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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation Incentive Plan The Company created the Rush Street Interactive, Inc. 2020 Omnibus Equity Incentive Plan, as amended from time to time (the “2020 Plan”), to attract, retain and incentivize employees, consultants and independent directors that will contribute to the success of the Company. Awards that may be granted under the 2020 Plan include incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards and other equity-based awards. During the year ended December 31, 2023, the Compensation Committee of the Board and the full Board each approved an amendment to the 2020 Plan to increase the number of shares of Class A Common Stock reserved under the 2020 Plan by 22.4 million shares, with the Company’s stockholders approving such amendment at the Company’s 2023 annual meeting of stockholders on June 1, 2023. There are approximately 35.8 million shares of Class A Common Stock reserved under the 2020 Plan. The 2020 Plan terminates on December 29, 2030. Restricted Stock Units (“RSUs”) and Options The Company granted 2.5 million and 3.9 million RSUs with service conditions, during the years ended December 31, 2023 and 2022, respectively. RSUs with service conditions generally vest over a three to four year period, with each tranche vesting annually. The grant date fair value of RSUs with service conditions is determined based on the quoted market price. The Company granted 1.5 million and 1.6 million RSUs with market-based conditions (e.g., share price targets, total shareholder return) during the years ended December 31, 2023 and 2022, respectively. RSUs with market-based conditions generally vest over a three year period and the fair value was determined using a Monte Carlo simulation using the following range of assumptions:
| December 31, 2023 |  | December 31, 2022
Volatility rate | 69.78 | % |  | 70.93% to 71.00%
Risk-free interest rate | 3.85 | % |  | 4.32% to 4.39%
Average expected life (in years) | 2.8 |  | 2.3 to 3.0
Dividend yield | None |  | None
Stock price at grant date | $ | 3.28 |  | $ | 3.95
The Company granted 1.1 million and 0.8 million stock options during the years ended December 31, 2023 and 2022, respectively. The estimated grant date fair value of stock options was determined using a Black-Scholes valuation model using the following weighted-average assumptions:
| December 31, 2023 |  | December 31, 2022
Volatility rate | 70.00 | % |  | 58.98 | %
Risk-free interest rate | 3.80 | % |  | 3.68 | %
Average expected life (in years) | 6.0 |  | 5.6
Dividend yield | None |  | None
Stock price at grant date | $ | 3.28 |  | $ | 4.07
Exercise price | $ | 3.28 |  | $ | 4.07
RSU activity for the years ended December 31, 2023 and 2022 was as follows:
| Number of Units |  | Weighted average grant price
Unvested balance at December 31, 2021 | 3,076,158 |  |  | $ | 16.08 |
Granted | 5,542,010 |  |  | 4.17 |
Vested(1) | (1,020,874) |  |  | 14.67 |
Forfeited | (104,681) |  |  | 14.36 |
Unvested balance at December 31, 2022 | 7,492,613 |  |  | $ | 7.48 |
Granted | 4,030,535 |  |  | 4.12 |
Vested(1) | (2,221,870) |  |  | 8.71 |
Forfeited | (83,136) |  |  | 9.52 |
Unvested balance at December 31, 2023 | 9,218,142 |  |  | $ | 5.70 |
_____________________________ (1)Include 467,712 and 253,787 of RSUs that vested during the years ended December 31, 2023 and 2022, respectively, for which the resulting shares of Class A Common Stock have not yet been issued. There were 1,104,629 and 636,917 RSUs that vested for which the resulting shares of Class A Common Stock were not issued as of December 31, 2023 and 2022, respectively. Stock option activity for the years ended December 31, 2023 and 2022 was as follows:
| Number of Units |  | Weighted average exercise price
Outstanding balance at December 31, 2021 | 96,827 |  |  | $ | 15.40 |
Granted | 790,339 |  |  | 4.07 |
Exercised | — |  |  | — |
Forfeited | — |  |  | — |
Outstanding balance at December 31, 2022 | 887,166 |  |  | 5.31 |
Granted | 1,084,445 |  |  | 3.28 |
Exercised | — |  |  | — |
Forfeited | — |  |  | — |
Outstanding balance at December 31, 2023 | 1,971,611 |  |  | $ | 4.19 |
Exercisable balance at December 31, 2023 | 328,002 |  |  | $ | 6.30 |
The aggregate fair value of the RSUs granted during the years ended December 31, 2023 and 2022, was approximately $16.6 million and $23.1 million, respectively. The weighted average grant date fair value of the RSUs vested during the years ended December 31, 2023 and 2022, was approximately $19.3 million and $15.0 million, respectively. The weighted-average grant-date fair values of options granted during the years ended December 31, 2023 and 2022 were $2.14 and $2.26 per share, respectively. The aggregate fair value of the stock options granted during the years ended December 31, 2023 and 2022, was $2.3 million and $1.8 million, respectively. The outstanding stock options and exercisable stock options as of December 31, 2023 had an intrinsic value of $1.6 million and $0.1 million, respectively. As of December 31, 2023, the Company had unrecognized stock-based compensation expense related to RSUs of $37.8 million, which is expected to be recognized over the remaining weighted-average vesting period of 0.9 years. As of December 31, 2023, the Company had unrecognized stock-based compensation expense related to stock options of $2.8 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.0 year. Recognition of Compensation Costs Share-based compensation expense for the years ended December 31, 2023, 2022 and 2021 was as follows:
| Years Ended December 31,
($ in thousands) | 2023 |  | 2022 |  | 2021
Costs of revenue | $ | 1,064 |  |  | $ | 987 |  |  | $ | 1,808 |
Advertising and promotions | 2,225 |  |  | 2,048 |  |  | 3,605 |
General and administrative | 26,731 |  |  | 15,656 |  |  | 19,499 |
Total share-based compensation expense | $ | 30,020 |  |  | $ | 18,691 |  |  | $ | 24,912 |

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