Rush Street Interactive, Inc. (RSI) stock intrinsic value fair value estimate & owner earnings analysis

Rush Street Interactive operates regulated real-money online sports betting and online casino products under the BetRivers and PlaySugarHouse brands across 16 U.S. states and Ontario, Canada, and under the RushBet brand in Colombia, Mexico and Peru. It holds a license in each market it serves, and it has been expanding into newly-regulated jurisdictions since 2018. For its first several years as a public company, the business ran at a loss while it entered one new state or country after another, spending heavily on marketing to acquire customers in each new market. That phase is now largely behind it: management has said it is deliberately "rationalizing" marketing spend as the North American and Latin American online-gaming markets it operates in mature, and marketing expense fell from 17% of revenue in 2024 to 15% in 2025 even as revenue grew. The company turned free-cash-flow positive in 2024 and the improvement continued through 2025 and into the first half of 2026. Because the 2020-2023 period reflects that earlier, loss-funding expansion phase rather than the business as it exists today, the valuation is anchored on the average of the two most recent full years (2024 and 2025), which is the cleanest window that reflects the current, more disciplined cost structure. A meaningful share of the company's underlying economics belongs to a group of pre-IPO owners who hold a direct interest in the operating subsidiary alongside public shareholders; the analysis isolates the portion of cash flow that belongs to a share of Rush Street Interactive, Inc. stock specifically, using the same split the company itself uses when it allocates net income between the two groups. That split has moved around from quarter to quarter, which is a real source of uncertainty in translating total company performance into per-share terms. Owner earnings (cash generated by the business after the cost of maintaining the existing operation, before spending tied to opening new markets) turned solidly positive in 2025. Non-cash items were meaningful in 2025, including a large deferred tax charge and an offsetting change in a tax-related liability tied to the company's ownership structure; both were added back or removed as non-operating, non-cash items, consistent with how they were treated for every year in this analysis. Three cases are considered: Bear case: Several of the states RSI operates in (Illinois, Louisiana, Maryland, New Jersey and Ohio) have already raised their gambling tax rates in recent years, and five more (Arizona, Indiana, Pennsylvania, Michigan and West Virginia) have proposed doing so. Separately, in December 2025 Colombia's president issued an emergency decree imposing a 19% tax on online gambling revenue in that country; a court preliminarily suspended it in January 2026 but the matter is still under review. This case assumes several more of the proposed U.S. tax increases take effect and the Colombian tax is at least partly reinstated, compressing margins over the next few years before the business stabilizes at a lower, flat level. On these assumptions the shares are worth about $3.20 today. Base case: This case assumes no further U.S. tax increases beyond what has already happened, the Colombian tax matter resolves without a lasting hit, and the existing, already-licensed markets keep growing at a decelerating pace consistent with their recent trend, funded from the company's own free cash flow the way it has been for the last two years. It does not assume RSI enters any new state or country, or that its margins improve further. On these assumptions the shares are worth about $5.95 today. Bull case: Ontario, one of the newer markets (launched April 2022), saw combined online casino and online sports betting revenue grow about 36% in 2025 versus 2024, with growth accelerating to 40% in the second half of the year, and none of the currently-proposed U.S. tax increases take effect, and the Colombian tax decree is struck down. Growth in the existing footprint continues for longer at a stronger pace before settling into the same flat, mature level assumed in the other cases. On these assumptions the shares are worth about $8.85 today. The margin-of-safety price, allowing for the regulatory and tax uncertainty described above and the fact that only two full years of profitability are on record, is around $3.75 per share. What would have to be true for this to be wrong: mainly, either the tax and regulatory risks above materializing faster or more broadly than assumed, or the still-young track record of profitability proving less durable than the last two years and the first half of 2026 suggest.