cruises and vacations, exclusive promotions and gifts, access to live concerts and sporting events and more. We also substantially improved the user interface and importantly, the communication of benefits to players. All of these changes align with our player-first philosophy and should continue to drive industry-leading retention and player values. We also continue to drive innovation on the player engagement front, leveraging our real-time promotional engine to provide extra value to our customers by putting twists on proven beloved games.

Building and extending on the success of our proprietary games such as Bingo, Trivia and Football Squares, we just launched PropPacks, a game-changing bonus promotion that combines the excitement of collecting sports cards with the thrill of prop bets, offering users a unique and engaging way to enhance their sports betting experience with BetRivers. We are excited because PropPacks not only adds an extra layer of excitement to watching NBA games, but also offers our users value in the form of additional opportunities to win at no extra cost to them, providing them with a clear incentive to place their single-game parlay bets with BetRivers. Our strong results and momentum continue to be driven by our strategic initiatives and commitment to operational excellence.

Our ability to attract and retain high-value players, coupled with our innovative product offerings and effective marketing strategies has resulted in robust growth in both our revenues and profitability. We are particularly proud of the progress we’ve made in diversifying our revenue streams and expanding our market presence, both in North America and Latin America. These accomplishments underscore our dedication to delivering exceptional value to our customers and shareholders. With that, I’ll turn the call over to Kyle.

Kyle Sauers: Thanks, Richard. For the third quarter, revenue was $232.1 million, marking a 37% increase compared to the same period last year. As we experienced during the first half of the year, the growth was balanced across geographies, products and market vintages. Richard touched quickly on the solid sports hold in the third quarter. We had an estimated revenue tailwind of $10 million due to higher-than-expected hold in sports. Our adjusted EBITDA for the third quarter was $23.4 million, reflecting a significant increase of over 5x from the prior year. We’re continuing to benefit from increasing scale in the business as demonstrated in the strong flow-through to earnings and cash flow, highlighting what we see as a very high quality of earnings.

As Richard mentioned, our revenue was again driven by strong growth in our player base, combined with industry-leading player values. North American MAUs were up 28% and in Latin America, MAUs were up 122%, our largest growth rate in over 3 years and off of a significantly stronger base. We grew first-time depositors in North America impressively during the quarter and in Latin America set another record for that metric. This was accomplished while also significantly reducing our cost to acquire new players as we continue to get more efficient with marketing and as our brand builds. Maybe most impressive, at the same time, we are growing our consistent player base at these higher rates. We also improved our average player value year-over-year in North America and sequentially in Latin America, something not easy to achieve.

All of this bodes well for our continued growth in the future in both top line revenue and profitability. In the third quarter, gross profit margin increased to 34.9%, an improvement of approximately 310 basis points versus the prior year. Revenue from markets other than Pennsylvania and Illinois accounted for 62% of revenue during the quarter, continuing the improvement in our revenue diversity and driving higher revenue growth in our more profitable markets. Our gross margins should continue to improve over time as this revenue mix continues to improve and we execute on improvements throughout our cost of revenue. We also continue to be very pleased with our approach to marketing. Marketing spend during the quarter was $38.6 million, up 13% compared to the prior year quarter, with cost to acquire players one-third lower in North America.

And the great success with Copa in Latin America, our new player acquisition growth far exceeded our percentage increase in marketing spend. As a percentage of revenue, marketing was 17% during the quarter, down from 20% in the year ago quarter. We expect marketing spend to increase sequentially into the fourth quarter as we continue capitalizing on our ability to acquire players at attractive CPAs. And as always, we’ll stay flexible and dynamic with our marketing spend. G&A for the third quarter was $19 million, up 2% sequentially. We’ll continue to invest in our product development and corporate infrastructure as we scale the business, although we expect to continue to get leverage over this line item as we grow the business. Turning to the balance sheet.

We ended the quarter with $216 million in unrestricted cash and no debt and have generated an approximate $48 million increase in our cash balance year-to-date. Turning to our guidance. With 1 quarter remaining, we’re raising both our full year revenue and EBITDA guidance for the full year of 2024. We now expect full year revenue to be between $900 million and $920 million, which increases the midpoint to $910 million, up $30 million from our prior guidance. And we now expect full year EBITDA to be between $82 million and $86 million, which increases the midpoint to $84 million, up $16 million and 24% from our prior guidance. And as a reminder, our guidance includes only those markets that are live as of today. So with that, operator, we can open the line for questions.

Operator: We’ll now begin our question-and-answer session. [Operator Instructions] Our first question comes from Jed Kelly with the company Oppenheimer. Your line is now open.

Q&A Session

Jed Kelly: Hey, great guys. Thanks for taking my question and solid quarter. Just going – just on the U.S., Canada, solid user growth, can you sort of talk about the LTV to CAC you’re seeing, call it, the first 2 months into football, the promotional environment? Any color you can add there? And then see that you’re implementing a buyback. Can you talk about the reasons or further expand on that, implementing a buyback versus like potentially maybe doing a dividend given the liquidity of your shares? Thank you.

Kyle Sauers: Yes. Thanks, Jed. So, on your first question, I’m not going to get into too deep on the specifics on each cohort or each month. But what I can tell you more generally is that, first off, we continue to attract new players at really attractive prices. That trend started going back into last year and has only gotten better as the year has gone on and that continued in Q3. And we’re still seeing very good predicted LTVs on players. So, I think that’s all good for sure. On the buyback, the fact is we felt like this was the right time to implement an initial buyback program. Obviously, the Board and the management team are always evaluating all the different alternatives for capital, but we felt like a buyback program was the right thing to do.

We really haven’t had a point in our history where we’ve had better visibility into the cash flow prospects. And obviously, as you’ve heard today, we’re very bullish on the position we’re in. So, I think it just gives us flexibility to return capital to shareholders in this way with also leaving plenty of flexibility for us to execute on new market launches and even new market launches that – where there could be multiple at a time and then also consider M&A opportunities or tuck-in M&A opportunities.

Jed Kelly: Thank you.

Operator: Our next question comes from Ryan Sigdahl with the company, Craig-Hallum. Ryan, your line is now open.

Ryan Sigdahl: Hey, good afternoon, Richard and Kyle. I also want to say, yes, nice execution, impressive acceleration in the business here. So, I want to kind of see on capital allocation. I mean the business is accelerating. You have your focus areas that are all performing extremely well. I guess given the cash and the increasing cash on the balance sheet, does this change your thought on potential expansion? I see Brazil listed on Slide 7, but any change in heart there or other markets kind of as you think about the increasing confidence you have in the core business today?

Richard Schwartz: Hey, Ryan, this is Richard. Thanks for the comments. Yes, our – we’re going to direct capital to the highest returns and we’re constantly comparing all opportunities. There’s some really exciting ones in Latin America that we’ll be continuing to evaluate and expect that over time. We will be expanding into additional markets in that region as long as well as other markets in North America that makes sense. We’ve talked already about Alberta coming online, hopefully in later next year. And obviously, I want to make sure if anything else pops that we have the ability to act with speed and deliberation to enter those additional markets.

Ryan Sigdahl: Thanks, Richard. New PropPacks for NBA, another kind of unique customer loyalty generosity tool you guys have in your toolbox. But I know it’s really, really early there, but any feedback you’ve received from players? And then any metrics you can share maybe on subsequent parlay mix and plays if it’s driving further play there?

Richard Schwartz: Yes. I think it’s too early to really share any metrics, but what I will share with you is the amount of enthusiasm we’ve seen from the players really enjoying the experience, something completely novel and innovative and something that really is engaging. And we have lots of opportunities to really engage with players when they’re in the process of sort of having a gold card of a player that’s – if they score over 50 points in a game, they’re going to win $10,000, and that creates a lot of excitement for them and for us, even as a marketing team to be able to promote those experiences in real time. So, the feedback from our customer service team has been extremely high. The players are responding to it.

It’s a really elegant solution and it’s really a lot of kudos to our team for executing on a very complex project like this that really hasn’t combined player cards with prop bets in the way this does. And it’s just really an engaging tool that we think is going to have long legs ahead of us for the rest of the NBA season.

Ryan Sigdahl: It’s a fun product. Unfortunately, I opened Julius Randle, not Anthony Edwards. Good job, guys.

Richard Schwartz: Try again next time.

Operator: Our next question comes from David Katz with the company, Jefferies. David, your line is now open.

David Katz: Thank you very much. Hi, everyone. Well done. I just wanted to maybe talk through in a qualitative way, unspecific way, next year, right? Because the business does look like it’s accelerating. But if I were to just use consensus numbers as a marker, revenue would only grow 8% and EBITDA like 26%, but you’re kind of putting up more than that. So, the question is really are there any headwinds or any puts and takes or pivot points we should be considering as we think about 2025?

Kyle Sauers: Yes. David, I’ll take that one. I appreciate you making it qualitative since you know that we haven’t given ‘25 guidance yet. But I think we can give you some things to think about. If you start with the top of the income statement, right, this is a growth business. Every market that we’re in is still growing nicely. We plan to get our fair share of that growth. I think we’ve made it clear that we expect gross margins to continue to improve into next year for the two reasons really being structural cost improvements that we continue to make across the whole business and also favorable revenue mix trends towards more profitable markets or higher growth in more profitable markets. And then we also intend to get leverage over our marketing and G&A costs.

So, expecting the revenue to grow faster than the increase in those line items. So obviously, that means improvement in revenue, improvement in profitability that translates into improvement in cash flow next year. I think the only thing maybe to think about from a top line headwind, if you will, would just be that we’ll be lapping Delaware, which launched right at the end of 2023. Obviously, we’re still very excited about Delaware. We see great opportunity to grow that market ahead, but we will lap the launch of that.

David Katz: Understood. And the follow-up then really needs to be about Delaware. And I suppose we should keep this in a qualitative context, too. But despite the fact that it’s grown a lot, but it is a relatively short amount of time, what would be the puts and takes for it to sort of grow more, right, despite the fact that it’s been a pretty solid start so far or less for that matter?

Richard Schwartz: I’ll start and then maybe, Kyle, you can add on. Yes, I mean, as you know, we’ve really been proud of what we’ve been able to achieve in Delaware. And ultimately, what it comes down to is identifying those high-quality customers and delivering the world-class customer service and a unique experience that really drives those players to want to stay with us. What you’re seeing is our ARPMAU has increased in North America despite also increasing our player volumes, which is hard to do both at the same time, like we’ve been doing in the last several quarters. And ultimately, it comes down to if you retain those customers that are valuable, which we tend to do, you can keep those players and keep adding incrementally new players as we connect and reach more of them. So, we think there’s a lot of room ahead for us in Delaware. I think, Kyle, perhaps you want to share a little more detail.

Kyle Sauers: Yes. I mean I think we talked about it in the prepared remarks, but we’re close to $100 million annual run rate at this point. So that’s obviously very, very solid results. I think if you looked at other iCasino markets and then you adjust for population and income levels, that would point you to a Delaware market that could be over $200 million in GGR between iCasino and sports when you look down the road.

David Katz: That’s helpful. Thank you very much.

Kyle Sauers: Thanks, David.

Operator: Our next question comes from Chad Beynon with the company, Macquarie. Chad, your line is now open.

Chad Beynon: Afternoon. Thanks for taking my question and nice results as well. I wanted to start with Latin America. So, exceptional growth in Q3, I know in Q2, you guys talked about really strong first-time depositors from the Copas and the Euros. But yes, I just wanted to ask from a retention standpoint, what you’ve seen given that a lot of those depositors were depositing for a certain event. Any major differences in terms of how your customers down there are being retained versus the success that you’ve had up here? Thanks.

Kyle Sauers: Yes. So, I’ll start on that one. I think the answer is part of a continuation of what we talked about in the last call. So, our – certainly, our user count, our monthly average user count in June and July during Copa were much higher and that impacted Q2 and Q3 monthly active user figures that we’ve given. Obviously, the goal then is to retain those players or as many as possible. I think it’s pretty amazing that we grew at that rate of players and kept our ARPMAU almost flat, just a little bit down. So, I think that part is really impressive. I think the other thing that’s great without getting too deep into the retention, our October trends in terms of year-over-year user growth are just as good as what we saw in August and September. So, we haven’t seen that dissipate. So that’s a really good sign for us and a good sign that we’ve got a lot of opportunity to continue to grow there.

Chad Beynon: Thank you. Appreciate it. And then for Q4, just asking because you gave guidance, it’s been well reported that the hold rates in North America from a sports standpoint have been pretty low, below average. A, can you comment on that? Obviously, you’re giving guidance today, so we kind of know what happened in October. And then b, are there opportunities to post the hold rate maybe with growth year-over-year, just given what you’ve done from a mix standpoint and driving hold higher for the overall portfolio? Thank you.

Kyle Sauers: Yes. So, I am not sure I exactly understood the back half of your question. Let me answer and see if it fills what you are looking for here. So, I think you are correct that we are giving guidance today and that reflects what we know about what’s happened already in October. So, still very solid revenue growth in Q4 year-over-year. Maybe just thinking about some of the sequential trends or year-over-year, we do – at least where currency sits today, we have got some headwinds on sequential and year-over-year basis in our non-U.S. markets. So, that impacts revenue somewhat. Nothing you don’t already know, but there is one less NFL week in Q4 of this year. And then looking back at Q3, as we mentioned in prepared remarks, we had stronger sports hold in the third quarter.

And then really specific to your question about Q4 or October, football results have been very, very player-friendly. That includes football with the U. So, soccer down in Colombia has actually had similar trends. So, I think that’s – it’s great that we have been able to put forward really strong growth guidance considering that.

Chad Beynon: Perfect. Thanks. That hits on everything. Thanks Kyle.

Kyle Sauers: Thank you, Chad.

Operator: Our next question comes from Jordan Bender with the company, Citizens JMP. Jordan, your line is now open.

Jordan Bender: Good afternoon everyone. Following-up on the Delaware discussion, Kyle, you essentially said that Delaware could double from here just based off of the GGR metrics. Is there anything to say that there is something market dynamics related or just a single operator model that won’t let you or will allow you to kind of get to that doubling of the Delaware market?

Kyle Sauers: Yes. So first off, I will say you are right. What I gave you was really just some mathematical look at comparing other iCasino markets, income levels and populations, right. So, I think the primary thing is we have got a great product. It’s resonating really, really well and there is an opportunity to grow significantly from where we are today. I don’t want to put a timeframe on that number and not necessarily putting that out as a target for us. But I do think it shows that there is a lot of opportunity left for us in the Delaware market.

Jordan Bender: Okay. Perfect. And then just on the follow-up, $10 million tailwind in the third quarter, is it fair to assume that, that’s about a $7 million to $8 million impact to EBITDA on the positive side?

Kyle Sauers: That’s probably a little heavy. It obviously, it depends on where we saw those benefits because different markets have different levels of margin profitability. But it’s probably closer to $5 million or $6 million in incremental than the $7 million or $8 million, I think that you mentioned.

Jordan Bender: Okay. Thank you. Nice quarter.

Kyle Sauers: Thanks Jordan.

Operator: Our next question comes from Bernard McTernan with the company, Needham & Company. Bernie, your line is now open.

Stefanos Crist: Hi. This is Stefanos Crist calling in for Bernie. Thanks for taking our questions. Just wanted to ask on Illinois, given the recent tax increase and now that we are two months into the NFL season. Just anything you are seeing from operators, anything different there? Thanks.

Richard Schwartz: Yes. Hi Stefano, this is Richard. Yes, I think you have seen a little bit of awareness, obviously, the higher tax rate. When you do that, you see sort of less investment, but we haven’t seen anything that quantifies it at this point. I think some platforms have a hard time adjusting their holds in different states. So, we haven’t seen some perhaps adjustments that you may see in the future. But all-in-all, I think the market continues to be a good one for us and I think we are going to see some adjustments over the longer term based on the tax rate adjustments.

Stefanos Crist: Got it. Thanks. And then just wanted to ask on Brazil, any updates before the launch in January?

Richard Schwartz: Yes. Well, Brazil is a really long-term exciting market. And while we appreciate the long-term opportunity that it presents for us, we continue to take a cautious wait-and-see approach as we want to really sort of evaluate the opportunity relative to all the other opportunities that we are also considering. So, I think for this point, we are just going to keep monitoring, tracking it, and we will get back when there is something new to share.

Stefanos Crist: Alright. Thanks guys.

Operator: Our next question comes from Dan Politzer with the company, Wells Fargo. Dan, your line is now open.

Zach Silverberg: Hi. Yes. Zach Silverberg calling in for Dan. Good afternoon. Thanks for taking my question. On advertising and promos, on the $115 million or so that you spent year-to-date, how best is to think about the split between the U.S. and Latin America? And along those lines, how should we think about that spend in 2025 relative to revenues and maybe a split between U.S. and Latin America?

Kyle Sauers: Sure, Zach. So, on the spend between geographies, we haven’t broken that down. As a percentage of revenue, we do spend a higher amount in Latin America, which probably makes sense and probably is obvious given the success we are having with adding players there and the growth profile of those markets. In terms of 2025, kind of along the lines of what I mentioned earlier, we expect to get leverage over the marketing line item yet or get leverage over the marketing line item in 2025, but we haven’t given out a specific amount there yet. I think the – probably something that will impact whether we grow more in Latin America or the U.S. in ‘25 – or North America in ‘25 is Peru that launched recently, as you know, and starting to put some money to work there.

So, that will be an incremental investment for us in Latin America, actually starting here in Q4, but also into 2025. And then if Alberta launches later in the year next year, that could be an investment for us in North America, so just some things we think about.

Zach Silverberg: Got it. Appreciate the color. And just a follow-up on the Illinois question, how do you think of regulatory risk for any other states in 2025 and beyond for the potential risk of higher taxes? And is there any states you would like to call out on potentially the legalization side for iGaming that you have seen some momentum?

Richard Schwartz: Yes. In terms of the tax increases, we don’t expect to see it and hopefully won’t spread. For the reason, obviously, is that the impact of taxes, increases in taxes really has to be carefully considered because there are going to be some unintended consequences that could impact the industry, our employees, our customers. Protecting consumers is a goal. Governments raising taxes on regulated operators like us really just simply drives more volumes at unregulated sites like the Sweepstakes Casinos where no one benefits. There aren’t any particular states that we are going to go on the limb and say is, looking for iGaming legalization, you do see more and more efforts being made in this area as at G2E, the trade show in Las Vegas a few weeks ago.

And I had more conversations about iGaming legalization than I have ever had in the over 10 years of being here since we started the company. So, I think there is a lot of momentum and desire, but we haven’t seen that translate yet to results in the near-term. But some of these states could pop, and we are just not going to get in the business of predicting which ones. To be honest, we don’t have a great track record of doing that.

Zach Silverberg: Thanks. Appreciate it.

Richard Schwartz: Thanks Zach.

Operator: [Operator Instructions] At this time there are no more questions registered in the queue. So, I would like to pass the conference back over to our hosting team for closing remarks.

Richard Schwartz: Thank you again for joining us today. We look forward to updating you on our progress when we share our fourth quarter and year-end results in the New Year.

Operator: That will conclude today’s conference call. Thank you for your participation and enjoy the rest of your day.